Credit Acceptance Corporation announced the completion of a $600.0 million asset-backed non-recourse secured financing on September 26, 2024. This transaction involved the conveyance of loans with an approximate value of $750.2 million to a wholly owned special purpose entity. The entity will then transfer these loans to a trust, which will issue three classes of notes.
The financing is structured to provide Credit Acceptance with 4.0% of the cash flows from the underlying consumer loans to cover servicing expenses. The remaining 96.0% of cash flows, after dealer holdback payments, will be used to pay principal and interest on the notes and cover ongoing financing costs. This arrangement ensures a steady revenue stream for the company's servicing operations.
This financing event strengthens Credit Acceptance's capital structure and provides substantial funding for its ongoing business activities. The non-recourse nature of the financing limits the company's direct exposure to the underlying loan performance. The transaction also preserves the contractual relationships and rights of dealers to future holdback payments.
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