Forty state attorneys general have finalized a settlement with Credit Acceptance Corporation, one of the nation’s largest subprime auto lenders, over allegations that the company financed car loans it predicted many borrowers could not repay. The agreement requires Credit Acceptance to deliver $388 million in debt relief to consumers whose vehicles were already repossessed and $246 million to borrowers still driving on similarly risky loans, both on or before November 2, 2026. People eligible for the relief have already been identified through the company’s own loan records and do not need to file anything to receive it. The case is one of the largest state-led financial settlements of the year, targeting how the country’s largest publicly traded subprime auto lender priced and approved loans for people with limited or damaged credit.
The CAC Score That Flagged Its Own “Set Up to Fail” Loans
Credit Acceptance built its lending decisions around an internal metric called the CAC Score, a number between zero and one representing the share of a loan’s value the company expected to collect from all sources, including monthly payments, debt-collection lawsuits, and repossession auctions. A borrower assigned a CAC Score of .64 meant the company itself predicted it would recover only 64 percent of what it lent, before the loan was ever approved.
According to the attorneys general’s complaint, filed in Alameda County Superior Court, loans in the bottom 20 percent of CAC Scores in any given year have historically been what the company’s own data labeled loans it did not expect borrowers to fully repay. Between 25 and 30 percent of those loans fell 90 days behind within a year, and more than 40 percent ended in repossession within three years, the filing states.
Credit Acceptance did not share the score, or the default risk it implied, with the borrowers taking out the loans, according to the complaint. Marketing for the loans emphasized building credit and reaching “a better future,” even for borrowers whose files already showed a high statistical likelihood of losing the vehicle to repossession.
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How the $694 Million Splits Between Repossessed and Current Borrowers
The settlement Credit Acceptance signed with the 40-state coalition totals $694 million in cash and debt relief, according to the California Attorney General’s announcement of the deal. Of that, $60 million is cash restitution earmarked for consumers who received the riskiest loans, while the remainder cancels debt directly: $388 million for people whose cars were repossessed, and $246 million for borrowers who still have their vehicles but were sold loans on similarly risky terms. Both categories of debt relief are due on or before November 2, 2026, and consumers do not need to submit a claim; the company and the states have already identified who qualifies and will send notices directly.
An additional $15 million goes to the participating states themselves, with California’s share set at $574,000. That total makes the deal one of the larger multistate financial-services settlements of 2026, combining consumer-facing debt cancellation with a smaller civil-penalty payment to the offices that pursued the case.
The Dealer Add-Ons That Were Supposed to Be Optional
A second set of allegations centered on vehicle service contracts and Guaranteed Asset Protection products, add-ons that can cost $2,000 or more and that dealers are required to sell as optional. The complaint describes a sales-penetration rate for service contracts that climbed from roughly 50 to 60 percent of Credit Acceptance loans in 2015 and 2016 to nearly 90 percent nationally by 2021, with some dealerships reporting rates at or near 100 percent for months at a stretch.
Investigators pointed to more than a thousand consumer complaints filed with the company between January 2017 and August 2020 describing borrowers who said they never agreed to the add-ons or discovered them only after signing. Internal dealer dashboards tracked the add-on sales monthly, and the complaint alleges Credit Acceptance relaxed its oversight of dealers even as those sales figures climbed.
New Pricing Caps and a Five-Year “Off-Ramp” for Failing Loans
Beyond the immediate debt relief, the settlement’s injunctive terms change how Credit Acceptance operates going forward. For loans originated starting in December 2025 that fail quickly, the company must offer an “off ramp”: qualifying borrowers get 95 percent debt relief, and Credit Acceptance is barred from suing them over the remaining balance, a provision that runs for five years starting November 2, 2026.
Separately, for seven years, the company must cap vehicle prices for certain borrowers at 109 percent of a car’s retail book value, and it must build in disclosures telling borrowers, before they sign, about the default risk tied to their specific loan terms. The agreement also requires processes to stop dealers from raising vehicle prices simply because a borrower has weaker credit, addressing a separate allegation that dealers marked up prices more aggressively for borrowers with lower CAC Scores.
A Signed Deal Still Waiting on a Judge’s Signature
The settlement was filed as a stipulated final judgment in the Superior Court of California, Alameda County, rather than a self-executing order, meaning a judge still has to enter it before it is formally final. In the stipulation filed with the court, both Credit Acceptance and the state agree to the judgment’s terms, a structure multistate consumer-protection settlements routinely use before a judge signs off within weeks of filing.
Alongside California, the deal was negotiated by attorneys general in states including Michigan, Illinois, Arkansas, Minnesota, and New Jersey, among more than thirty others, spanning both Republican- and Democrat-led offices. The settlement also resolves a case originally brought by the Consumer Financial Protection Bureau and New York’s attorney general, a federal action state officials say was abandoned before it concluded, leaving the states to finish negotiating the terms on their own.
The Four Dates On A Real Settlement Notice
Not every settlement moves the way the Credit Acceptance case does, where the states and the company already have a list of who qualifies. Many settlements instead require a borrower or account holder to recognize a mailed notice, confirm it against the actual case record, and file the right form with the right office before unclaimed funds revert to a state’s unclaimed-property division.
The Settlement & Refund Recovery System opens with a 5-tab Excel tracker pre-filled with all 51 state unclaimed-property offices and the four-date rule for reading a settlement notice.
See the pre-filled state-by-state tracker in The Settlement & Refund Recovery System.
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