Credit Acceptance CEO Ken Booth.

Regulators say true cost of Credit Acceptance Corporation loans ‘hidden’

The Southfield-based regulator, which provides car loans to those with bad credit and may not qualify for a car loan, is accused of making predatory deals that put financially vulnerable buyers on the brink of failure.

Auto loans for used cars carry “exorbitant interest rates, are loaded with expensive add-ons, and borrowers are so indebted” that even the lender believes the borrowers can’t repay in full, according to a complaint filed Wednesday.

New York Attorney General Letitia James and the Consumer Financial Protection Bureau on Wednesday filed a joint lawsuit against Credit Acceptance Corporation for defrauding thousands of low-income New Yorkers out of high-interest auto loans.

Additional products that are ultimately financed, driving up borrowing costs, include a vehicle service contract that promises to repair or replace certain parts and a guaranteed asset protection or “GAP” product to cover the amount borrowers owe after insurance payouts if the vehicle is stolen or used truck or had an accident.

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