States Investigating Predatory Subprime Auto Lender For COVID-19 Actions

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While the company offered some Covid-19-related accommodations — halting late fees and repossessions — deferrals were not an option.

“I have been paying for this car for four years — over $12,000 — and I couldn’t even get a deferment,” Williams said. The car died in December 2019, she said, but about $2,000 on the loan remains outstanding.

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Early in the pandemic, many lenders filled the gap left by the government, offering deferments and halting late fees; as a result, auto loan defaults last year fell to their lowest rate in 15 years, said Jonathan Smoke, chief economist at Cox Automotive, a company that provides services to the car industry.

Credit Acceptance, however, did not offer such deferrals. The company says it froze reporting on borrowers’ credit reports and suspended late fees and collection activities, such as phone calls and repossessions, for 90 days for customers hurt by Covid-19. After that, however, borrowers must make their monthly payments; if they don’t, the lender’s website says, the company may resume repossessions and late charges.