Hundreds of Washington residents will receive financial relief after a multistate settlement with a major auto lender.
Hundreds of Washington residents will receive financial relief after a multistate settlement with a major auto lender.
The Washington State Office of Attorney General Nick Brown announced that Credit Acceptance Corporation will pay $694 million to resolve claims it steered consumers into risky car loans they would struggle to repay.
About 260 Washington residents will receive payments averaging $1,400, totaling about $373,000 in restitution. The settlement also includes about $2.4 million in loan forgiveness for eligible Washingtonians.
Credit Acceptance Corporation is one of the nation’s largest auto finance companies, providing loans to people with limited or impaired credit histories. The settlement requires the company to make several changes, including new disclosures about loan risks, “off ramps” for certain risky loans, and protections against dealers adding unwanted insurance or service products to loans.
The settlement resolves allegations that Credit Acceptance Corporation issued loans it knew or should have known consumers could not afford. The company uses a proprietary scoring system to predict how much it will collect on each loan. According to the states, the company sometimes issued loans even when it predicted the debt would not be paid back. Many consumers defaulted, lost their vehicles to repossession, and saw those vehicles sold at auction.
The agreement, effective Nov. 2, also addresses claims that the company encouraged and failed to prevent auto dealers from adding extra products to loans without consumers’ knowledge or consent. The states allege that the company’s dealer compensation and oversight practices led to dealers aggressively adding unwanted products.
The settlement provides $60 million in cash restitution to be distributed by attorneys general to consumers who received especially risky loans. For certain loans made between November 1, 2015 and November 30, 2025, Credit Acceptance Corporation will provide $388 million in debt relief to consumers whose cars were repossessed and $246 million in debt relief to those who still have their vehicles.
Consumers with questions can call Credit Acceptance Corporation’s customer service at (800) 634-1506. The company will notify those eligible for debt relief, while a claims administrator will contact those eligible for cash payments. The type of relief depends on when the loan was made, whether it is in default or collection and whether the borrower still has the vehicle. The company is not required to begin providing relief until November 2.
Washington residents are expected to receive notifications about their eligibility as the settlement takes effect.
