The agreement calls for about $7.5 million in debt relief and nearly $2 million in restitution for North Carolina borrowers while imposing new limits on Credit Acceptance Corp.
North Carolina has joined a $694 million multistate settlement with Credit Acceptance Corp. over allegations that the auto-finance company made unaffordable loans, misrepresented borrowing costs and used aggressive collection practices.
The agreement includes about $7.5 million in debt relief for North Carolina borrowers and nearly $2 million in restitution for approximately 1,300 consumers in the state, Attorney General Jeff Jackson’s office announced Thursday. The average restitution payment for those North Carolina consumers is expected to be about $1,435.
Credit Acceptance is a large auto lender that serves borrowers with limited or poor credit histories. The states alleged that the company evaluated loans according to how much it expected to collect and extended high-interest financing that some consumers could not afford. According to the attorney general’s office, borrowers who defaulted often lost their vehicles while remaining subject to collection efforts.
Nationally, the settlement provides $60 million in restitution for consumers with particularly risky loans. It also calls for $246 million in debt relief for eligible borrowers whose vehicles were not repossessed and $388 million for eligible consumers whose vehicles were repossessed. The affected loan periods and eligibility standards vary by the type of relief.
Consumers eligible for restitution will receive notice from a claims administrator, while the company will notify borrowers eligible for debt relief, according to the state.
The agreement also changes how Credit Acceptance may conduct future business. For five years beginning in November, qualifying borrowers whose newer loans fail quickly may receive 95% debt relief, and the company may not file collection lawsuits against them. Other provisions require additional disclosures, monitoring of dealers and steps intended to prevent certain add-on products from being included unlawfully in loans.
For certain customers, vehicle prices will be capped at 109% of retail book value for seven years. The company must also implement procedures intended to prevent dealers from increasing prices because of a buyer’s creditworthiness or charging above an advertised price.
Jackson joined attorneys general from 39 other states and the District of Columbia in the agreement. The Department of Justice release did not state that Credit Acceptance admitted wrongdoing as part of the settlement.
Editor’s note: This article was drafted with the assistance of artificial intelligence and was reviewed and fact-checked by a member of the NC Political News editorial team before publication.