Attorney General Raoul Announces $694 Million Multistate Settlement With Subprime Auto Lender Credit Acceptance Corporation
The 41-state agreement provides cash restitution, debt relief and lending reforms tied to allegations involving risky subprime auto loans and product packing.
CHICAGO – Attorney General Kwame Raoul, as part of a bipartisan coalition of 41 states, secured a settlement with Credit Acceptance Corporation (CAC), providing $694 million in cash and debt relief to consumers across the country in connection with their car loans.
CAC is one of the nation’s largest auto finance companies, providing car loans to consumers with limited or impaired credit histories. In addition to relief for consumers, the settlement also includes injunctive terms that require CAC to provide disclosures about loan risks to consumers, give consumers protections from bad outcomes from certain risky CAC loans, and help guard consumers from dealers “packing” CAC auto-loan contracts with unwanted Vehicle Service Contracts (VSC) and Guaranteed Asset Protection (GAP) products.
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“Credit Acceptance Corporation’s predatory lending practices harmed thousands of consumers,” Raoul said. “I am pleased that this settlement holds CAC accountable and requires that the company make fundamental changes to its business practices.”
The settlement resolves allegations that CAC originated loans that the company knew or should have known consumers could not afford. CAC gives a proprietary “score” to each of its loans, representing its prediction of the percentage amount CAC will collect on the loan from all sources. In some cases, CAC predicted consumers would not pay back even the principal loan amount. Unsurprisingly, many of those low score loans resulted in consumers defaulting on their loans and losing their cars when they were repossessed and sold at auction.
Raoul’s office played an integral role in negotiating the settlement, which goes into effect Nov. 2, 2026. The agreement also resolves allegations that CAC encouraged and failed to reasonably prevent unlawful VSC and GAP product “packing” by auto dealers in CAC’s network. The attorneys general allege that CAC’s dealer compensation structure and lack of reasonable dealer oversight resulted in dealers aggressively selling VSCs and GAP products in connection with CAC loans when consumers were either unaware they were purchasing the products or were led to believe the products had to be purchased for the consumer to get financing.
The settlement provides $60 million in cash restitution that will be distributed to consumers to whom CAC gave particularly risky loans. For certain risky CAC loans made between Nov. 1, 2015, and Nov. 30, 2025, CAC has agreed to provide $388 million in debt relief to consumers whose cars were repossessed, and $246 million in debt relief to consumers whose cars have not been repossessed, allowing those consumers to keep their cars. CAC must also pay an additional $15 million to the states. Illinois will receive $665,395.06 from the settlement.
The settlement’s injunctive terms include requirements designed to meaningfully reform the company’s lending practices:
- For consumers with certain risky CAC loans that CAC made starting in December 2025, CAC will provide “off-ramps” for loans that fail quickly. Qualifying consumers will get 95% debt relief, and CAC is prohibited from filing collections lawsuits against them. CAC must provide these off-ramps for a five-year period starting on Nov. 2, 2026.
- The settlement mandates a process to prevent unlawful VSC and GAP product packing, including enhanced pre-purchase disclosures, a post-purchase process alerting consumers about the purchase that allows easier product cancellation, and dealer monitoring.
- CAC must provide consumers with pre-loan disclosures about the risks of default and the value of the vehicle.
- For seven years, CAC must institute a price cap for vehicle prices at 109% of retail book value for certain consumers.
- CAC must implement processes to prevent dealers from raising car prices due to creditworthiness or above advertised prices.
Attorney General Raoul was on the executive committee leading the settlement, along with the attorneys general of Maryland, Arkansas, California, Minnesota and New Jersey. Joining the settlement are the attorneys general of Alabama, Alaska, Arizona, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Hawai?i, Indiana, Kentucky, Louisiana, Maine, Michigan, Nebraska, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia, Washington and Wisconsin.
Consumers with questions about the settlement with Credit Acceptance Corporation can call 1-800-634-1506.
Customers eligible for debt relief will be notified by CAC. Consumers eligible for restitution will be notified by a claims administrator.
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