Settlement! Are You Eligible for 27.5 Million in Auto Loan Relief?

Settlement! Are You Eligible for 27.5 Million in Auto Loan Relief?

One of the nation's top subprime auto lenders, Credit Acceptance Corporation (CAC), has agreed to pay more than $27 million to resolve a lawsuit filed by Massachusetts Attorney General Maura Healey. The lawsuit made several allegations of unfair practices relating to the company's role in issuing, collecting, and securitizing subprime auto loans. 

CAC will pay $27.2 million and give debt relief and credit restoration to thousands of Massachusetts debtors under the settlement terms. 

The lawsuit was filed in Suffolk Superior Court, accusing the Southfield, Michigan-based corporation of breaking consumers' protection and debt collection laws and regulations.

Over 3,000 debtors are expected to be eligible for settlement funds across the state, including many marginalized communities in Boston, Worcester, Springfield and Brockton. CAC must also change its loan-handling methods under the terms of the agreement.

According to the lawsuit stemming from last summer, CAC has been accused of funding around 4,000 subprime used automobile loans in Massachusetts each year since 2013 for a total value of $458 million.

The corporation, which makes 92% of its money from financing charges, gave those high-interest loans to clients who struggled to repay them. Thus, resulting in destroyed credit, the loss of autos and down payments, and an average of $9,000 in debt.

The case also claimed that some CAC debtors were subjected to concealed finance charges, resulting in violations of the state's 21% usury threshold and the usage of illegal collection techniques. As per the AG's lawsuit, CAC failed to notify investors that it topped off securitization loan pools with higher-risk loans.

Credit Acceptance admitted no liability. However, in a subsequent public statement, they stated that “they were pleased” to put the case behind it and look forward to serving customers through their financial programs.

The AG's Office will contact borrowers who are eligible for relief under the settlement. If you have questions about settlement eligibility and reimbursement for your loan, reach out to the Insurance and Financial Services Division of AG Healey at 617-963-2240.