D.C. Car Buyers to Get Relief in $694 Million Subprime Auto Loan Settlement

September 21, 2026

Credit Acceptance Corporation, a major subprime auto lender, will pay over $694 million to settle allegations from 41 states and D.C. that it intentionally approved car loans to borrowers it knew could not afford repayment. State authorities accused the Michigan-based company of using internal scoring systems to predict defaults before issuing loans, then profiting by repossessing and reselling vehicles in a continuous cycle while borrowers' credit worsened. The settlement provides cash restitution, debt forgiveness, and mandates significant operational changes including enhanced borrower protections and restrictions on high-risk lending practices.

Who is affected

D.C. residents who financed cars through Credit Acceptance Corporation (receiving over $250,000 in restitution)
Thousands of consumers nationwide with limited or damaged credit histories who received loans between November 1, 2015, and November 30, 2025
Consumers who received particularly risky loans (receiving $60 million in cash restitution)
Borrowers whose vehicles were repossessed (receiving $388 million in debt relief)
Borrowers who still have their vehicles (receiving $246 million in debt relief)
Credit Acceptance Corporation (paying $694 million total)
Auto dealers in Credit Acceptance's network

What action is being taken

The District and 40 states are distributing $694 million in settlement payments
A claims administrator is contacting District consumers eligible for restitution
Credit Acceptance is notifying customers who qualify for debt relief
The settlement is resolving a multistate investigation that began in 2020 and litigation filed by New York in 2023

Why it matters

This settlement addresses predatory lending practices that trapped financially vulnerable consumers in a cycle of debt and vehicle repossession, destroying their already damaged credit and financial stability. Access to reliable transportation is critical for families to maintain employment, education, and financial security, making exploitative auto lending particularly harmful to communities that depend on vehicles for basic economic survival. The case demonstrates how lenders can profit from loans designed to fail, systematically harming those with the fewest financial options while enriching themselves through repeated repossessions and resales of the same vehicles.

What's next

Protections for qualifying high-risk loans made beginning December 2025 that default quickly will include 95% debt relief eligibility and prohibition on collection lawsuits (taking effect November 2 for five years)
For seven years, Credit Acceptance must cap vehicle prices at 109% of retail book value for certain consumers
Credit Acceptance must strengthen safeguards for vehicle service contracts and GAP products with enhanced disclosures, notifications, and dealer monitoring
Credit Acceptance must provide pre-loan information about default risk and vehicle value to consumers
New York is resolving its litigation separately under the agreement

Read full article from source: The Washington Informer