Maryland AG Anthony Brown Co-Leads $694M Settlement with Subprime Auto Lender Credit Acceptance Corporation
Attorney General Anthony G. Brown, alongside a multistate coalition of attorneys general across 40 other states, announced a landmark $694 million multistate settlement with Credit Acceptance Corporation (CAC), one of the nation's largest subprime auto finance companies. The resolution targets high-risk, unaffordable vehicle loans and deceptive add-on practices that caused thousands of consumers to default on debt and lose their primary family transportation.
Here are the takeaways:
* Massive Debt Relief & Restitution Package: Under the settlement agreement, CAC must provide $634 million in total debt relief to consumers, alongside $60 million in direct cash restitution for borrowers placed into particularly risky financing contracts. A total of $388 million in debt will be erased for borrowers whose vehicles were already repossessed, while another $246 million in debt forgiveness will go to current borrowers, allowing them to keep their cars.
* Resolving Unaffordable Loan Allegations: The multistate investigation resolved allegations that CAC knowingly approved loans consumers could not reasonably afford, utilizing a proprietary scoring model where the lender predicted borrowers would fail to repay even the principal balance. These low-score loans set borrowers up to fail, leading directly to elevated default rates, aggressive vehicle repossessions, and auction liquidations.
* Halting Deceptive Add-On "Product Packing": Regulators alleged that CAC failed to prevent affiliated dealerships from illegally packing contracts with unwanted Vehicle Service Contracts (VSC) and Guaranteed Asset Protection (GAP) insurance. Dealers frequently slipped these expensive add-on products into contracts without borrower consent or falsely claimed they were mandatory to secure financing approval.
* Mandatory Business Reforms and Off-Ramps: Taking effect on November 2, 2026, the settlement establishes a five-year "off-ramp" program offering 95% debt relief and collection immunity for fast-failing risky loans originated since December 2025. Furthermore, CAC must provide pre-loan default risk disclosures, simplify add-on product cancellations, and enforce a strict vehicle pricing cap at 109% of retail book value for seven years.
* Claims Notification & Support: Eligible consumers do not need to file a formal claim immediately, as borrowers qualifying for debt relief will be notified directly by CAC, and restitution recipients will be contacted by a court-approved claims administrator. Maryland residents with specific questions regarding their contracts can contact the Attorney General's team directly at 410-576-6456.
Why This Matters: Reliable vehicle transportation is essential for Maryland families commuting to work, transporting children to school, and managing household responsibilities. Subprime auto lenders that push borrowers into high-interest, deceptive loans often leave families with ruined credit and repossessed vehicles, creating compounding financial distress. Erasing hundreds of millions of dollars in predatory vehicle debt helps Maryland households regain financial footing and ensures strict price caps and transparent lending terms protect local car buyers going forward.
Baltimore Mom Tip: Whenever you are shopping for a new or used family vehicle, always secure pre-approved auto financing through your local bank or credit union before stepping onto a dealership lot. Having financing in hand gives you a firm baseline for your interest rate and monthly budget, preventing dealers from marking up financing terms. Additionally, always review the final purchase agreement line-by-line before signing to ensure optional line items—like extended service contracts, tire protection, or GAP coverage—were not added without your explicit consent.
Because vehicle financing errors, unauthorized account collections, and identity issues can derail your credit score, monitoring your credit profile regularly is crucial when preparing for a major vehicle or home purchase. Consider using proactive credit and identity monitoring tools like Aura or LifeLock to track changes to your credit reports and safeguard your family's personal data. To review the full multistate legal order, visit the Office of the Attorney General of Maryland announcement.