Little Rock, Arkansas – Arkansas Attorney General Tim Griffin has announced a major multistate settlement with Credit Acceptance Corporation following allegations that the auto finance company provided loans to consumers it knew or should have known they could not afford.
Griffin co-led the lawsuit that resulted in the agreement, which involves a coalition of 40 attorneys general. The settlement provides hundreds of millions of dollars in cash payments and debt relief while also requiring changes to Credit Acceptance Corporation’s lending practices.
Arkansas will receive $660,000 in civil penalties under the agreement.
“CAC has agreed to a $694 million settlement with our coalition of 40 attorneys general, providing cash and debt relief to consumers in connection with the consumers’ car loans. Arkansas will receive $660,000 in civil penalties as part of the settlement. The settlement also includes injunctive relief that requires CAC to strengthen consumer protections. Among other things, CAC must provide consumers with disclosures about loan risks, give consumers protections from bad outcomes on certain high-risk CAC loans, and protect consumers from auto dealers packing unwanted Vehicle Service Contracts (VSC) and Guaranteed Asset Protection (GAP) products into CAC auto-loan contracts.
“Since 2015, CAC allowed consumers to enter into loans that the lender knew the consumers could not afford. This sort of predatory lending is unconscionable and clearly violates the Arkansas Deceptive Trade Practices Act. I am pleased that this issue has been resolved and trust that CAC will no longer prey on vulnerable Arkansans.”
Settlement addresses loans considered especially risky
The attorneys general alleged that Credit Acceptance Corporation originated loans even when the company knew or should have known that borrowers were unlikely to be able to afford them.
CAC uses its own scoring system to predict how much money it expects to collect from each loan from all available sources. According to the allegations, many loans receiving low scores were made even when CAC predicted that a borrower would not repay enough to cover the principal amount of the loan.
Many consumers with these loans eventually defaulted, according to the attorneys general. Some borrowers then lost their vehicles after they were repossessed and sold at auction.
The settlement is scheduled to take effect November 2, 2026.
It provides $60 million in cash restitution for consumers who received loans considered particularly risky.
CAC will also provide $388 million in debt relief to qualifying consumers whose vehicles have already been repossessed. Another $246 million in debt relief will go to consumers whose vehicles have not been repossessed, allowing those borrowers to keep their vehicles.
That relief applies to certain risky CAC loans issued between November 1, 2015, and November 30, 2025. The required debt relief is to be provided on or before November 2.
CAC must separately pay another $15 million to the 40 attorneys general participating in the agreement.
New protections required for consumers
The settlement also addresses allegations involving Vehicle Service Contracts and Guaranteed Asset Protection products sold through auto dealers in CAC’s network.
The attorneys general alleged that CAC encouraged and failed to reasonably prevent unlawful product packing. According to the allegations, some dealers aggressively sold VSC and GAP products with CAC financed vehicles even when consumers did not realize they were buying the products or were led to believe purchasing them was necessary to obtain financing.
Under the settlement, CAC must establish stronger safeguards aimed at preventing that practice. These include improved disclosures before purchases, notifications after purchases and a simpler process for consumers who want to cancel the additional products. Dealer activity must also be monitored.
CAC will also have to provide consumers with information before they enter a loan explaining default risks and the value of the vehicle.
For certain risky loans made beginning in December 2025, CAC must provide what the settlement describes as “off ramps” when loans fail quickly. Consumers who qualify can receive 95 percent debt relief, and CAC will not be allowed to file collection lawsuits against them. This requirement will remain in place for five years beginning November 2, 2026.
For seven years, CAC must also apply a vehicle price cap of 109 percent of retail book value for certain consumers.
The company must further put procedures in place to prevent dealers from increasing vehicle prices based on a customer’s creditworthiness or charging more than an advertised price.
The executive committee leading the settlement consists of the attorneys general of Arkansas, Maryland, California, Illinois, Minnesota and New Jersey.
Attorneys general from Alabama, Alaska, Arizona, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Hawaii, Indiana, Kentucky, Louisiana, Maine, Michigan, Nebraska, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia, Washington and Wisconsin also joined the settlement.
New York is separately settling litigation it filed against CAC in the Southern District of New York at the same time.
Arkansas consumers who have questions about the Credit Acceptance Corporation settlement can contact the Arkansas Attorney General’s Office at 501 682 2007.
Consumers who qualify for debt relief will receive notification directly from CAC. Those who are eligible for cash restitution will be contacted by a claims administrator.
