Healey’s office will contact more than 3,000 borrowers who are eligible for the subsidy. Any borrower with questions about eligibility is directed to contact the Healey office at 617-963-2240.
Credit Acceptance markets itself as the go-to place for consumers who have a low credit score and need to finance a car purchase. The company works with more than 12,000 merchants nationwide and has financed more than 300,000 loans in 2020, according to a recent investor filing.
In 2020, Healey’s office sued the lender, claiming that starting in 2013 it made thousands of loans to consumers who “knew or should have known” they couldn’t repay. It is also alleged that accepting credit values the hidden financing fees that made loans usurious under Massachusetts law, which prohibits charging an annual percentage rate (APR) higher than 21 percent.
Based on the company’s repossession and loan data, the lawsuit alleged, the credit acceptor knew that “more than 50 percent of high-risk, low-grade borrowers would default, typically just over a year on their loans.”
Under the settlement agreement, credit acceptance does not allow any liability. The company did not immediately respond to a request for comment but in a public statement released Wednesday afternoon it said it was “delighted” to put the issue behind it.
“The company looks forward to continuing to serve clients in the Commonwealth of Massachusetts through its financing programs,” the statement read.
The Massachusetts issue is likely just the tip of the iceberg, says Chuck Bell, director of Consumer Reports programs. “CR encourages other states to provide strong oversight for auto lenders, to make sure they comply with state caps on interest rates and lending laws, and not stuff hidden financing charges or fees into loans,” he says.