Although Credit Acceptance will finance anyone, even those with good credit, Don Foss' sales video makes it clear that the company wants customers with bad credit. Those customers have fewer options for lower-cost loans. Dealers are advised not to sidestep questions about the cars or warranties, but instead to steer the conversation back to financing, which reminds the customer of his financial straits. Credit Acceptance usually charges the maximum interest rate allowed in each of the 48 states it operates in. Charles Howard of the Ohio Auto Dealers Association said there are more than 30 publicly traded subprime lenders.
Many dealers use a variety of lenders to finance deals.
Through a tiered reward system, as outlined in the training manuals, dealerships could earn cash advances of up to 90 percent of the amount customers financed, plus bonuses for tacking on insurance policies and warranties, or service contracts. Credit Acceptance pooled the debt in 100-loan packages and paid the dealers the rest only after it recovered the advances it paid to dealers. If a customer defaulted on the loan, Credit Acceptance withheld the sum from future advances. In theory, dealers had an incentive to charge higher prices for the cars to protect themselves when customers defaulted. And a staggering number of customers did default.