Some Hawai‘i residents could get a piece of a $694 million settlement between Hawai‘i and an automobile finance company.
Hawai‘i and 40 other states sued the Credit Acceptance Corp. in 2025 over allegations that the company knowingly targeted certain low-income car buyers for loans they couldn’t afford, and then used aggressive debt-collection tactics to force them to pay up.
According to the Hawai‘i Department of Commerce and Consumer Affairs, CAC used a proprietary scoring system to predict the percentage of each loan that CAC could collect on. But CAC still offered loans with low scores — that is, loans unlikely for the borrower to be able to pay back — even to people the company predicted couldn’t pay back the loan’s principal, resulting in many borrowers defaulting and losing their cars to repossession.
Furthermore, the suit also alleged that CAC failed to prevent auto dealers in the company’s network from “packing” additional fees into their CAC loans. This practice led dealers to include additional fees for services such as vehicle service contracts, which customers may have been led to believe were required to have in order to get financing, or may have been unaware they purchased at all.
“Making high‑risk loans a lender knows a borrower cannot reasonably afford predictably leads to bad outcomes for borrowers and lenders,” Mana Moriarty, executive director of the Office of Consumer Protection, said on Wednesday, Sept 23. “This settlement provides cash to affected borrowers, removes the threat of collection lawsuits and removes negative items from borrowers’ credit reports.”
The $694 million settlement is split between $15 million to be paid to the attorneys general involved in the suit, $60 million for cash restitution for consumers who took risky loans through CAC, and $634 million for customer debt forgiveness.
The Hawai‘i Department of Commerce and Consumer Affairs’ Office of Consumer Protection announced this week that certain Hawai‘i recipients of CAC loans will receive up to $830,000 in total debt relief.
Eligible recipients may have already had their loans forgiven; the settlement requires CAC to reach out to customers who are entitled to debt relief. Nonetheless, people with questions about their eligibility are encouraged to reach out to CAC at 800-634-1506.
Meanwhile, other Hawai‘i consumers will receive about $115,000 in total in direct payments.
Furthermore, CAC must provide “off-ramps” for borrowers who took out risky lans in Dec. 2025 or later. Those borrowers will have 95% of their debt forgiven, and CAC will not initiate any further collection lawsuits or other collection actions on those loans. Those off-ramps will be available for five years beginning on Nov. 2 of this year.
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