New York Attorney General Letitia James, along with a bipartisan coalition of 39 state attorneys general, the District of Columbia, and the Office of Consumer Protection of the State of Hawaii, reached a $700 million settlement with subprime auto finance lender Credit Acceptance Corporation (CAC) concerning allegations related to lending and sales practices.
The matter originated in January 2023, when the New York attorney general and the Consumer Financial Protection Bureau filed a lawsuit against CAC. After the CFPB discontinued its litigation in early 2025, the New York attorney general continued pursuing the matter with a coalition of jurisdictions, ultimately resulting in a settlement agreement.
Allegations Involving Subprime Auto Loans
According to investigators, CAC’s loans had average annual percentage rates exceeding 38%, with some loans carrying rates of 100% or more. Investigators also alleged that nearly half of CAC borrowers ultimately experienced vehicle repossession.
The investigation further alleged that CAC bundled certain loans into asset-backed securities (ABS) and sold them to institutional investors while making representations concerning the loans’ compliance.
The settlement addresses these allegations through consumer debt relief, restitution, financial penalties, and changes to certain business practices.
Consumer Debt Relief and Restitution
Under the settlement, CAC will eliminate account balances owed by more than 55,000 consumers nationwide, resulting in more than $630 million in debt relief.
CAC will also provide $60 million in restitution to consumers whose vehicles were repossessed and pay $15.5 million in penalties to the states involved in the settlement.
The settlement also establishes additional protections for certain borrowers who default on their loans.
For qualifying high-risk borrowers who default within 12 to 18 months and subsequently have their vehicles repossessed, CAC will be required to forgive 95% of the remaining deficiency balance. The company will also be prohibited from suing those borrowers to collect the remaining amount or selling the residual debt to another party.
Changes to Consumer Disclosures and Dealer Oversight
The consent judgments include several changes to CAC’s consumer and dealer-related practices.
CAC will be required to provide clearer disclosures concerning vehicle pricing and add-on products. The company will also implement enhanced affordability protections and additional dealer oversight measures.
Another provision addresses add-on finance and insurance products. CAC will be required to contact borrowers directly after the vehicle sale, outside of the dealership setting, to confirm any add-on products purchased as part of the financing transaction.
The direct contact provides consumers with an opportunity to cancel unnecessary add-on products without changing the terms of their underlying auto loan.
The settlement also prohibits CAC from suing certain consumers to collect covered debt or reselling that debt to another party.
Company’s Response
Credit Acceptance stated that the settlement was reached without an admission of fault or wrongdoing.
The company said the resolution provides additional clarity regarding regulatory expectations and allows its management team to continue focusing on customers, dealer partners and its long-term business strategy.
According to the company, the consent judgments will strengthen its controls through clearer consumer disclosures, additional affordability protections and enhanced dealer oversight. CAC stated that it believes the measures are consistent with current automotive finance regulations while allowing it to maintain its core business operations.
Credit Acceptance CEO Vinayak Hegde said the resolution provides certainty for the company, its dealer partners and the customers it serves. He also said the provisions are intended to address consumer-focused regulatory expectations while allowing the company to continue providing financing options to consumers who may have limited access to traditional auto financing.
States Participating in the Investigation
The investigation and settlement involved attorneys general from Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Nevada, Nebraska, New Hampshire, New Mexico, New Jersey, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia, Washington and Wisconsin.
The District of Columbia and the Office of Consumer Protection of the State of Hawaii also participated in the effort.
The settlement represents a significant resolution involving subprime auto financing and includes provisions addressing consumer debt, repossession-related balances, add-on products, affordability considerations, disclosures and dealer oversight.
Author: Jennifer Evancic
Jennifer.Evancic@ResourceManagement.com
Jennifer Evancic is a third-party auditor valued by creditors and large organizations for her knowledge in call monitoring within the collections industry. With meticulous attention to detail and a firm grasp of regulatory requirements, she ensures compliance with clients’ criteria and state and federal regulations.
Jennifer audits collections calls, ensuring they meet client-specific criteria and comply with regulations, providing valuable insights and maintaining industry standards.
Beyond her auditing responsibilities, Jennifer takes the lead in organizing and facilitating monthly call calibrations. These sessions serve as a collaborative forum where clients and their vendors come together to discuss call monitoring results and address any findings or areas for improvement. Jennifer’s guidance fosters open communication and ensures alignment between clients and vendors, driving continuous improvement in collections practices.
Jennifer stays up-to-date with compliance and industry best practices by participating regularly in peer meetings, regulatory updates and industry webinars. This keeps her informed about emerging issues and ensures she remains a knowledgeable leader in collections compliance.
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