Michigan Attorney General Dana Nessel secured a $3.25 million settlement in May 2026 with West Creek Financial, Inc., a Virginia-based company doing business as Koalafi, over how it financed auto repairs across the state. The company had been using lease-to-own agreements — a financing structure built for furniture, appliances, and electronics — to cover labor, parts, and fluids on vehicle repairs, according to the AG’s own announcement. Under a standard lease-to-own contract, a customer who can’t pay for an item outright leases it with an option to eventually own it, typically at a steep markup over the cash price. Applying that same structure to a repair someone’s car already needed, and had already used, created exactly the kind of consumer trap Michigan’s own consumer protection statutes exist to stop. Here’s how the scheme worked and what drivers who used it are now owed.
How Lease-to-Own Repair Financing Actually Worked
According to Michigan’s Attorney General, West Creek Financial structured its auto-repair agreements under Michigan’s Rental-Purchase Agreement Act — a law written with tangible goods like furniture and electronics in mind, not services a mechanic has already performed and a car that’s already back on the road. A driver who couldn’t cover a repair bill up front would sign what functioned like a lease on the completed repair itself: the parts, the fluids, the labor, all bundled into payments stretched out over time. The problem is structural. You can repossess a couch. You can’t repossess a water pump that’s already installed and the car it’s already been driven on, which meant the “lease” framing didn’t match the transaction it was covering — and the AG’s office found it ran afoul of both the Michigan Consumer Protection Act and the Rental-Purchase Agreement Act as a result.
What Drivers Actually Paid
The mismatch mattered most in the total cost. Lease-to-own pricing is built around the idea that a customer might walk away from the lease before ownership transfers, so the payment schedule is priced well above the item’s cash value to cover that risk. Applied to a repair that a driver had no realistic way to “return,” that pricing structure meant Michigan consumers were paying multiples of what the repair would have cost through ordinary financing or an upfront invoice. The settlement’s own remedy makes the scale of that markup clear: any consumer who paid at least 1.75 times the original cash price of their repair now has their remaining balance zeroed out entirely, with full ownership of the parts and labor already covered.
What the Settlement Requires Going Forward
The company has 45 days from the settlement to stop using lease-to-own agreements for auto-repair financing entirely, according to the Attorney General’s release. Beyond the structural change, the bulk of the $3.25 million goes toward restitution for eligible Michigan consumers, distributed through a settlement administrator who will contact affected customers directly with instructions on how to submit a claim — meaning drivers who qualify shouldn’t need to track down the company or the state on their own. Nessel framed the outcome as part of a broader pattern of enforcement, saying in the release: “I am proud of our Consumer Protection Team for securing millions in restitution and reducing the financial burden on current customers. We will continue to pursue agreements that prioritize Michigan residents and hold companies to fair and transparent business practices.”
What This Means If You’re Financing a Repair
The core lesson travels well beyond Michigan and beyond this one company. Lease-to-own financing and traditional repair financing are not the same product, even when both show up as a monthly payment option at a shop’s front counter, and the difference in total cost can be enormous. Before signing anything to cover a repair bill, it’s worth asking directly whether the agreement is a loan or a lease, since a lease structure typically means you don’t legally own what you’re paying for until the final payment clears — and the total cost across the full term, not just the monthly figure, is the number that actually tells you what the repair is costing. If a shop or third-party financer can’t give you a straight answer to “what’s the total I’ll pay, all in,” treat that as the moment to ask for a written breakdown before you agree to anything.