North Carolina consumers with high-risk auto loans from Credit Acceptance Corporation are slated to receive about $9.5 million in combined restitution and debt relief under a multistate settlement announced Sept. 17.
The North Carolina Department of Justice said roughly 1,300 state residents will share nearly $2 million in restitution, averaging about $1,435 each, while other borrowers will receive approximately $7.5 million in canceled debt. Attorney General Jeff Jackson joined officials from 39 other states and the District of Columbia in the agreement.
The settlement resolves allegations that Credit Acceptance, one of the nation’s largest subprime auto-finance companies, steered consumers with limited or poor credit into loans it knew many could not afford. State officials alleged the company scored loans according to expected collections, financed vehicles above reasonable retail values and allowed costly service contracts or guaranteed-asset-protection products to be added without adequate safeguards.
Nationally, the agreement provides more than $630 million in debt relief and $60 million in restitution. The New York attorney general’s office, which led the litigation, said more than 55,000 borrowers are expected to have debt forgiven. Credit Acceptance denied wrongdoing; its chief executive described the resolution as constructive and consistent with regulatory expectations, according to Reuters.
North Carolinians do not need to submit an application immediately. The state said a claims administrator will contact borrowers eligible for restitution, while Credit Acceptance will notify customers receiving debt relief. Because eligibility turns on loan risk and origination dates, borrowers should keep their mailing addresses current and treat unsolicited messages demanding fees or bank information with caution.
The debt-relief terms cover certain risky loans made from Nov. 1, 2015, through Nov. 30, 2025. Depending on whether a vehicle was repossessed, qualifying balances may be reduced or eliminated. For newer loans that fail quickly, Credit Acceptance must offer a five-year “off-ramp” program beginning in November: qualifying customers can receive 95% debt relief, and the company may not sue to collect the remainder.
The agreement also changes how the lender may structure future deals. For seven years, certain vehicle prices will be capped at 109% of retail book value. Dealers must be monitored, borrowers must receive disclosures about default risk and vehicle value, and add-on products cannot be packed into loans without stronger notices and easier cancellation procedures.
For consumers, the immediate question is whether a notice is legitimate. Official correspondence should identify the loan and the relief without requiring an upfront payment. Anyone who believes they were eligible but was missed can contact the North Carolina Department of Justice consumer-protection division or call its toll-free complaint line. Borrowers should also retain settlement notices, payment histories and repossession records until the adjustment appears on their account and credit reports.
