Credit Acceptance Corporation Allegedly Misrepresented the True Cost of Credit, Profited from Financing Designed to Fail
Boston – Yesterday, the Consumer Financial Protection Bureau (CFPB) and the Attorney General of New York (NY AG) filed a complaint against Credit Acceptance Corporation (CAC), a predatory subprime auto finance company for misrepresenting the cost of credit and tricking its customers into high-cost financing designed to produce profit regardless of consumers’ ability to actually pay off the loan.
In response, John W. Van Alst, staff attorney at the National Consumer Law Center and director of NCLC’s Working Cars for Working Families project, issued the following statement:
“We applaud the CFPB and the NY AG for investigating these disturbing practices of unnecessarily increasing the costs of buying a car and then profiting when a consumer is predictably unable to make payments.
“Profiting from transactions that are unnecessarily expensive and designed to fail creates a perverse incentive to put consumers into harmful transactions. Consumers should know upfront the cost of the car whether they finance or pay cash, should not be pressured into buying overpriced and unnecessary add-ons, and should be told the true costs of credit.
“We encourage healthy access to credit to allow people to purchase cars they need, but both the consumer and the finance provider should be motivated to see the consumer come out of the transaction having successfully paid for the car.
“It is urgent that state and federal regulators and enforcement entities act swiftly through enforcement and rulemaking to end abuses in the auto sales and finance market and to protect the car buying public as well as dealers and creditors that do not engage in such abuse.”