Credit Acceptance Announces Extension of $100.0 Million Asset-Backed Financing

Rhea-AI Summary

Credit Acceptance Corporation (CACC) extends a $100.0 million asset-backed financing program, Term ABS 2021-1, to February 17, 2026. Since 1972, Credit Acceptance has provided financing programs for consumers with poor credit history, benefiting both dealers and consumers.

Insights

Financial Analyst

Extending a significant asset-backed financing agreement, such as the one by Credit Acceptance Corporation, can have considerable implications for the company's liquidity and financial flexibility. By pushing the revolve date from December 2024 to February 2026, the company secures its access to capital for a longer period without the immediate need to refinance. This move may be interpreted by investors as a positive signal, suggesting management's confidence in the company's financial stability and operational performance.

It's important to note that the extension of the financing term without material changes to the terms indicates a stable borrowing cost, which is beneficial in an environment where interest rates might be volatile or increasing. This stability can help in budgeting and forecasting, as well as potentially improving the company's creditworthiness in the eyes of lenders and rating agencies.

However, investors should consider the nature of the company's business model, which involves providing financing to consumers with poor credit history. While this model can be profitable during economic expansions, it can pose higher risks during economic downturns when default rates typically increase. The extension of the financing might be a strategic move to ensure continuity of operations during such uncertain times.

Market Research Analyst

The auto financing industry, where Credit Acceptance operates, is highly competitive and sensitive to economic cycles. The extension of the Term ABS 2021-1 financing indicates that Credit Acceptance is taking proactive steps to manage its capital structure and sustain its dealership network. This move could provide a competitive edge by ensuring ongoing support to dealers and consumers, which is critical for maintaining market share.

From a market perspective, such an extension also reflects on the company's reputation in the debt market. A seamless extension suggests that lenders have confidence in Credit Acceptance's business model and credit management practices. This could positively influence the company's stock as it reassures investors about the company's risk management capabilities and long-term viability.

For stakeholders, the extension provides a buffer against short-term market disruptions and can be seen as a commitment to long-term strategic goals. It's also indicative of management's foresight in capital management, which is a key factor in assessing a company's investment potential.

Southfield, Michigan, Feb. 16, 2024 (GLOBE NEWSWIRE) -- Credit Acceptance Corporation (Nasdaq: CACC) (referred to as the “Company”, “Credit Acceptance”, “we”, “our”, or “us”) announced today that we have extended the $100.0 million asset-backed non-recourse secured financing that we entered into on January 29, 2021 (the “Financing”) and to which we refer as Term ABS 2021-1. Under the amendment effecting the extension, the date on which the Financing will cease to revolve has been extended from December 16, 2024 to February 17, 2026.

There were no other material changes to the terms of the Financing.

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 ticker symbol for Credit Acceptance Corporation?

The ticker symbol for Credit Acceptance Corporation is CACC.

When was the $100.0 million asset-backed financing program extended until?

The $100.0 million asset-backed financing program, Term ABS 2021-1, was extended until February 17, 2026.

What type of financing programs does Credit Acceptance provide?

Credit Acceptance provides financing programs for automobile dealers to sell vehicles to consumers with poor credit history.

How long has Credit Acceptance been in operation?

Credit Acceptance has been in operation since 1972.

Where is Credit Acceptance publicly traded?

Credit Acceptance is publicly traded on the Nasdaq Stock Market.