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In New Jersey, a car is not a luxury. That is why a deal announced Thursday by Attorney General Jennifer Davenport is more than a Trenton press release.
Credit Acceptance Corporation, one of the country’s largest subprime auto lenders, will provide about $694 million in cash and debt relief – and roughly $15.5 million to the states – to resolve allegations that it steered credit-challenged buyers into loans its own models suggested they could not repay. In addition, they then piled on extras and chased the debt when the payment broke.
New Jersey AG, Jennifer Davenport’s office sat on the executive committee that led this multistate settlement, alongside Maryland, Arkansas, California, Illinois, and Minnesota.
“Access to a car helps families get to work, take their kids to school, and build financial stability — but when car payments become unaffordable, that stability turns into a spiral of debt and financial distress,” Davenport said. “I am proud of the way New Jersey and our fellow states stepped up to obtain relief for car buyers who suffered devastating consequences as a result of CAC’s conduct.”
The company, based in Southfield, Michigan, says it admitted no wrongdoing and that fewer than 3 percent of its open accounts will see settlement-related forgiveness. Most customers, it says, should keep paying as usual. People who qualify will be contacted, there is no need to apply.
What this can mean for a New Jersey household
Below are some highlights of the total settlement.
If your car was already taken. For certain high-risk Credit Acceptance loans made between Nov. 1, 2015, and Nov. 30, 2025, the company is required, by Nov. 2, 2026, to wipe remaining balances for borrowers whose vehicles were repossessed — about $388 million nationwide. That does not put the car back in the driveway. It can stop the leftover bill from following someone after the tow truck leaves.
If you still have the car. Another $246 million in debt relief is reserved for borrowers on those same risky loans whose cars were not repossessed, so some people can keep the vehicle without the old balance hanging over it.
If you got one of the worst loans. A $60 million cash fund will go to consumers the states say were given particularly risky paper. A claims administrator working for the attorneys general — not the lender — will handle that money. Eligible people are supposed to get notice by mail or email.
New Jersey has not yet published a state-by-state dollar split the way Pennsylvania did (more than $17 million in debt relief and about $3 million in cash for its residents). The structure is the same. If you financed a used car through a dealer that used Credit Acceptance in the last decade, and the payment never felt workable, you may be in the pool. You still should not stop paying unless you are told the balance is gone.
For a state where missing one paycheck can mean missing a shift in a place with no subway, wiping a deficiency balance after repossession is the difference between starting over and staying underwater.
Credit Acceptance does not usually sit across a desk from the buyer. It is an indirect lender. A dealer sells the car, the paperwork goes to Credit Acceptance, and the company funds and services the loan. Its market is people with thin or damaged credit — the buyers other banks often refuse.
States say the model had a built-in trap. The company marketed credit-building. Internally, they allege, it expected to collect far less than the contract amount and still made the loans. The 2023 federal complaint, filed jointly by New York Attorney General Letitia James and the Consumer Financial Protection Bureau, said Credit Acceptance projected collecting only about 64 percent of what was owed nationwide. On a large share of loans, projected collections were less than the amount financed. In plain English: the lender’s own math said the deal would fail, and the deal still closed.
Prosecutors also accused the company of hiding the true cost of credit, letting dealers pack loans with add-ons such as service contracts and insurance that buyers did not understand or did not want, and using aggressive collection after default.
One example from the New York case: a mother of two making about $950 a month was approved for a $260 monthly payment. The car was repossessed twice.
The paper trail is long. New York started investigating in 2019. A multistate probe followed. On Jan. 4, 2023, New York and the CFPB sued in Manhattan federal court. The case stalled while courts fought over the CFPB’s funding. In April 2025, the federal bureau withdrew. New York kept going. State AGs, including New Jersey, kept negotiating. By mid-2026 the parties told the court they had a deal in principle. Thursday’s announcements made it public.
Credit Acceptance has said throughout that it complies with the law and that the settlement ends the fight without an admission of fault.
What changes from here
The money is the headline. The rules are the part that could matter the next time someone is sitting in a dealer’s finance office on Route 22 or the Black Horse Pike.
Under the consent judgments:
- Credit Acceptance must tell borrowers in advance when a loan carries a historically high risk of default.
- For certain risky loans made starting in December 2025, it must offer an “off-ramp”: if the loan fails quickly — within 12 or 18 months, depending on the terms — qualifying borrowers get 95 percent of the remaining debt waived. The company cannot sue them for the rest or sell that debt to a collector. Those off-ramps last five years from Nov. 2, 2026.
- It must put in place processes to stop dealers from raising the car’s price because of the buyer’s credit or above the advertised price, and to curb packing loans with add-ons.
That last point is the one New Jersey buyers will recognize. The advertised payment is rarely the payment that leaves the lot. The extra products are where a tight budget becomes an impossible one.
The company will also pay about $15.5 million to the participating attorneys general to cover the investigation.
What New Jerseyans should do now
Do not assume you are covered, and do not assume you are not.
If you had a Credit Acceptance loan in the 2015–2025 window — especially if the car was repossessed or the payment was never realistic — watch the mail and email for a letter from the company or a settlement administrator. The lender says eligible customers will be contacted within 90 days of Nov. 2, and no later than Feb. 1, 2027. Cash relief, if any, will come through the states’ administrator, not a dealer.
Until that letter arrives, keep paying if you still have an active account. The company’s public page is blunt: most customers are unaffected.
Sources
NJ AG Office
Credit Acceptance
