Credit Acceptance Corp. Settles Suit

By Staff Writer September 10, 2021

In the largest settlement of its kind, national subprime auto lender Credit Acceptance Corp. will pay more than $27 million to settle a Massachusetts lawsuit over a variety of alleged unfair practices relating to the company’s role in the origination, collection, and securitization of subprime auto loans.

The settlement, which was filed in Suffolk Superior Court, requires CAC to provide debt relief and credit repair to thousands of Massachusetts borrowers. Over 3,000 borrowers across the state are expected to be eligible for settlement funds, including many residents of marginalized communities in Springfield, Boston, Worcester and Brockton. The settlement also requires CAC to make changes to its loan handling practices. 

“Thousands of Massachusetts consumers, many of them first-time car buyers, put their faith in CAC to help them with an auto loan, but were instead lured into high-cost loans, fell deeper in debt, and even lost their vehicles,” said Attorney General Maura Healey. “With this significant settlement, eligible Massachusetts drivers who have been suffering under the weight of a crushing car loan due to CAC’s deceptive practices will be able to receive relief and avoid new defaults.”

The AG’s Office sued CAC in August 2020 over the company’s practices relating to the origination, collection, and securitization of subprime auto loans. Specifically, the lawsuit alleged that CAC made high-interest subprime auto loans that it knew or should have known many borrowers would be unable to repay. The AG’s lawsuit noted that while the company profited from these loans, borrowers experienced credit harm, and, in some instances, lost their vehicles or down payments. The complaint also alleged that some CAC borrowers were subject to hidden finance charges, which resulted in violations of the state’s 21 percent usury cap and that CAC engaged in unlawful collection practices.

Rate this item
(1 Vote)
Last modified on Thursday, 16 September 2021 16:28