Pennsylvania and 40 other states have reached a settlement with Credit Acceptance Corp. that will deliver $694 million in cash and debt relief to consumers nationwide.
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Pennsylvania Attorney General Dave Sunday announced the agreement last week with CAC, one of the nation’s largest subprime auto finance firms.
An investigation conducted by a multistate coalition of attorneys general alleged that CAC originated vehicle loans it knew or should have known borrowers could not afford based on its own internal metrics.
The practice, according to the attorney general’s office, led to high default rates, resulting in repossessions and auction sales for affected consumers with limited or impaired credit histories.
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Under the terms of the settlement, which takes effect Nov. 2, CAC will deliver more than $17 million in debt relief and about $2.97 million in direct restitution to qualifying Pennsylvania residents. The commonwealth will also receive $469,623 to fund future public protection and consumer education initiatives.
“This auto loan company did not do their due diligence to ensure the loans they were providing were appropriate for consumers,” Sunday said. “Furthermore, the unnecessary add-ons they pushed onto consumers burdened those borrowers. This settlement provides necessary restitution and debt relief for impacted consumers, while allowing many people a chance to keep their vehicles.”
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Nationwide, CAC will pay $60 million in cash restitution to borrowers who received particularly high-risk loans.
For high-risk loans originated between Nov. 1, 2015, and Nov. 30, 2025, CAC will provide $388 million in debt relief to borrowers whose vehicles were repossessed, along with $246 million in debt relief to borrowers who have kept their vehicles, discharging their remaining loan obligations. These debt relief measures are set to take effect on or before Nov. 2.
The company will pay an additional $15 million directly to the participating state attorneys general.
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The settlement includes mandatory reform measures designed to overhaul CAC’s operations.
For high-risk loans issued starting in December 2025 that fail early, CAC must offer 95% debt relief and is prohibited from filing collection lawsuits against those borrowers. The five-year program begins Nov. 2.
CAC must implement new safeguards to stop auto dealers from “packing” contracts with unwanted Vehicle Service Contracts and Guaranteed Asset Protection products. The reforms mandate enhanced pre-purchase disclosures, post-purchase notifications, simplified cancellation procedures, and increased dealer oversight.
For seven years, CAC must also enforce a price cap limiting vehicle sales prices to 109% of retail book value for certain qualifying consumers.
In addition, CAC must supply clear pre-loan disclosures outlining default risks and actual vehicle values. The company must also establish checks to prevent dealers from inflating prices based on a customer’s credit score or charging prices above advertised rates.
CAC will contact consumers who qualify for debt relief, while an independent claims administrator will notify individuals eligible for cash restitution payments.
The multistate investigation was led by an executive committee consisting of the attorneys general of Maryland, Arkansas, California, Illinois, Minnesota, and New Jersey.
Joining Pennsylvania in the agreement are 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, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia, Washington, and Wisconsin.
New York reached a concurrent settlement resolving separate litigation against CAC in the U.S. District Court for the Southern District of New York.
