BOSTON (SHNS) – More than 3,000 Massachusetts borrowers could be eligible to receive money in a $ 27.2 million settlement, Attorney General Maura Healey said on Wednesday with Credit Acceptance Corporation to resolve allegations that the subprime auto lender engaged in predatory lending practices that have ruined the credit of many consumers.
Healey, who reached similar settlements with Exeter Finance and Santander over their auto lending practices, described the credit acceptance settlement filed in Suffolk Superior Court on Wednesday as the largest of its kind. Healey, in a video conference with three consumers who bought cars with loans through Credit Assistance, described a company that lent money to consumers at interest rates that met or exceeded the state cap by 21% and then engaged in illegal collection practices.
She said many consumers hurt by these lending practices live in cities like Springfield, Boston, Worcester and Brockton. âThese were loans that these customers couldn’t afford to repay, but they made them anyway,â Healey said. Instead of learning from the subprime mortgage crisis, Healey said Credit Assistance and other auto loan companies have used it as a “blueprint … to make profits on some of our most vulnerable residents.” .
Under the regulations, thousands of borrowers who received auto loans through credit assistance could be eligible for repayments or debt relief. The lender has also agreed to change its lending and debt collection practices, according to Healey.
Frank Mello said he bought a car on a credit assistance loan in 2018 to get to work an hour from where he lives. With an interest rate of 20.99% he said he quickly fell behind and then endured constant collection calls and vehicle repossessions until he lost the car in 2019. âIt’s been hurting me for a long time and I’m trying to get over it,â says Mello.
Another consumer, Nuria Barros Silva, was a single mother who also needed a car to work, but when she qualified for the 20% interest loan in 2015, she was referred to a Volkswagen. 2010 Jetta. Within months, the car needed major repairs and finally suffered an engine failure after six months, leaving it with thousands of debt. âWe won’t stop until we stop all of these predatory practices,â Healey said.