Credit Acceptance Corporation, a subprime auto lender, has agreed to contact borrowers away from the dealer showroom, explain any add-on products on their loans and offer to cancel them. The requirement is part of a $700 million settlement announced Sept. 17 by a bipartisan coalition of state attorneys general.
Add-ons are the extras that can ride along with a car loan: vehicle service contracts, GAP coverage and similar insurance. Regulators say too many borrowers never knew they were paying for them, and the settlement is built to change that going forward.
What Credit Acceptance now has to do
New York Attorney General Letitia James’s release spells out the duty: “To prevent consumers from paying for unwanted add-ons, CAC must contact consumers outside of the dealer showroom to clearly inform them of any products they purchased and offer them a process to cancel those products while keeping their vehicles.”
The last clause matters. A borrower who drops an add-on keeps the car, and the loan stays in place. The release does not say how often the lender must make that contact or what form it takes.
Who is most likely to be affected
Anyone who financed a car through Credit Acceptance, usually by way of a dealer, and later spotted a service contract or GAP charge they do not remember agreeing to is the borrower this rule is aimed at. Nobody has to file a claim to get the contact. Minnesota Attorney General Keith Ellison’s office says consumers need not take any action and will be contacted if they receive debt relief or a refund.
The itemized list in the original loan contract is where borrowers can see what was added. A separate line for a service contract, GAP or credit insurance is the sign to ask about.
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What the attorneys general say went wrong
Ellison’s office says its lawsuit alleged the company financed loans it knew or should have known borrowers could not afford, and financed add-on products that consumers did not know they were buying. In a statement, Ellison said “a car is a necessity for many Minnesotans and is the largest purchase some may ever make.”
Minnesota’s release adds that the company must take steps to stop dealers from adding optional products without consent. That includes stronger disclosures at the time of sale and a post-sale disclosure that alerts the consumer to the purchase and lets them cancel it.
How the money part of the deal works
The New York release puts the total at $700 million, including more than $630 million in debt relief and $60 million in restitution for consumers who lost their cars within months of taking out Credit Acceptance loans. About 55,000 consumers nationwide receive debt relief, including about 2,500 New Yorkers.
The lender also agreed to forgive 95 percent of what is owed by certain at-risk borrowers who default within 12 or 18 months, depending on the loan’s risk, and whose vehicle is repossessed and sold. The company may collect only the remaining 5 percent and cannot sue over the debt.
Where a borrower can take a question
The add-on contact is a duty on the lender, not a refund a borrower can demand today. Borrowers with a complaint can reach the Minnesota Attorney General’s Office at (651) 296-3353 or (800) 657-3787, and other states list their own consumer protection offices. Whether the first outreach reaches every affected borrower, and when, is something no attorney general has announced.
Until a call or letter arrives, a dated note of every conversation about the loan is the simplest protection if a cancellation is promised and the charge keeps appearing.
Add-ons on the car loan, and no record of who said what?
A promised cancellation that never shows up on the next statement is how a borrower ends up paying for coverage the attorneys general say people did not know they bought. Lenders and collectors change names and phone numbers, and a verbal promise is hard to prove.
The Bank Account & Debt Protection Kit includes the debt-validation steps and a debt inventory, call log and deadline tracker, so every conversation with a lender has a date, a name and a result written down. It also covers the 2-month bank protection rule that applies to Social Security deposits.
Get the call log and deadline tracker for your car-loan add-on cancellation →
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This article was produced with AI assistance and edited for accuracy against the sources linked above.
