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Subprime Auto Lender Consumes Detroit With Debt and Turns Its Courthouse Into a Collections Agency
JALOPNIK INVESTIGATES
How a Subprime Auto Lender Consumed Detroit With Debt and Turned Its Courthouse Into a Collections Agency
Ryan Felton and Ishaan Jhaveri
Yesterday 12:00pm Filed to: SUBPRIME AUTO LOANS
When Don Foss started his career as a car salesman, he recognized early on that most of his prospective customers had shaky credit, leaving them with few options for financing to buy a vehicle. So in 1972, he started subprime auto lending company Credit Acceptance Corporation to fill that void. He knew lending money to buyers with low credit posed an inherent risk, and he knew the business couldn’t solely be focused on closing sales. It had to excel at collecting loan payments too.
....
The company has acknowledged it repossesses about 35 percent of all vehicles it finances, and its aggressive methods to pursue buyers for non-payment is widely known. Debt collectors retained by the company chase after defaulted buyers for as long as 20-25 years, garnishing their wages and recouping sums that sometimes exceed two times the original loan amount. ... But it’s even worse than many know. The extent of Credit Acceptance’s well-oiled debt collection machine is perhaps best illustrated in the company’s backyard: Detroit.
In 2017, one out of every eight civil lawsuits filed in Detroit’s 36th District Court, the largest district court in the state of Michigan, was a collection case brought by Credit Acceptance, according to an analysis of publicly available court records by Jalopnik. Credit Acceptance alone—a company meant to service subprime car loans under the cheerful motto of “We change lives!”—absolutely dominates the civil case volume of one of the country’s busiest courts.
“Oh my god,” said Robert Lawless, a law professor at the University of Illinois who co-authored a study this year that examined the effect debt collection suits have on consumers who ultimately file bankruptcy. “That’s an incredibly high number.”
....
How a Subprime Auto Lender Consumed Detroit With Debt and Turned Its Courthouse Into a Collections Agency
Ryan Felton and Ishaan Jhaveri
Yesterday 12:00pm Filed to: SUBPRIME AUTO LOANS
When Don Foss started his career as a car salesman, he recognized early on that most of his prospective customers had shaky credit, leaving them with few options for financing to buy a vehicle. So in 1972, he started subprime auto lending company Credit Acceptance Corporation to fill that void. He knew lending money to buyers with low credit posed an inherent risk, and he knew the business couldn’t solely be focused on closing sales. It had to excel at collecting loan payments too.
....
The company has acknowledged it repossesses about 35 percent of all vehicles it finances, and its aggressive methods to pursue buyers for non-payment is widely known. Debt collectors retained by the company chase after defaulted buyers for as long as 20-25 years, garnishing their wages and recouping sums that sometimes exceed two times the original loan amount. ... But it’s even worse than many know. The extent of Credit Acceptance’s well-oiled debt collection machine is perhaps best illustrated in the company’s backyard: Detroit.
In 2017, one out of every eight civil lawsuits filed in Detroit’s 36th District Court, the largest district court in the state of Michigan, was a collection case brought by Credit Acceptance, according to an analysis of publicly available court records by Jalopnik. Credit Acceptance alone—a company meant to service subprime car loans under the cheerful motto of “We change lives!”—absolutely dominates the civil case volume of one of the country’s busiest courts.
“Oh my god,” said Robert Lawless, a law professor at the University of Illinois who co-authored a study this year that examined the effect debt collection suits have on consumers who ultimately file bankruptcy. “That’s an incredibly high number.”
....
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