TRENTON, N.J. — New Jersey and 40 other states have reached a $694 million settlement with Credit Acceptance Corporation that will provide cash restitution and debt relief to consumers and resolve allegations involving the company’s subprime auto lending practices.
New Jersey is expected to receive more than $28.5 million through the settlement, including approximately $2.2 million in restitution and $25.6 million in debt relief for affected consumers, according to Attorney General Jennifer Davenport and the state Division of Consumer Affairs.
Credit Acceptance, one of the nation’s largest auto finance companies, provides vehicle financing to consumers with limited or impaired credit histories. The states alleged the company originated some loans it knew or should have known consumers could not afford, resulting in defaults and vehicle repossessions.
“Access to a car helps families get to work, take their kids to school, and build financial stability–but when car payments become unaffordable, that stability turns into a spiral of debt and financial distress,” said Attorney General Jennifer Davenport. “I am proud of the way New Jersey and our fellow states stepped up to obtain relief for car buyers who suffered devastating consequences as a result of CAC’s conduct.”
The states said Credit Acceptance assigns a proprietary score to its loans representing the percentage it predicts it will collect. Attorneys general alleged that consumers could not reasonably afford many loans with low scores, including some in which the company predicted the borrower would not repay even the loan principal.
The settlement also resolves allegations involving vehicle service contracts and Guaranteed Asset Protection, or GAP, products sold by dealers in Credit Acceptance’s network. The states alleged some consumers did not know they were purchasing the add-on products or were led to believe they were required to purchase them to obtain financing.
“Predatory and deceptive lending practices are especially harmful when they target consumers who can least afford the consequences,” said Christopher Peterson, Acting Director of the Division of Consumer Affairs. “We will continue to investigate lenders that take advantage of financially vulnerable consumers and hold them accountable when they violate the law. No company should be able to profit by trapping consumers in unaffordable debt or charging them for add-ons they did not knowingly purchase.”
Under the settlement, $60 million will be distributed as cash restitution to consumers who received certain risky loans.
For qualifying loans made between Nov. 1, 2015, and Nov. 30, 2025, Credit Acceptance will provide $388 million in debt relief to consumers whose vehicles were repossessed and $246 million to consumers whose vehicles were not repossessed, allowing those borrowers to keep their vehicles. The company also will make an additional payment to the participating attorneys general.
The agreement also requires changes to Credit Acceptance’s lending practices. For certain risky loans made beginning in December 2025, qualifying consumers whose loans fail quickly will be eligible for 95% debt relief, and the company will be prohibited from filing collection lawsuits against them. Those provisions are scheduled to remain in place for five years beginning Nov. 2, 2026.
Other provisions require additional disclosures concerning default risks and vehicle values, measures intended to prevent unwanted service contracts and GAP products from being added to loans, and processes to prevent dealers from raising vehicle prices based on a consumer’s creditworthiness or above advertised prices. For certain consumers, vehicle prices will also be capped at 109% of retail book value for seven years.
Credit Acceptance said the settlement was reached without an admission of fault or wrongdoing and resolves the multistate investigation and related New York litigation.
The Consumer Financial Protection Bureau and New York sued Credit Acceptance in 2023. The federal agency later withdrew from the case in 2025, while the states continued pursuing the matter. New York is separately settling its litigation with the company.
Customers eligible for debt relief will be notified by Credit Acceptance, while consumers eligible for restitution will receive notice from a claims administrator. Consumers with questions about the settlement can call 1-800-634-1506.
