Attorney General Maura Healy announced that more than 3,000 borrowers across Massachusetts who are victims of a predatory car loan company may be eligible for a refund as part of a $ 27.2 million dispute settlement.
“Thousands of Massachusetts consumers, many of whom are buying cars for the first time, believed that CAC would help them with a car loan, but instead were attracted to costly loans, mired in debt and even lost their cars,” Healy said. during a Zoom press conference on Wednesday with the three consumers that became the company’s target.
She added: “With this sizable $ 27 million settlement, eligible Massachusetts drivers who have suffered under the brunt of a crushing car loan due to CAC’s fraudulent practices will be able to get help and avoid further defaults.”
The Suffolk Supreme Court’s settlement with national subprime auto lender Credit Acceptance Corporation is the largest settlement of its kind, Healy’s office said.
People who bought cars on credit through Credit Acceptance were given loans at interest rates that met or exceeded the government’s 21% limit, Healy said. According to the settlement agreement, the credit company was also engaged in illegal debt collection.
Healy said many of the consumers affected by this lending practice live in cities such as Springfield, Boston, Worcester and Brockton, where they used the subprime mortgage crises that plagued the US economy more than a decade ago as a “plan” to “get profits from some of our most vulnerable residents. “
“These were loans that these clients could not afford, but they made them anyway,” she said.
According to the agreement, thousands of borrowers who have received car loans through loan acceptance may be eligible for repayment or debt relief. The lender also agreed to change its collection practices for loans and debts, Healy said.
Frank Mello told reporters that he bought a car in 2018 using a loan to get to and from work an hour’s drive from home. At an interest rate of 20.99%, Mello said he quickly fell behind and endured constant foreclosure calls at any time of the day or night, as well as frequent car seizures, until he lost his car permanently in 2019.
“I was in pain for a long time and I was trying to recover from it,” Mello said.