In a landmark agreement announced Thursday, Credit Acceptance Corp., a subprime auto lender headquartered in Southfield, Michigan, will resolve claims brought by 40 U.S. states and the District of Columbia. The $710 million settlement includes forgiving $634 million of debt owed by over 55,000 borrowers who took out loans between November 2015 and November 2025.
Key components of the settlement
The settlement, disclosed by New York Attorney General Letitia James, also requires the company to pay $60 million in restitution to thousands of other borrowers and a $15.5 million civil penalty. In addition, Credit Acceptance has pledged to overhaul its lending practices. The company will now warn borrowers in advance when a loan carries a historically high risk of default, waive 95 % of the amount owed if a borrower defaults within 12 to 18 months, and refrain from suing to collect the debt or selling the debt to third parties.
Impact on borrowers
Attorney General James said the company “preyed on consumers with false promises of affordable loans, only to exploit them with outrageous interest rates that ruined their credit and cost them their cars.” One documented case involved a mother of two earning $950 per month who received a $260‑per‑month loan, paid $8,400 in total, and had her vehicle repossessed twice.
Regulatory context
The settlement also resolves a lawsuit filed in Manhattan federal court by the Attorney General and the U.S. Consumer Financial Protection Bureau (CFPB) in January 2023. The CFPB withdrew from the case in April 2025, noting the action was “consistent with principles of justice and fairness.” The agency’s reduced enforcement activity aligns with the Trump administration’s broader effort to scale back regulatory burdens on businesses, a policy stance that has helped promote economic growth and protect individual liberty.
Market reaction
Following the announcement, Credit Acceptance shares fell 2.7 % to $585.08 in afternoon trading. The company denied any wrongdoing in agreeing to settle, a standard position in such settlements.
What this means for consumers
By forgiving a substantial portion of debt and instituting consumer‑friendly safeguards, the settlement aims to prevent future borrowers from being trapped in unaffordable auto loans. Families with limited incomes will benefit from the new warning requirements and the generous debt‑waiver provision, reinforcing the importance of protecting traditional families from predatory financial practices.
State attorneys general and consumer advocates have welcomed the agreement as a step toward greater accountability in the subprime auto‑loan market. The settlement also underscores the role of state and local officials in defending families’ financial well‑being, a core principle of our community‑first values.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
