Victims of Bad Faith Auto Loans in Massachusetts Drivers Could Be in for a Payout
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Credit Acceptance Corp., a major U.S. subprime auto lender, settled a lawsuit out of court on September 1, 2021, by paying $27 million to victims of its predatory car loans.
In 2020, Massachusetts Attorney General Maura Healey’s office accused Credit Acceptance of loaning thousands of people money the company “knew or should have known” they couldn’t repay and charged them interest fees that rose above the state’s 21% limit.
Credit Acceptance has not admitted liability or guilt as part of the agreement. Consumer Reports (CR) says that over 3,000 consumers from the state are eligible for compensation. Anyone with questions can call the Attorney General’s office at 617-963-2240.
Locking into a bad auto loan can cost you thousands of dollars.
Who is Credit Acceptance Corp.?
Credit Acceptance Corp. finances cars to consumers through over 12,000 car dealerships across the U.S. In 2020, they funded over 300,000 auto loans.
But Credit Acceptance doesn’t offer these loans straight to buyers. Instead, auto dealers set up the financing deals with their customers and then pay Credit Acceptance to fund and manage the loan. CR says most auto financing agreements are conducted this way in America.
This creates the illusion that dealers are responsible for approving loans and luring people into agreements they can’t afford, but in actuality, the attorney general’s lawsuit states that Credit Acceptance controls every aspect of the process, from approval to collection.
How can I finance a vehicle safely?
Credit Acceptance is only the latest auto lender to be accused of vulturous tactics. The settlement is part of an industry-wide investigation by the Massachusetts Attorney General.
Avoiding greedy lenders is much harder than bypassing one company, especially if you suffer from a low credit score.
But that doesn’t make it impossible. You can secure a car loan safely and save money. You just need to walk into the dealership prepared.
First, know your credit score before you go looking for a car. Knowing where you stand will give you leverage as you negotiate the car’s price and the financing agreement.
But even more importantly, know your budget and stick to it—for the down payment, the monthly payments, and the interest incurred over the length of your agreement.
Other ways to save on a new car
In today’s auto market, it often makes more sense to finance a car than to pay for it upfront. But there are other ways to save on car expenses that have nothing to do with your loan agreement.
A key way to save on a car is to buy a lightly used model. New vehicles generally depreciate in value quickly in their first few years on the road, so buying newish will help you avoid that loss. You can also save significant money by shopping around for the best car insurance rate.
If you’re shopping for car insurance, Jerry will generate competitive quotes from top providers in less than a minute. Jerry gathers your information from your past insurer, so you’re not responsible for any long forms or phone calls. Basically, you get all of the savings and coverage, with none of the hassle.