Credit Acceptance Corporation announced the completion of a $300.0 million asset-backed non-recourse secured financing on December 20, 2024. This transaction involved conveying loans with an approximate value of $375.1 million to a wholly owned special purpose entity. The entity will pledge these loans to institutional lenders under a loan and security agreement.
The financing structure ensures that Credit Acceptance will receive 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 to the institutional lenders and cover ongoing financing costs. This mechanism supports the company's operational funding.
This financing event further enhances Credit Acceptance's capital resources, providing additional funds for its lending programs. The non-recourse nature of the financing helps manage risk exposure. The transaction is designed to maintain existing contractual relationships with dealers and preserve their rights to future holdback payments.
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