More than 55,000 borrowers are expected to have an estimated $634 million in auto-loan debt erased under a settlement announced Thursday between Credit Acceptance Corporation and a coalition of state attorneys general. The company also agreed to establish a $60 million fund for other affected consumers and pay $15.5 million to the participating states.
The agreement resolves allegations that Credit Acceptance, a major lender serving car buyers with low credit scores, helped place consumers in loans they could not afford. New York Attorney General Letitia James said an investigation also found that some buyers were pushed into costly add-on products or were not told those products had been included in their deals.
Credit Acceptance denies wrongdoing. In its announcement, the company said the resolution ends a multistate investigation and litigation filed by New York in 2023 without an admission of fault.
The distinction matters. These are allegations resolved through a settlement, not findings made after a trial. Still, the relief is substantial for borrowers who qualify, particularly those who lost a vehicle and continued to owe money on it.
According to the proposed court order, approximately $388 million of the debt relief covers qualifying accounts associated with vehicles surrendered or repossessed and sold within 18 months of the loan’s origination. Another estimated $246 million covers other qualifying accounts. For borrowers in that second group who still have their vehicles, Credit Acceptance must release any lien it holds on the title.
Eligibility is specific. The accounts must meet criteria involving the borrower’s finances when the loan was made, and the covered loans were originated between November 2015 and November 2025. Having a Credit Acceptance loan during those years does not, by itself, mean the balance will be canceled.
The proposed order calls for Credit Acceptance to notify affected borrowers by letter, email or text when their accounts are closed and no further payments are owed. It also requires the company to ask the three major credit bureaus to delete the affected accounts from borrowers’ credit reports.
The separate $60 million fund is intended to provide restitution to other consumers. James said it will help thousands of people who were misled and lost their vehicles within months of taking out their loans. The participating states will determine which borrowers receive payments and how much each receives; individual payment amounts have not been announced.
The agreement also addresses how future loans are handled. For certain borrowers whose vehicles are repossessed and sold soon after purchase, Credit Acceptance would have to forgive 95% of the remaining balance after the sale. Other provisions call for clearer information about vehicle pricing and optional products, additional oversight of dealers, and steps to ensure consumers consent to products financed with their loans.
James’ office alleged that Credit Acceptance knew many borrowers could not repay their loans and that some dealers added products such as service contracts and GAP coverage without adequately explaining them. Credit Acceptance said the agreed requirements are broadly consistent with its existing approach and do not fundamentally change its business model.
For car buyers, the case is a reminder to look beyond the monthly payment. Check the vehicle’s selling price, the annual percentage rate, the total amount to be repaid and every product included in the contract before signing. An add-on rolled into a loan costs more than its sticker price once interest is included.
The settlement was announced September 17, and the court document made public that day is labeled a proposed consent order. Borrowers should wait for official notice or confirmation from Credit Acceptance before assuming a balance has been forgiven. For those who qualify, however, this agreement could mean the end of a debt that survived long after the car was gone.