Credit Acceptance Corporation, a Michigan-based subprime auto lender, will forgive more than $630 million in car-loan debt owed by more than 55,000 borrowers nationwide under a settlement announced September 17, 2026. Minnesota Attorney General Keith Ellison, New York Attorney General Letitia James and a bipartisan group of states said the deal also requires $60 million in restitution for consumers who lost their cars, a $15.5 million penalty to the states and lasting changes to how the company lends. Borrowers do not need to file a claim; those who qualify will be contacted.
Who gets debt relief and who gets a refund
According to New York Attorney General James, Credit Acceptance will eliminate all debt owed by more than 55,000 consumers, including about 2,500 New Yorkers, on auto loans the states say were “destined to fail from the start.” That debt relief totals more than $630 million. A separate $60 million will go as restitution to thousands of additional borrowers who were misled and lost their vehicles to repossession within months of taking out their loans.
The Minnesota attorney general’s office described the payment to the states as $75.5 million and said Minnesota consumers placed into risky loans are expected to receive more than $7.5 million in debt relief, with additional Minnesotans in line for more than $1 million in refunds. New York expects about $34 million in combined debt relief, restitution and penalty payments.
Both offices said the process runs off the company’s own loan files. “Consumers do not need to take any action and will be contacted if they receive either debt relief or a refund,” the Minnesota office said. No public claim form, filing deadline or payment schedule was announced.
For borrowers waiting to hear from the lender: The states will reach eligible borrowers using the lender’s loan files, so keeping past addresses, loan numbers and any settlement letter together matters. A claim log and payment tracker and the source vault of 12 official places money sits are part of The Settlement & Refund Recovery System.
What the states said went wrong
New York and the Consumer Financial Protection Bureau sued Credit Acceptance in January 2023. The CFPB dropped its part of the case in April 2025, but New York continued the litigation and ultimately reached the settlement alongside a coalition of other states and the District of Columbia.
The states alleged that the lender financed loans it knew or should have known borrowers could not afford. New York said the average Credit Acceptance loan carried an annual interest rate of more than 38 percent, some topped 100 percent, and nearly half of borrowers had their vehicles repossessed during the loan. The company projected how much it would collect through payments, repossession, auction and wage garnishment, the states said, and structured deals with dealers so it would profit even when borrowers defaulted.
“Credit Acceptance Corporation misled consumers to enter into expensive loans that the company knew were ‘Set Up to Fail,’ based on its own internal, company analysis,” Ellison said. James said the company “preyed on consumers in New York and across the nation with false promises of affordable loans.”
The states also alleged that dealers packed loans with expensive add-ons, such as vehicle service contracts and guaranteed asset protection, or GAP, coverage. Buyers were either told the products were required to get a loan or never told about them at all, according to New York.
New rules for future loans
The settlement changes how Credit Acceptance must treat certain high-risk borrowers going forward. If it offers a loan that has historically carried a high risk of default, it must tell the borrower. If that borrower then defaults within the first 12 or 18 months, depending on the loan’s risk, and the car is repossessed and sold, the company must forgive 95 percent of the remaining debt. It may collect only the remaining 5 percent, and it is barred from suing to collect or reselling the debt to another collector.
For add-on products, the lender must contact buyers outside the dealership showroom after the sale, clearly explain any products they purchased and offer a way to cancel those products while keeping the vehicle.
What the settlement means for older borrowers
Subprime auto loans are not only a young buyer’s problem. Retirees on fixed incomes, widowed spouses rebuilding credit and older adults who co-signed for a child or grandchild can all end up with high-rate loans. A loan balance that disappears through a settlement can lift a monthly burden, and relief on a defaulted account can end collection calls or garnishment threats.
Debt forgiveness and cash refunds work differently. Forgiveness wipes out an amount the lender says is owed, and it may later show up as an updated balance or a letter from the company. Restitution is money paid to a consumer. Some borrowers may receive one form of relief, some the other, and many former customers will receive neither, so the Minnesota and New York figures should not be used to estimate any individual’s share.
Forgiven debt can sometimes carry tax consequences, and the announcements did not address taxes, so anyone who receives a notice of canceled debt may want to review it with a tax preparer or a free IRS-certified volunteer program before filing.
Spotting fake settlement contacts
Because the states said no action is needed, any caller or text asking for a processing fee, a bank password, a one-time code or payment by gift card to “unlock” Credit Acceptance relief is not following the announced process. The states said eligible borrowers will be contacted, and a message that asks for money first does not fit that description.
Minnesotans with complaints about auto dealers or lenders can reach the attorney general’s office through its online complaint form or at (651) 296-3353 or (800) 657-3787. The office also publishes guides on cars, credit and personal finance. Residents of other states can contact their own attorney general’s consumer protection division.
An old car loan can still send a letter
Eligible borrowers will be contacted about relief tied to loans the states say were set up to fail from the start. The practical gap is having loan numbers, old addresses and any official letters in one place when that contact arrives.
The Settlement & Refund Recovery System includes the scam-proof rules, a step-by-step filing walkthrough and a 5-tab Excel tracker pre-filled with all 51 state unclaimed-property offices, for checking official channels and logging every notice.
Keep those loan papers organized with The Settlement & Refund Recovery System.
This article was prepared with AI assistance and reviewed against the linked official sources.
