Lifeline for Borrowers: Credit Acceptance Corporation Agrees to $694 Million Auto Debt Relief Deal

Drivers struggling under high-cost subprime auto loans may finally be getting a breather.

A coalition of 41 attorneys general, led by officials including Michigan Attorney General Dana Nessel, announced a landmark settlement with Credit Acceptance Corp.

The agreement resolves allegations that the subprime auto lender engaged in predatory lending practices that set vulnerable consumers up for financial failure.

Under the terms of the settlement, Credit Acceptance Corporation will provide $694 million in total relief, including cash payments and extensive debt forgiveness nationwide.

Regulators claimed Credit Acceptance routinely approved loans it knew borrowers could not afford, backed by a proprietary scoring model that predicted high default rates.

According to filings with the Securities and Exchange Commission, Credit Acceptance made no admission of wrongdoing or liability as part of the agreement.

The settlement addresses subprime loans originated between November 1, 2015, and November 30, 2025.

Borrowers whose vehicles were repossessed during this period are slated to receive roughly $388 million in debt relief nationwide.

An additional $246 million in debt forgiveness will go to borrowers who still have their vehicles, allowing them to lower their balances and keep their transportation.

The agreement also establishes $60 million in direct restitution for consumer losses, along with $15.5 million paid directly to state attorneys general.

In addition to financial relief, regulators alleged that participating dealerships often packed loan agreements with expensive, unwanted add-ons like vehicle service contracts and GAP insurance.

To prevent future abuses, the settlement forces Credit Acceptance to implement strict safeguards, including a mandatory process allowing consumers to cancel unwanted add-on products.

For loans originated after December 1, 2025, Credit Acceptance must offer "off-ramp" provisions that grant up to 95% debt relief on rapidly failing loans and prohibit collection lawsuits on those accounts.

The company is also required to cap vehicle prices at 109% of retail book value for seven years to curb inflated dealer pricing.

Impacted consumers eligible for debt relief will be notified directly by Credit Acceptance Corporation, while a settlement administrator will reach out to those entitled to cash restitution.

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