3,000 Massachusetts residents victimized by predatory subprime car loans eligible for payback

More than 3,000 borrowers across Massachusetts who fell victim to a predatory subprime car loan company could be eligible for a payback under a $27.2 million settlement, Attorney General Maura Healey announced.

“Thousands of Massachusetts consumers, many of them first-time car buyers, put their faith in CAC to help them with an auto loan but were instead lured into high-cost loans, fell deeper in debt and even lost their vehicles,” Healey said during a Wednesday Zoom press conference with three consumers who were targeted by the company.

She added: “With this significant $27 million settlement, eligible Massachusetts drivers who have been suffering under the weight of a crushing car loan due to CAC’s deceptive practices will be able to receive relief and avoid new defaults.”

The Suffolk Superior Court settlement with national subprime auto lender Credit Acceptance Corporation is the largest settlement of its kind, Healey’s office said.

People who purchased cars with loans through Credit Acceptance were lent money at interest rates that met or exceeded the state’s cap of 21%, Healey said. The lending company also engaged in unlawful collection practices, according to the settlement.

Healey said many of the consumers hurt by those lending practices live in cities like Springfield, Boston, Worcester and Brockton where they used the subprime mortgage crises that toppled the U.S. economy over a decade ago as a “blueprint” to “profit on some of our most vulnerable residents.”

“These were loans these customers couldn’t afford to pay back but they made them anyway,” she said.

Under the settlement, thousands of borrowers who received auto loans through Credit Acceptance 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 told reporters he purchased a car using a Credit Acceptance loan in 2018 to get to and from his job an hour away from home. At an interest rate of 20.99%, Mello said he quickly fell behind and endured constant collection calls at all times of day and night as well as frequent vehicle repossessions until he lost the car for good in 2019.

“It’s hurt me for a long time, and I’ve been trying to recover from it,” Mello said.

from Boston Herald https://ift.tt/3jCbgTb