How to Get Out of a Credit Acceptance Car Loan
You can get out of a Credit Acceptance loan in several ways, including by paying off the car or refinancing.
Companies like Credit Acceptance Corp. can seem like a good solution for people who need a car but have trouble getting financing, such as because they have poor credit history. The company offers financing programs that allow car dealers to sell vehicles to consumers with bad credit. However, Credit Acceptance charges double-digit interest rates and additional fees, making it difficult to keep up with the payments.
Learn how to get out of a Credit Acceptance car loan through extra payments, refinancing, and other strategies.
Key Takeaways
- Credit Acceptance Corp. provides auto loans to consumers with poor credit.
- Credit Acceptance car loans have an average annual percentage rate (APR) of 22%.
- Paying more than the minimum or refinancing can help you get out of debt faster.
Credit Acceptance Corp. is a publicly traded company (CACC) that connects with dealers to provide financing for people with poor credit. Credit Acceptance’s loans may help if you are struggling financially but can’t apply for a loan directly through the company. Instead, you need to find a car from one of the company’s partner dealers and finance through the dealer.
By working with Credit Acceptance, dealers are able to approve customers who cannot get approved for financing elsewhere.
About 1.9 million people got used-car loans through Credit Acceptance and its affiliated dealers from Nov. 2, 2015, to April 30, 2021. The company financed more than $4.9 billion in loans in 2020 alone.
Although Credit Acceptance provides financing to consumers who may not qualify for typical auto loans, there is a significant drawback: high rates and fees. Nationally, the average annual percentage rate (APR) on Credit Acceptance loans was about 22%. However, additional fees and charges could drive the total cost even higher.
In 2023, the Consumer Financial Protection Bureau (CFPB) filed a lawsuit against the company, alleging that Credit Acceptance hid key information about rates and fees from consumers and inflated the values of the used vehicles sold. The CFPB reported that the median markup was more than 50% over the reported dealer cost.
Credit Acceptance does not offer a grace period. Your account will be reported as delinquent after 30 days of a payment being past due. Collection measures can include late fees, repossession, and wage garnishment.
5 Strategies to Get Out of a Credit Acceptance Car Loan
If you’re researching how to get out of a Credit Acceptance car loan, you have a few options:
1. Pay Off the Car
The quickest way to get out of the loan is to pay it off in full. That approach may not be feasible for the majority of borrowers, but you may be able to raise the money necessary to pay off the loan by asking family or friends for help, taking out a personal loan, or applying any windfalls of cash you may receive, such as a tax refund or gift, to the loan.
2. Make Extra Payments
With such high APRs, Credit Acceptance loans can accrue interest quickly. You can pay off your loan faster and save money by paying more than the minimum required. Even small amounts—such as an extra $25 per month—can help.
You can use an auto loan interest calculator to see how additional payment amounts can reduce your time in repayment and lower your total loan cost.
3. Refinance Your Car Loan
If your credit score or financial situation has improved since you took out your loan through Credit Acceptance, you may be eligible for refinancing. When you refinance a car loan, you take out a new loan and pay off the existing one. With a better credit score or higher income, you might qualify for a loan with a lower interest rate and different terms than you have now.
For example, let’s say you bought a car for $20,000 with an APR of 22%. If you refinanced to a five-year loan with an APR of 12%, you would save $6,468 in interest charges.
Leading auto loan refinancing companies like LendingClub and Bank of America are among the lenders that may provide new auto loans at lower rates than Credit Acceptance.
4. Trade the Car in for Another Vehicle
If you have established good credit habits and are ready for a new vehicle, another option to get out of a Credit Acceptance loan is to purchase another car and trade in the vehicle you financed through Credit Acceptance.
If the car isn’t worth enough to satisfy the existing loan, you can roll the remaining balance into a new loan with a different lender with potentially better terms.
5. Voluntarily Surrender the Vehicle
If you’re desperate to get out of a Credit Acceptance loan, you could consider a voluntary surrender, sometimes referred to as a voluntary repossession. With a voluntary surrender, you inform the lender that you cannot afford the payments and you give the car back. The lender sells the car at auction to recoup its investment.
However, the car’s sale price may not pay off the existing loan. And even if you return the vehicle and aren’t using it, you would still owe the remaining balance of your car loan. If you can’t afford the payments, the lender can report the surrender as a repossession on your credit report. For this reason, voluntary surrenders are risky and should be considered a last resort to get out of a Credit Acceptance loan.
If you do surrender your vehicle, get the lender to confirm in writing that the loan is satisfied and that it will not report the return of the vehicle as a repossession to the credit bureaus.
What happens if I skip a payment on my car loan?
Credit Acceptance begins collection efforts one day after a missed payment due date. It will take the following measures to collect the money owed:
- Its collections department will call you regularly until the payment is made.
- Credit Acceptance will report the missed payments to the credit bureaus.
- You will have to pay late fees.
- Credit Acceptance can repossess your vehicle.
- Credit Acceptance can sue you and get a court order to garnish your wages.
What is Credit Acceptance’s repossession policy?
Credit Acceptance will try to collect on the owed money right after a missed payment occurs. If you don’t pay the money owed and the late fees that accrued, Credit Acceptance will assign your vehicle to a third-party repossession contractor. The contractor will then repossess your car.
Once that happens, you can negotiate a payment amount to redeem the vehicle. Otherwise, the car will be sold, with the sale’s proceeds applied to your outstanding loan.
Does Credit Acceptance have trackers on cars?
In 2017, the Federal Trade Commission announced an inquiry into Credit Acceptance’s use of trackers called GPS starter interrupters. Since then, Credit Acceptance has discontinued the practice; the company stopped using them in mid-2019.
The Bottom Line
There are several steps you can take to get out of a Credit Acceptance car loan, and each strategy has pros and cons to weigh. Among your options: Pay more than the minimum to get rid of the loan faster, refinance, trade in the vehicle, or, as a last resort, voluntarily surrender the vehicle.
If you’re struggling to afford your bills and are worried about collection calls or repossession of a vehicle, consider using a nonprofit credit counseling agency. Credit counselors can help you create a budget, develop a debt management plan, and negotiate with your creditors on your behalf. You can find a counselor near you through the U.S. Department of Justice’s database of approved agencies.