Credit Acceptance Corporation, one of the nation’s largest subprime auto lenders, has agreed to a $694 million settlement with a coalition of 41 state attorneys general over car loans the states say borrowers could never afford. The deal, announced September 17, 2026, includes $388 million in debt relief for qualifying borrowers whose cars were repossessed, $246 million in debt relief for borrowers who still have their cars, and $60 million in cash restitution. Credit Acceptance must deliver the debt relief on or before November 2, 2026, the date the settlement takes effect.
Where the $694 million goes
According to the Maryland attorney general’s office, which helped lead the case, the settlement breaks into three consumer pieces. The largest, $388 million, is debt relief for consumers whose cars have been repossessed. Another $246 million in debt relief goes to consumers whose cars have not been repossessed, allowing them to keep their vehicles. The remaining $60 million is cash restitution for consumers to whom the company gave particularly risky loans.
The debt relief covers certain risky loans Credit Acceptance made between November 1, 2015, and November 30, 2025. After a repossession and auction sale, a borrower can still owe money on the original loan, and the $388 million is aimed at borrowers in that position. Credit Acceptance, often called CAC, must also pay an additional $15 million to the attorneys general.
The states described a direct-notice process rather than an open claims portal. Customers eligible for debt relief will be notified by CAC, and consumers eligible for restitution will be notified by a claims administrator, the states said. Maryland set up a line for questions about the settlement at 410-576-6456.
Checking an old auto-loan balance: Borrowers who still get collection letters on a repossessed car need a clear way to confirm what is actually owed before paying anything while settlement notices go out. The debt-validation steps and a protected-funds and dispute log are laid out in The Bank Account & Debt Protection Kit.
What the states say Credit Acceptance did
The multistate investigation focused on how Credit Acceptance decided which loans to make. The company assigns a proprietary “score” to each loan, representing its prediction of the percentage it will collect on the loan from all sources. The attorneys general allege that consumers could not reasonably afford many of the company’s low-score loans, including loans where CAC predicted the borrower would not repay even the principal.
Many of those loans ended the way the company’s own numbers suggested, according to the states: borrowers defaulted and lost their cars when they were repossessed and sold at auction. The states allege CAC originated loans it knew or should have known consumers could not afford, based on its own internal evaluations.
The settlement also resolves allegations about add-on products. The attorneys general allege that CAC’s dealer compensation methods and weak dealer oversight led dealers to aggressively sell vehicle service contracts and guaranteed asset protection, or GAP, products with CAC loans. In some cases, the states say, consumers either did not know they were buying the products or were led to believe they had to buy them to get financing, a practice known as “packing.”
“Credit Acceptance Corporation made loans that many Marylanders could not afford, resulting in consumers defaulting on their loans and losing their vehicles,” Maryland Attorney General Anthony G. Brown said. “This settlement erases hundreds of millions of dollars in debt for borrowers struggling under loans that should never have been made, provides money back to certain borrowers, and requires real changes to how CAC does business going forward.”
New rules for future Credit Acceptance loans
Beyond the money, the agreement changes how the lender must operate. For certain risky loans CAC made starting in December 2025, the company must provide “off ramps” for loans that fail quickly. Qualifying consumers will receive 95% debt relief, and CAC may not file collection lawsuits against them. Those off ramps must be available for five years starting November 2, 2026.
Other terms require CAC to give borrowers disclosures before a loan about the risk of default and the value of the vehicle. For seven years, the company must cap vehicle prices at 109% of retail book value for certain consumers. It must adopt processes to stop dealers from raising car prices based on a buyer’s creditworthiness or above advertised prices. A new process to prevent packing of service contracts and GAP products includes enhanced pre-purchase disclosures, a post-purchase alert that makes cancellation easier, and dealer monitoring.
Maryland, Arkansas, California, Illinois, Minnesota and New Jersey formed the executive committee that led the settlement. New York is separately settling litigation it brought against CAC in federal court in the Southern District of New York. The remaining participants range from Alabama and Alaska to Washington and Wisconsin, along with the District of Columbia, so the agreement reaches most of the country.
What borrowers in each state can expect
State shares vary. The Pennsylvania attorney general’s office estimated that qualifying Pennsylvania consumers will receive more than $17 million in debt relief and about $2.97 million in restitution, with the state receiving $469,623 for public protection and education.
“This auto loan company did not do their due diligence to ensure the loans they were providing were appropriate for consumers,” Pennsylvania Attorney General Dave Sunday said. “Furthermore, the unnecessary add-ons they pushed onto consumers burdened those borrowers.”
For older Americans, the settlement touches a familiar problem. Retirees on fixed incomes, and parents or grandparents who co-signed a car loan for a relative, can be left with a balance on a vehicle that is long gone. Because notices will come directly from CAC or a claims administrator, the safest course is to watch for mail tied to an existing CAC account and to be wary of anyone who calls asking for a fee or bank details to “release” settlement money. The Consumer Financial Protection Bureau’s auto loan resources explain borrower rights on repossession and collection more generally.
When a car is gone but the loan balance lingers
Settlement relief arrives on the lender’s schedule, while collection calls and letters on a repossessed car may keep coming in the meantime. Borrowers living on Social Security or a pension need a way to confirm a balance and keep their deposits safe while they wait.
The Bank Account & Debt Protection Kit includes the debt-validation steps for challenging a balance in writing, the 2-month bank protection rule for federal benefits in a checking account, and a protected-funds and dispute log for tracking every letter and call.
Start the dispute log with The Bank Account & Debt Protection Kit.
This article was prepared with AI assistance and reviewed against the linked official sources.
Warren Cohen is a finance writer based in Phoenix, Arizona, covering personal finance topics including credit, banking, and beginner investing. He earned his degree in business administration from Arizona State University and began his career working in consumer finance, where he gained direct experience with lending and credit systems. He now writes for personal finance websites and fintech platforms, focusing on clear, practical content that helps readers make informed financial decisions.
