Settlement draws in $10 million for Kentuckians in ‘predatory’ auto loan case

FRANKFORT, Ky. — Attorney General Russell Coleman announced Tuesday that a $694 million nationwide settlement with Credit Acceptance Corporation is before a court for review and approval.

This follows after the company allegedly sold predatory loans to customers they knew could not afford them, officials say.

As part of this settlement, the attorney general’s office says Kentucky customers will receive more than $10 million in debt relief and restitution.

In addition, officials say the company must disclose loan risks to customers, protect consumers from certain risky CAC loans and help guard customers from unwanted Vehicle Service Contracts and Guaranteed Asset Protection products.

Officials say Kentucky will receive more than $264,000 in monetary relief.

“This company preyed on our vulnerable neighbors, digging them into a hole of debt. Our Office will always fight for Kentucky consumers and their hard-earned dollars,” Coleman said.

According to officials, the settlement requires the following long- and short-term requirements designed to meaningfully reform the company’s leading practices:

• For consumers with certain risky CAC loans that CAC made starting in December 2025, CAC will provide “off ramps” for loans that fail quickly. Qualifying consumers will get 95% debt relief, and CAC is prohibited from filing collections lawsuits against them. CAC must provide these off ramps for a five-year period starting on November 2, 2026.
• The settlement mandates a process to prevent unlawful Vehicle Service Contracts and Guaranteed Asset Protections product packing, including enhanced pre-purchase disclosures, a post-purchase process alerting consumers about the purchase(s) and allowing easier product cancelation, and dealer monitoring.
• CAC must provide consumers with pre-loan disclosures about the risks of default and the value of the vehicle.
  For seven years, CAC must institute a price cap for vehicle prices at 109% of retail book value for certain consumers.
• CAC must implement processes to prevent dealers from raising car prices due to credit worthiness or above advertised prices.
  These requirements go into effect November 2. Under the terms of the settlement, CAC is required to inform consumers of their relief and eligibility.

The attorneys general of Maryland, Arkansas, California, Illinois, Minnesota, and New Jersey led the settlement negotiations. Kentucky joined Alabama, Alaska, Arizona, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Hawaii, Indiana, Louisiana, Maine, Michigan, Nebraska, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia, Washington and Wisconsin in the settlement.