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Actual cost of borrowing from Credit Acceptance Corp. 'obscured', say regulators

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Southfield-based Credit Acceptance Corp., which made its mark by offering car loans to those with bad credit and might not otherwise qualify for a car loan, is accused by regulators of making predatory deals that drive buyers financially vulnerable to bankruptcy.

Used car loans carry “exorbitant interest rates, are loaded with expensive add-ons and burden borrowers with debt” that even the lender believes borrowers cannot repay in full, according to a complaint filed Wednesday. market.

On Wednesday, New York Attorney General Letitia James and the Department of Consumer Financial Protection jointly sued the Credit Acceptance Corporation for swindling thousands of low-income New Yorkers into high-interest car loans.

Complementary products that end up being financed, raising borrowing costs, include a vehicle service contract that promises to repair or replace certain parts and a guaranteed asset protection product or “GAP” that is supposed to cover the amount owed by borrowers after payment. insurance if the used car or truck is stolen or destroyed in an accident.