$694M Credit Acceptance Auto Loan Settlement: Relief Is Automatic

Credit Acceptance Corporation has agreed to provide $694 million in cash restitution and debt relief under a multistate settlement addressing allegations that the subprime auto lender financed loans it knew or should have known many consumers could not afford.

The settlement also addresses allegations that dealers included expensive vehicle service contracts and guaranteed asset protection products in financed transactions without consumers understanding that the products were optional or even knowing they were included.

The participating states say eligible consumers have already been identified, will be notified and do not need to file a claim. The proposed judgment is subject to court approval. Credit Acceptance denies violating the law, and the agreement does not contain a finding of liability.

Key facts

Defendant: Credit Acceptance Corporation
Settlement announced: September 17, 2026
Participating jurisdictions: 40 state attorneys general and the District of Columbia, with Hawaii's consumer-protection office also participating
Cash restitution fund: $60 million
Debt relief for repossessed-vehicle accounts: $388 million
Debt relief for accounts without a repossession: $246 million
Additional payment to states: $15.5 million, separate from the $694 million consumer relief total
Covered loan period for major debt-relief groups: November 1, 2015, through November 30, 2025
Action required: None for identified consumers; notices will be sent automatically
Effective date stated in the proposed judgment: November 2, 2026
Current status: Negotiated multistate settlement subject to court approval

What happened

California and other states announced a coordinated agreement resolving allegations about Credit Acceptance's auto-finance and dealer-oversight practices. The California attorney general filed a complaint and a proposed final judgment in Alameda County Superior Court. New York is concurrently resolving related federal litigation.

The settlement combines money paid into a restitution fund with direct changes to consumer account balances. It is not an open claims-made class action. The states and a settlement administrator will use company account records to identify people entitled to relief.

The agreement grew from allegations first pursued by the Consumer Financial Protection Bureau and the New York attorney general. The California announcement says the federal government later abandoned the CFPB portion of that litigation, while state officials continued negotiating a nationwide resolution.

Relief is automatic for identified accounts Participating states say eligible consumers have already been identified and do not need to submit a claim form.

What Credit Acceptance does

Credit Acceptance is a Michigan-based indirect auto-finance company. An indirect lender does not usually make the retail sale itself. A dealer signs a retail installment contract with the buyer, then assigns or sells rights in that contract to the finance company, which services the account and collects payments.

The company specializes in financing for people with impaired credit or no established credit score. The California complaint says Credit Acceptance has worked with more than 12,000 affiliated vehicle dealers and originated millions of loans since 2015.

The company also financed vehicle service contracts, often called VSCs, and guaranteed asset protection, or GAP, products. A service contract may cover certain repairs under its terms. GAP generally addresses part of the difference between an auto-loan balance and insurance proceeds when a covered vehicle is totaled or stolen. Both are ancillary products, meaning they are separate from the vehicle itself and are supposed to be optional.

How the loans and company score work

The complaint describes a proprietary Credit Acceptance Score used to predict how much the company expects to collect on a loan from borrower payments, collection activity and the sale of a repossessed vehicle. A score of 0.64, for example, represents a prediction that 64% of the loan's total principal and interest will be collected.

According to the complaint, the lowest-scoring 20% of contracts in a typical year were predicted to return less than the principal. California calls these set up to fail loans in its pleading.

The complaint alleges that 25% to 30% of these accounts became at least 90 days delinquent within 12 months, about 70% reached that level within 36 months, more than 40% resulted in repossession within 36 months, and more than half eventually resulted in repossession and auction.

Those figures are allegations drawn from state analysis of company data. Credit Acceptance denies legal violations, and the settlement avoids a trial over the claims.

What the states allege

The states allege that Credit Acceptance financed loans that it knew or should have known borrowers could not repay according to the contracts. They also accuse the company of not disclosing the known default risk while marketing financing as a way to improve credit or build a better future.

The complaint also focuses on vehicle pricing. It alleges that dealer data showed higher markups for consumers with lower Credit Acceptance Scores and says increasing a vehicle's price based on creditworthiness is unlawful.

A second group of allegations concerns VSC and GAP products. The complaint says a service contract could cost $2,000 or more and GAP could cost $1,000 or more. It alleges that dealer compensation encouraged add-on sales and that the service-contract penetration rate rose from roughly 50% to 60% in 2015 and 2016 to nearly 90% by 2021.

California says some dealer dashboards showed 100% or nearly 100% service-contract sales for extended periods. The complaint treats that as a warning sign because optional products would not ordinarily be expected in every transaction. It also says the company received more than 1,000 add-on complaints from January 2017 through August 2020.

Two practices are at issue The states challenge both the affordability of some loans and the financing of optional add-ons that consumers allegedly did not knowingly choose.

Who may receive relief

The debt-relief provisions focus on certain accounts originated from November 1, 2015, through November 30, 2025. The proposed judgment defines groups using the company's proprietary score, the ratio of monthly payment to monthly income, and whether a vehicle was repossessed and sold.

The states will determine who receives the $60 million restitution fund. Credit Acceptance must provide account-holder names, addresses, contact information and account numbers when requested. The public documents do not provide a general self-service eligibility test or claim form.

Consumers with covered repossessed-vehicle accounts may receive relief from deficiency balances. A deficiency balance is the amount claimed after auction proceeds are applied to a loan following repossession. Other identified consumers whose vehicles were not repossessed may receive balance relief that allows them to keep their vehicles under the settlement terms.

California estimates its consumers will receive about $1.46 million in restitution and $5.4 million in debt relief. National individual amounts will vary by account.

Do not pay for access There is no public application fee or paid service needed. Identified consumers will be contacted through the official administration process.

How the $694 million is divided

The agreement describes three main consumer-relief pools:

$60 million in cash restitution for consumers with particularly risky loans, distributed under rules set by the multistate executive committee.
$388 million in debt relief for certain consumers whose vehicles were repossessed.
$246 million in debt relief for certain consumers whose vehicles were not repossessed, allowing qualifying borrowers to keep their cars.

Credit Acceptance must also pay $15.5 million to the participating states. That amount is separate from the advertised $694 million in consumer cash and debt relief.

The $60 million restitution fund will be administered using identified account data. Unclaimed or uncashed money can eventually be used by participating states as permitted by the agreement and applicable law rather than being returned to Credit Acceptance.

What will change for future loans

For five years beginning November 2, 2026, qualifying future loans that fail quickly will receive an off ramp. The California announcement says eligible consumers will get 95% debt relief, and Credit Acceptance cannot file collection suits on those accounts.

The proposed judgment also requires clearer pre-loan information about default risk and vehicle value. For seven years, it sets a price cap at 109% of retail book value for certain consumers. Retail book value means a vehicle value supplied by a recognized industry source such as Black Book, Kelley Blue Book or NADA.

Credit Acceptance must strengthen controls against dealers raising prices based on creditworthiness or above advertised prices. It must also improve add-on disclosures, send post-purchase notices, simplify cancellation and monitor dealers for unusually high ancillary-product sales.

Future borrowers receive new protections The settlement adds affordability disclosures, vehicle-price limits for certain consumers, add-on cancellation safeguards and relief for qualifying loans that default quickly.

What remains disputed

Credit Acceptance denies the alleged violations. The judgment is negotiated without a trial, admission of wrongdoing or finding of liability. It also states that it does not create a new private right of action.

Not every Credit Acceptance borrower will receive money or debt cancellation. Relief depends on detailed account criteria and decisions made by the participating states. The public documents do not provide a national list of names or a calculator for individual benefits.

The judgment still requires court entry. Deadlines and compliance periods depend on the effective date and final approval process.

Timeline and next steps

The complaint addresses loans and dealer practices dating back to at least 2015. The covered debt-relief account period runs through November 30, 2025. The parties signed the California stipulation on September 17, 2026, and the states announced the settlement that day.

If approved, the judgment uses November 2, 2026, as its effective date. Credit Acceptance must provide the specified debt relief on or before that date under the announced terms. The settlement administrator and participating states will send notices to identified consumers and distribute restitution.

Borrowers should keep account statements, loan contracts, add-on documents, repossession notices, auction statements and communications from Credit Acceptance or a settlement administrator. They should verify any notice against a participating attorney general's official website before sharing information.

Frequently asked questions

Do I need to file a claim?

No. The states say eligible consumers have been identified and will be notified automatically.

How much is the Credit Acceptance settlement?

The settlement provides $60 million in cash restitution and $634 million in debt relief, for $694 million in consumer relief. Credit Acceptance will also pay $15.5 million to the states.

Who qualifies?

The relief groups use account-specific criteria including origination dates, the company's proprietary score, payment-to-income ratio and repossession status. The states will identify eligible accounts.

What if my vehicle was repossessed?

Certain consumers with covered repossessed-vehicle accounts may receive relief from remaining debt. Eligibility is determined from company and state records.

What if I still have the vehicle?

Certain covered accounts without a repossession may receive debt relief that permits the consumer to keep the vehicle, subject to the settlement terms.

Did Credit Acceptance admit wrongdoing?

No. The company denies the allegations, and the proposed judgment resolves them without a trial or liability finding.