Credit Acceptance Corporation, one of the country’s largest subprime auto lenders, will forgive more than $630 million in auto-loan debt under a settlement with a bipartisan group of state attorneys general announced September 17, 2026. Minnesota Attorney General Keith Ellison, who brought one of the underlying lawsuits, said the Michigan-based lender will also pay $75.5 million to the states and overhaul how it makes and monitors loans. Borrowers who qualify for relief do not need to apply; they will be contacted.
How the more than $630 million in debt relief breaks down
The settlement’s debt forgiveness comes in two pieces, according to Michigan Attorney General Dana Nessel’s office. For certain risky loans made between November 1, 2015, and November 30, 2025, Credit Acceptance must provide $388 million in debt relief to borrowers whose cars have already been repossessed and $246 million to borrowers whose cars have not been repossessed, allowing that second group to keep their vehicles. Together, those two pools total $634 million.
The company must deliver that debt relief on or before November 2, 2026, the date the settlement takes effect. It also provides $60 million in cash restitution for consumers who received particularly risky loans, bringing the total package of cash and debt relief to $694 million, Nessel’s office said. Credit Acceptance must pay an additional $15 million to the attorneys general.
The relief is spread across the country. Ellison’s office said Minnesota borrowers placed into risky loans are expected to receive more than $7.5 million in debt relief, with more than $1 million in refunds going to additional Minnesotans. Michigan put debt forgiveness for its residents at about $70.3 million.
Only defined groups of borrowers qualify. The debt relief turns on when a loan was made and on the company’s own risk scoring, so not every current or former Credit Acceptance customer will see a reduced balance.
Checking a balance after debt relief. Borrowers who get a letter from Credit Acceptance this fall will want to confirm what is still owed and whether collection has stopped, and the debt-validation steps for asking a lender to prove a balance are in The Bank Account & Debt Protection Kit.
What the states say Credit Acceptance did
Credit Acceptance lends to people with limited or damaged credit histories, usually through a network of car dealers. According to the Michigan announcement, the company assigns each loan a proprietary “score” predicting what percentage of the balance it will collect from all sources. The attorneys general allege that borrowers could not reasonably afford many low-scoring loans, including some where Credit Acceptance predicted it would not recover even the principal.
Many of those loans ended in default, repossession and an auction sale of the car. Ellison’s lawsuit alleged the company still found such loans profitable because it could repossess a vehicle, resell it to another borrower and start the process over.
“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. “A car is a necessity for many Minnesotans and is the largest purchase some may ever make.”
The states also allege that Credit Acceptance encouraged and failed to prevent dealers from “packing” loans with vehicle service contracts and GAP (Guaranteed Asset Protection) products. According to the attorneys general, the company’s dealer-pay structure and weak oversight led dealers to sell those add-ons to borrowers who did not know they were buying them or who were told the products were required to get financing. Credit Acceptance resolved the allegations through the settlement rather than a court ruling.
“Predatory lending practices can pull those already struggling financially into a downward spiral of inescapable debt,” Nessel said.
New protections for future borrowers
The settlement changes how Credit Acceptance will lend going forward. Its main requirements include:
- A five-year “off-ramp” program starting November 2, 2026, for certain risky loans made from December 2025 on. If a borrower defaults within the first 12 or 18 months, depending on the loan’s risk, the company must waive 95% of what is owed and may not file a collection lawsuit.
- Pre-loan disclosures telling borrowers about the risk of default and the value of the vehicle.
- For seven years, a cap on vehicle prices at 109% of retail book value for certain consumers.
- Processes to stop dealers from raising prices based on a buyer’s credit or charging more than an advertised price.
- Enhanced disclosures before a service contract or GAP product is sold, plus a post-sale notice alerting the borrower to the purchase and making cancellation easier, along with dealer monitoring.
The off-ramp program is separate from the historical debt forgiveness. It applies only to newer loans flagged as high-risk and to borrowers who default early, while the $634 million in forgiveness covers loans made over the previous decade.
Who is covered and what borrowers should expect
Attorneys general from Alabama to Wisconsin joined the agreement, including California, Florida, Illinois, Pennsylvania, Maryland and the District of Columbia. New York is concurrently settling its own lawsuit against Credit Acceptance in federal court in Manhattan.
Borrowers eligible for debt relief will be notified by Credit Acceptance, and those eligible for cash restitution will be notified by a settlement administrator, according to Nessel’s office. Ellison’s office said consumers do not need to take any action.
For older Americans, the case carries a practical lesson. Many retirees still depend on a car for medical appointments and errands, and some help adult children or grandchildren finance one, sometimes as a co-signer. Service contracts and GAP coverage folded into a loan are financed along with the car, so unwanted add-ons increase both the balance and the interest paid on it. Anyone who co-signed a Credit Acceptance loan in the past decade may want to watch for a notice about the account.
Because relief arrives automatically, a caller or website asking for an upfront fee to secure Credit Acceptance debt forgiveness is not part of the settlement. Borrowers with questions or complaints about an auto dealer or lender can contact their state attorney general’s consumer protection office; Minnesota residents can reach Ellison’s office at (651) 296-3353 or (800) 657-3787.
When a car loan balance changes overnight
A settlement letter can wipe out most of an auto-loan balance, but borrowers still need to confirm the new figure, make sure no one keeps collecting on the forgiven amount and hold on to proof of every contact with the lender.
The Bank Account & Debt Protection Kit walks through the debt-validation steps for challenging a balance a collector claims, and its protected-funds and dispute log keeps each letter, call and response in one place, alongside the frozen-account response for a bank account that has already been hit.
Set up the dispute log with The Bank Account & Debt Protection Kit.
This article was prepared with AI assistance and reviewed against the linked official sources.
