Attorneys general from 41 states, including New Jersey, announced on Sept. 17 a settlement worth a total of $694 million with subprime auto lender Credit Acceptance Corporation (CAC). New Jersey consumers will receive $28.5 million, consisting of $25.6 million in debt relief and $2.2 million in cash restitution. Eligible borrowers will be notified directly by the company and the claims administrator.
The New Jersey Office of the Attorney General announced on Sept. 17 that subprime auto lender Credit Acceptance Corporation (CAC) has agreed to provide $694 million in cash and debt relief to car buyers. New Jersey consumers' share exceeds $28.5 million, of which $25.6 million is debt relief and about $2.2 million is cash restitution. Attorney General Jennifer Davenport and the Division of Consumer Affairs led the settlement together with the attorneys general of 40 states and Washington, D.C.
The attorneys general alleged that CAC approached low-income consumers with short or damaged credit histories by promising to "build their credit," then made loans that its own internal systems predicted would not be repaid. CAC assigns each loan its own score that predicts the share of the loan it expects to collect. The attorneys general said many low-scoring loans, which the company expected would not even recover the principal, were nonetheless made and ultimately led to delinquencies and vehicle repossessions. The settlement also addresses allegations that CAC's dealer network sold vehicle service contracts (VSC) and GAP insurance to buyers who were unaware of them or who were led to believe they were mandatory.
Eligible loans are certain high-risk loans made between Nov. 1, 2015, and Nov. 30, 2025. Nationwide, $60 million has been allocated for cash restitution, $388 million in debt will be forgiven for borrowers whose vehicles were repossessed, and $246 million in debt will be forgiven for borrowers whose vehicles were not repossessed. Borrowers whose vehicles were not repossessed may keep them. CAC will separately pay $15 million to the attorneys general's offices.
CAC will notify borrowers eligible for debt relief, and the claims administrator will notify those eligible for cash restitution. No separate claim form is required. Questions about the settlement can be directed to 1-800-634-1506.
The settlement also includes provisions requiring changes to business practices. If a high-risk loan made after December 2025 fails early, CAC must forgive 95% of the debt and may not file a collection lawsuit; this measure will apply for five years starting Nov. 2, 2026. For the next seven years, CAC must limit the price of vehicles sold to certain buyers to within 109% of the retail benchmark price, and must put in place procedures to prevent dealers from raising prices because of a buyer's credit. CAC was sued in 2023 by the federal Consumer Financial Protection Bureau (CFPB) and New York State. After the CFPB permanently dropped its suit in 2025, the state attorneys general stepped in, and New York is pursuing a separate settlement in the U.S. District Court for the Southern District of New York.