Healey’s office will contact the more than 3,000 borrowers eligible for relief. All borrowers with questions about eligibility have been urged to call Healey’s office at 617-963-2240.
Credit acceptance is emerging as the place of choice for consumers with low credit scores who need to finance the purchase of a car. The company works with more than 12,000 dealers across the country and financed more than 300,000 loans in 2020, according to a recent investor file.
In 2020, Healey’s office sued the lender, alleging that as of 2013, it had granted thousands of loans to consumers that it “knew or should have known” that it would not be able to repay. Credit Acceptance also reportedly assessed the hidden finance charges that made loans usurious under Massachusetts law, which prohibits charging an annual percentage rate (APR) greater than 21%.
Based on the company’s loan and repossession data, according to the lawsuit, Credit Acceptance knew that “well over 50% of high-risk, low-scoring borrowers would default, typically a little over a year later. the start of their loans “.
Under the settlement agreement, Credit Acceptance made no admission of liability. The company did not immediately respond to a request for comment, but in a public statement released Wednesday afternoon, it said it was “happy” to put the case behind it.
“The company looks forward to continuing to serve customers in the Commonwealth of Massachusetts through its fundraising programs,” the statement said.
The Massachusetts case is probably just the tip of the iceberg, says Chuck Bell, director of programs for Consumer Reports. “CR encourages other states to closely monitor auto lenders, to ensure that they comply with state interest rate caps and loan laws, and that they do not charge finance charges.” or hidden fees in loans, ”he said.