Credit Acceptance Corporation has agreed to a $694 million multistate settlement to resolve allegations that the auto lender engaged in deceptive and abusive practices by issuing subprime loans to consumers it allegedly knew could not afford them, according to Georgia Attorney General Chris Carr.
National Settlement Terms and Affected Borrowers
The $694 million agreement covers cash payments and debt relief nationwide across 41 participating state attorney general offices. According to consumer advocates, the financing structure targeted vulnerable borrowers with low credit scores or limited incomes. Sarah Mancini, an attorney with the National Consumer Law Center, stated that the transactions were built to fail and left consumers worse off financially.
Within the state of Georgia, 4,890 consumers will receive a direct share of $28 million in financial relief. According to state filings, eligible consumers will receive cash payments if their vehicles were repossessed, while others will have their outstanding loan balances forgiven.
Allegations of Knowingly Defaulted Loans and Hidden Fees
According to the state complaint, internal data from Credit Acceptance showed the firm knowingly approved subprime auto loans despite a high likelihood of default, driven primarily by a profit motive. The lawsuit further alleged that the company tacked on unnecessary charges for optional add-on products such as service agreements and warranties.
Court filings stated that many borrowers remained unaware they were purchasing these extra products, did not understand they were optional, or were led to believe the add-ons were mandatory to secure vehicle financing.
Corporate Response and Operational Changes
Credit Acceptance did not admit to any wrongdoing as part of the settlement agreement. In a public statement posted to the company website, CEO Vinayak Hegde addressed the resolution and outlined compliance measures.
“The settlement includes certain commitments related to customer disclosures, dealer oversight, and consumer protections, many of which reflect practices we already have in place today,” Hegde wrote. The company confirmed that administrators and representatives working on behalf of the participating states will contact eligible consumers by mail regarding their relief packages.