AG: More than 3,000 could get relief from auto loan settlement

Massachusetts

(AG Healey’s office)

BOSTON (SHNS) – More than 3,000 borrowers in Massachusetts could be eligible to receive money under a $27.2 million settlement Attorney General Maura Healey announced Wednesday with Credit Acceptance Corporation to resolve allegations that the subprime auto lender engaged in predatory loan practices that ruined the credit of many consumers.

Healey, who has secured similar settlements with Exeter Finance and Santander over their auto loan practices, described the Credit Acceptance settlement filed in Suffolk Superior Court on Wednesday as the largest of its kind. Healey, in a video conference call with three consumers who purchased cars with loans through Credit Assistance, described a company that lent money to consumers at interest rates that met or exceeded the state’s cap of 21 percent, and then engaged in unlawful collection practices.

She said many of the consumers hurt by those lending practices lives in cities like Springfield, Boston, Worcester and Brockton. “These were loans these customers couldn’t afford to pay back but they made them anyway,” Healey said. Instead of learning from the subprime mortgage crisis, Healey said Credit Assistance and other auto loan companies used it as a “blueprint…to make a profit on some of our most vulnerable residents.”

Under the settlement, thousands of borrowers who received auto loans through Credit Assistance could be eligible for reimbursements or debt relief. The lender has also agreed to change its loan and debt collection practices, according to Healey.

Frank Mello said he purchased a car with a Credit Assistance loan in 2018 to get to his job an hour from where he was living. With an interest rate of 20.99 percent, he said he quickly fell behind and then endured constant collection calls and vehicle repossessions until he lost the car in 2019. “It’s hurt me for a long time and I’ve been trying to recover from it,” Mello said.

Another consumer, Nuria Barros Silva, was a single mother who needed also needed a car for work, but when she qualified in 2015 for the loan at 20 percent interest she was steered toward a 2010 Volkswagen Jetta. Within months, the car needed extensive repairs and eventually suffered engine failure after six months, leaving her on the hook with thousands in debt. “We just won’t stop until we shut down all of these predatory practices,” Healey said.

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