Credit Acceptance Announces Completion of $200.0 Million Asset-Backed Financing

Rhea-AI Summary

Credit Acceptance Corporation (Nasdaq: CACC) completed a $200.0 million asset-backed non-recourse secured financing, conveying loans valued at approximately $252.0 million to a special purpose entity. The financing includes three classes of notes with interest rates ranging from 6.98% to 8.24% and is expected to have an average annualized cost of approximately 8.6%. The proceeds will be used to repay outstanding indebtedness and for general corporate purposes. Credit Acceptance has been offering financing programs for automobile dealers since 1972, enabling them to sell vehicles to consumers regardless of their credit history.

Southfield, Michigan, Nov. 30, 2023 (GLOBE NEWSWIRE) -- Credit Acceptance Corporation (Nasdaq: CACC) (the “Company”, “Credit Acceptance”, “we”, “our”, or “us”) announced today the completion of a $200.0 million asset-backed non-recourse secured financing (the “Financing”).  Pursuant to this transaction, we conveyed loans having a value of approximately $252.0 million to a wholly owned special purpose entity that will pledge the loans to an institutional lender under a loan and security agreement. We will issue three classes of notes:

Note Class			Amount			Interest Rate
	A		$	100,830,000			6.98 %
	B		$	45,050,000			7.81 %
	C		$	54,120,000			8.24 %

The Financing will:

• have an expected average annualized cost of approximately 8.6% including the initial purchasers’ fees and other costs;
• revolve for 24 months after which it will amortize based upon the cash flows on the conveyed loans; and
• be used by us to repay outstanding indebtedness and for general corporate purposes.

We will receive 4.0% of the cash flows related to the underlying consumer loans to cover servicing expenses.  The remaining 96.0%, less amounts due to dealers for payments of dealer holdback, will be used to pay principal and interest to the institutional lender as well as the ongoing costs of the Financing.  The Financing is structured so as not to affect our contractual relationships with our dealers and to preserve the dealers’ rights to future payments of dealer holdback.

Description of Credit Acceptance Corporation

Since 1972, Credit Acceptance has offered financing programs that enable automobile dealers to sell vehicles to consumers, regardless of their credit history.  Our financing programs are offered through a nationwide network of automobile dealers who benefit from sales of vehicles to consumers who otherwise could not obtain financing; from repeat and referral sales generated by these same customers; and from sales to customers responding to advertisements for our financing programs, but who actually end up qualifying for traditional financing.

Without our financing programs, consumers are often unable to purchase vehicles or they purchase unreliable ones.  Further, as we report to the three national credit reporting agencies, an important ancillary benefit of our programs is that we provide consumers with an opportunity to improve their lives by improving their credit score and move on to more traditional sources of financing.  Credit Acceptance is publicly traded on the Nasdaq Stock Market under the symbol CACC.  For more information, visit creditacceptance.com.

FAQ

What is the recent announcement from Credit Acceptance Corporation?

Credit Acceptance Corporation (Nasdaq: CACC) completed a $200.0 million asset-backed non-recourse secured financing.

How will the proceeds from the financing be used?

The proceeds will be used to repay outstanding indebtedness and for general corporate purposes.

What is the interest rate on the notes issued by Credit Acceptance Corporation?

The notes issued by Credit Acceptance Corporation have interest rates ranging from 6.98% to 8.24%.

What has Credit Acceptance Corporation been offering since 1972?

Credit Acceptance Corporation has been offering financing programs for automobile dealers since 1972, enabling them to sell vehicles to consumers regardless of their credit history.