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What changed in CREDIT ACCEPTANCE CORP's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of CREDIT ACCEPTANCE CORP's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+204 added−195 removedSource: 10-K (2025-02-12) vs 10-K (2024-02-12)

Top changes in CREDIT ACCEPTANCE CORP's 2024 10-K

204 paragraphs added · 195 removed · 163 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeIn addition, we compete by offering a profitable and efficient method for Dealers to finance consumers who would be more difficult or less profitable to finance through other methods. 9 Customer and Geographic Concentrations The following tables provide information regarding the five states that were responsible for the largest dollar volume of Consumer Loan assignments and the related number of active Dealers during 2023, 2022, and 2021: For the Year Ended December 31, 2023 (Dollars in millions) Consumer Loan Assignments Active Dealers (2) Dollar Volume (1) % of Total Number % of Total Michigan $ 326.3 7.9 % 833 5.9 % Texas 272.5 6.6 % 1,170 8.3 % Ohio 245.2 5.9 % 986 7.0 % New Jersey 238.2 5.7 % 357 2.5 % Tennessee 216.0 5.2 % 569 4.0 % All other states 2,849.6 68.7 % 10,259 72.3 % Total $ 4,147.8 100.0 % 14,174 100.0 % For the Year Ended December 31, 2022 (Dollars in millions) Consumer Loan Assignments Active Dealers (2) Dollar Volume (1) % of Total Number % of Total Michigan $ 353.0 9.7 % 731 6.1 % New York 229.8 6.3 % 687 5.8 % Ohio 205.7 5.7 % 832 7.0 % Texas 205.5 5.7 % 903 7.6 % New Jersey 204.0 5.6 % 300 2.5 % All other states 2,427.3 67.0 % 8,448 71.0 % Total $ 3,625.3 100.0 % 11,901 100.0 % For the Year Ended December 31, 2021 (Dollars in millions) Consumer Loan Assignments Active Dealers (2) Dollar Volume (1) % of Total Number % of Total Michigan $ 343.4 10.8 % 747 6.5 % New York 218.9 6.9 % 709 6.2 % Ohio 181.5 5.7 % 764 6.7 % Texas 170.2 5.4 % 810 7.1 % Tennessee 162.9 5.1 % 458 4.0 % All other states 2,090.9 66.1 % 7,922 69.5 % Total $ 3,167.8 100.0 % 11,410 100.0 % (1) Represents advances paid to Dealers on Consumer Loans assigned under our Portfolio Program and one-time payments made to Dealers to purchase Consumer Loans assigned under our Purchase Program.
Biggest changeIn addition, we compete by offering a profitable and efficient method for Dealers to finance consumers who would be more difficult or less profitable to finance through other methods. 9 Customer and Geographic Concentrations The following tables provide information regarding the five states that were responsible for the largest dollar volume of Consumer Loan assignments and the related number of active Dealers during 2024, 2023, and 2022: For the Year Ended December 31, 2024 (Dollars in millions) Consumer Loan Assignments Active Dealers (2) Dollar Volume (1) % of Total Number % of Total Michigan $ 372.4 8.1 % 861 5.6 % Texas 327.9 7.1 % 1,295 8.4 % New Jersey 303.5 6.6 % 386 2.5 % Ohio 269.5 5.8 % 1,024 6.6 % Florida 233.7 5.1 % 873 5.6 % All other states 3,111.4 67.3 % 11,024 71.3 % Total $ 4,618.4 100.0 % 15,463 100.0 % For the Year Ended December 31, 2023 (Dollars in millions) Consumer Loan Assignments Active Dealers (2) Dollar Volume (1) % of Total Number % of Total Michigan $ 326.3 7.9 % 833 5.9 % Texas 272.5 6.6 % 1,170 8.3 % Ohio 245.2 5.9 % 986 7.0 % New Jersey 238.2 5.7 % 357 2.5 % Tennessee 216.0 5.2 % 569 4.0 % All other states 2,849.6 68.7 % 10,259 72.3 % Total $ 4,147.8 100.0 % 14,174 100.0 % For the Year Ended December 31, 2022 (Dollars in millions) Consumer Loan Assignments Active Dealers (2) Dollar Volume (1) % of Total Number % of Total Michigan $ 353.0 9.7 % 731 6.1 % New York 229.8 6.3 % 687 5.8 % Ohio 205.7 5.7 % 832 7.0 % Texas 205.5 5.7 % 903 7.6 % New Jersey 204.0 5.6 % 300 2.5 % All other states 2,427.3 67.0 % 8,448 71.0 % Total $ 3,625.3 100.0 % 11,901 100.0 % (1) Represents advances paid to Dealers on Consumer Loans assigned under the Portfolio Program and one-time payments made to Dealers to purchase Consumer Loans assigned under the Purchase Program.
The originations function includes team members that are responsible for enrolling new Dealers and supporting active Dealers. Originations also includes team members responsible for processing new Consumer Loan assignments. Servicing . The servicing function includes team members that are responsible for servicing the Consumer Loans. The majority of these team members are responsible for collection activities on delinquent Consumer Loans.
The servicing function includes team members that are responsible for servicing Consumer Loans. The majority of these team members are responsible for collection activities on delinquent Consumer Loans. Originations. The originations function includes team members that are responsible for enrolling new Dealers and supporting active Dealers. Originations also includes team members responsible for processing new Consumer Loan assignments.
Under our Purchase Program, we provide Dealers that meet certain criteria the ability to offer vehicle service contracts and GAP to consumers through the Dealers’ relationships with TPPs. The retail price of the vehicle service contract and/or GAP is included in the principal balance of the Consumer Loan and is paid to the Dealer.
Under the Purchase Program, we provide Dealers that meet certain criteria the ability to offer vehicle service contracts and GAP to consumers through the Dealers’ relationships with TPPs. The retail price of the vehicle service contract and/or GAP is included in the principal balance of the Consumer Loan and is paid to the Dealer.
Our Company’s culture attracts talented people and enables them to perform to their potential. We have been honored to receive many workplace awards in recent years. Available Information Our internet address is creditacceptance.com .
Our Company’s culture attracts talented people and enables them to perform to their potential. We have been honored to receive many workplace awards in recent years. 13 Available Information Our internet address is creditacceptance.com .
Purchase Program The Purchase Program differs from our Portfolio Program in that the Dealer receives a one-time payment from us at the time of assignment to purchase the Consumer Loan instead of a cash advance at the time of assignment and future Dealer Holdback payments.
Purchase Program The Purchase Program differs from the Portfolio Program in that the Dealer receives a one-time payment from us at the time of assignment to purchase the Consumer Loan instead of a cash advance at the time of assignment and future Dealer Holdback payments.
For accounting purposes, the transactions described under the Purchase Program are considered to be originated by the Dealer and then purchased by us. Program Enrollment Dealers are granted access to our Portfolio Program upon enrollment.
For accounting purposes, the transactions described under the Purchase Program are considered to be originated by the Dealer and then purchased by us. Program Enrollment Dealers are granted access to the Portfolio Program upon enrollment.
No single Dealer’s Loans receivable balance accounted for more than 10% of total Loans receivable balance as of December 31, 2023 or 2022. 10 Seasonality Our business is seasonal with peak Consumer Loan assignments and collections occurring during the first quarter of the year.
No single Dealer’s Loans receivable balance accounted for more than 10% of total Loans receivable balance as of December 31, 2024 or 2023. 10 Seasonality Our business is seasonal with peak Consumer Loan assignments and collections occurring during the first quarter of the year.
For information regarding our one reportable segment and related entity-wide disclosures, see Note 15 to the consolidated financial statements contained in Item 8 of this Form 10-K, which is incorporated herein by reference. 3 Principal Business We offer Dealers financing programs that enable them to sell vehicles to consumers, regardless of their credit history.
For information regarding our one reportable segment and related disclosures, see Note 14 to the consolidated financial statements contained in Item 8 of this Form 10-K, which is incorporated herein by reference. 3 Principal Business We offer Dealers financing programs that enable them to sell vehicles to consumers, regardless of their credit history.
Credit Acceptance was founded to collect retail installment contracts (referred to as “Consumer Loans”) originated by automobile dealerships owned by Donald Foss, our founder.
Credit Acceptance was founded in 1972 to collect retail installment contracts (referred to as “Consumer Loans”) originated by automobile dealerships owned by Donald Foss, our founder.
See the description below of the lawsuit commenced by the Bureau on January 4, 2023. • On January 4, 2023, the Office of the New York State Attorney General and the Bureau jointly filed a complaint in the United States District Court for the Southern District of New York alleging that the Company engaged in deceptive practices, fraud, illegality, and securities fraud in violation of New York Executive Law § 63(12) and New York General Business Law §§ 349 and 352, and that the Company engaged in deceptive and abusive acts and provided substantial assistance to a covered person or service provider in violation of the CFPA, 12 U.S.C. § 5531 and 12 U.S.C. § 5536(a)(1)(B).
On January 4, 2023, the Office of the New York State Attorney General and the Bureau jointly filed a complaint in the United States District Court for the Southern District of New York alleging that the Company engaged in deceptive practices, fraud, illegality, and securities fraud in violation of New York Executive Law § 63(12) and New York General Business Law §§ 349 and 352, and that the Company engaged in deceptive and abusive acts and provided substantial assistance to a covered person or service provider in violation of the CFPA, 12 U.S.C. § 5531 and 12 U.S.C. § 5536(a)(1)(B).
The following table sets forth the percent relationship to total revenue of each of these sources: For the Years Ended December 31, Percent of Total Revenue 2023 2022 2021 Finance charges 92.3 % 92.0 % 93.9 % Premiums earned 4.2 % 3.4 % 3.2 % Other income 3.5 % 4.6 % 2.9 % Total revenue 100.0 % 100.0 % 100.0 % 5 Operations Sales and Marketing .
The following table sets forth the percent relationship to total revenue of each of these sources: For the Years Ended December 31, Percent of Total Revenue 2024 2023 2022 Finance charges 92.2 % 92.3 % 92.0 % Premiums earned 4.4 % 4.2 % 3.4 % Other income 3.4 % 3.5 % 4.6 % Total revenue 100.0 % 100.0 % 100.0 % 5 Operations Sales and Marketing .
Our agreements with Dealers provide that the Dealer shall indemnify us with respect to any loss or expense we incur as a result of the Dealer’s failure to comply with applicable laws and regulations. Team Members Our team members are organized into three operating functions: Originations, Servicing, and Support. Originations.
Our agreements with Dealers provide that the Dealer shall indemnify us with respect to any loss or expense we incur as a result of the Dealer’s failure to comply with applicable laws and regulations. Team Members Our team members are organized into four operating functions as follows: Servicing .
Dealer Loans and Purchased Loans are collectively referred to as “Loans.” The following table shows the percentage of Consumer Loans assigned to us under each of the programs for each of the last three years: Unit Volume Dollar Volume (1) For the Years Ended December 31, Portfolio Program Purchase Program Portfolio Program Purchase Program 2021 67.9 % 32.1 % 65.0 % 35.0 % 2022 73.5 % 26.5 % 69.8 % 30.2 % 2023 74.0 % 26.0 % 70.7 % 29.3 % (1) Represents advances paid to Dealers on Consumer Loans assigned under our Portfolio Program and one-time payments made to Dealers to purchase Consumer Loans assigned under our Purchase Program.
Dealer Loans and Purchased Loans are collectively referred to as “Loans.” The following table shows the percentage of Consumer Loans assigned to us under each of the programs for each of the last three years: Unit Volume Dollar Volume (1) For the Years Ended December 31, Portfolio Program Purchase Program Portfolio Program Purchase Program 2022 73.5 % 26.5 % 69.8 % 30.2 % 2023 74.0 % 26.0 % 70.7 % 29.3 % 2024 78.7 % 21.3 % 77.5 % 22.5 % (1) Represents advances paid to Dealers on Consumer Loans assigned under the Portfolio Program and one-time payments made to Dealers to purchase Consumer Loans assigned under the Purchase Program.
The number of Dealer enrollments and active Dealers for each of the last three years are presented in the table below: For the Years Ended December 31, Dealer Enrollments Active Dealers (1) 2021 2,804 11,410 2022 3,627 11,901 2023 5,605 14,174 (1) Active Dealers are Dealers who have received funding for at least one Loan during the period.
The number of Dealer enrollments and active Dealers for each of the last three years are presented in the table below: For the Years Ended December 31, Dealer Enrollments Active Dealers (1) 2022 3,627 11,901 2023 5,605 14,174 2024 6,088 15,463 (1) Active Dealers are Dealers who have received funding for at least one Loan during the period.
We refer to automobile dealers who participate in our programs and who share our commitment to changing consumers’ lives as “Dealers.” Upon enrollment in our financing programs, the Dealer enters into a Dealer servicing agreement with us that defines the legal relationship between Credit Acceptance and the Dealer.
We refer to automobile dealers who participate in our programs and who share our desire to provide an opportunity to consumers to improve their lives as “Dealers.” Upon enrollment in our financing programs, the Dealer enters into a Dealer servicing agreement with us that defines the legal relationship between Credit Acceptance and the Dealer.
We expect that regulatory investigations of our business by both state and federal agencies will continue and that the results of these investigations could have a material adverse impact on us. 11 Ongoing Regulatory Matters Regulatory matters to which we are a party include the following matters, in each case the eventual scope, duration, and outcome of which we cannot predict at this time. • On December 1, 2021, we received a subpoena from the Office of the Attorney General for the State of California seeking documents and information regarding GAP products, GAP product administration, and refunds. • On May 7, 2019, we received a subpoena from the Consumer Frauds and Protection Bureau of the Office of the New York State Attorney General, relating to the Company’s origination and collection policies and procedures in the state of New York.
Ongoing Regulatory Matters Regulatory matters to which we are a party include the following matters, in each case the eventual scope, duration, and outcome of which we cannot predict at this time. • On December 1, 2021, we received a subpoena from the Office of the Attorney General for the State of California seeking documents and information regarding GAP products, GAP product administration, and refunds. 11 • On May 7, 2019, we received a subpoena from the Consumer Frauds and Protection Bureau of the Office of the New York State Attorney General, relating to the Company’s origination and collection policies and procedures in the state of New York.
ITEM 1. BUSINESS General Since 1972, Credit Acceptance Corporation (referred to as the “Company”, “Credit Acceptance”, “we”, “our” or “us”) has offered financing programs that enable automobile dealers to sell vehicles to consumers, regardless of their credit history.
ITEM 1. BUSINESS General Credit Acceptance Corporation (referred to as the “Company”, “Credit Acceptance”, “we”, “our” or “us”) makes vehicle ownership possible by providing innovative financing solutions that enable automobile dealers to sell vehicles to consumers, regardless of their credit history.
Support . The support function includes team members that are responsible for engineering, corporate legal and compliance, human resources, finance, analytics, and marketing and product management.
Engineering, Analytics, Marketing, and Product Management . This function consists of team members that are responsible for innovating, transforming, enhancing, modernizing, and optimizing our product for Dealers and consumers. Support . The support function includes team members that are responsible for corporate legal and compliance, human resources, and finance.
Our team members reflect diversity of nationality, faith, age, and sexual orientation. We believe that our workplace is naturally diverse and inclusive due to our practices of maintaining open and transparent communication and fostering a climate in which all team members are welcome to speak up and contribute.
We believe our workplace supports an inclusive culture due to our practices of maintaining open and transparent communication and fostering a climate in which all team members are welcome to speak up and contribute.
Community Financial Services Association of America Ltd ., No. 22-448. The Company intends to vigorously defend itself in this matter. • On March 18, 2016, we received a subpoena from the Attorney General of the State of Maryland, relating to the Company’s repossession and sale policies and procedures in the state of Maryland.
As of October 29, 2024, the Company's motion to dismiss has been fully briefed. The Company intends to vigorously defend itself in this matter. • On March 18, 2016, we received a subpoena from the Attorney General of the State of Maryland, relating to the Company’s repossession and sale policies and procedures in the state of Maryland.
We have a Diversity and Inclusion Committee, chaired by a senior manager, tasked with generating concrete actions that we can take together to help our communities heal and make our culture and our Company stronger. 13 We place great importance on listening to our team members, as we believe that “ the people doing the work know the most about it. ” We encourage participation in periodic anonymous surveys to gain honest feedback about our workplace from our team members, and we use this feedback to generate ideas for improvement.
We place great importance on listening to our team members, as we believe that “ the people doing the work know the most about it. ” We encourage participation in periodic anonymous surveys to gain honest feedback about our workplace from our team members, and we use this feedback to generate ideas for improvement.
Dealers must also comply with credit and trade practice statutes and regulations. Failure of Dealers to comply with these statutes and regulations could result in consumers having rights of rescission and other remedies that could have a material adverse effect on us.
Failure of Dealers to comply with these statutes and regulations could result in consumers having rights of rescission and other remedies that could have a material adverse effect on us. 12 The sale of vehicle service contracts and GAP by Dealers in connection with Consumer Loans assigned to us from Dealers is also subject to state laws and regulations.
The table below presents team members by operating function: Number of Team Members As of December 31, Operating Function 2023 2022 2021 Originations 533 505 500 Servicing 851 913 895 Support 848 828 678 Total 2,232 2,246 2,073 As of December 31, 2023, we had 2,232 full- and part-time team members.
The following table presents team members by operating function: Number of Team Members as of December 31, Operating Function 2024 2023 2022 Servicing 906 845 907 Originations 578 533 505 Engineering, Analytics, Marketing, and Product Management 512 420 425 Support 435 434 409 Total 2,431 2,232 2,246 As of December 31, 2024, we had 2,431 full- and part-time team members.
The following table shows the percentage of Consumer Loans assigned to us with either FICO ® scores below 650 or no FICO ® scores: For the Years Ended December 31, Consumer Loan Assignment Volume 2023 2022 2021 Percentage of total unit volume with either FICO ® scores below 650 or no FICO ® scores 80.9 % 84.8 % 91.0 % In recent years, we have expanded our financing programs to consumers with higher credit ratings, which has contributed to the reduction in the percentage of total unit volume with either FICO ® scores below 650 or no FICO ® scores over the three year period presented above.
The following table shows the percentage of Consumer Loans assigned to us with either FICO ® scores below 650 or no FICO ® scores: For the Years Ended December 31, Consumer Loan Assignment Volume 2024 2023 2022 Percentage of total unit volume with either FICO ® scores below 650 or no FICO ® scores 80.6 % 80.9 % 84.8 % Business Segment Information We currently operate in one reportable segment which represents our core business of offering innovative financing solutions and related products and services that enable Dealers to sell vehicles to consumers regardless of their credit history.
Department of Justice pursuant to the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 directing us to produce certain information relating to subprime automotive finance and related securitization activities. 12 In addition, governmental regulations that would deplete the supply of used vehicles, such as environmental protection regulations governing emissions or fuel consumption, could have a material adverse effect on us.
The Company has been informed that the State of Kansas, the State of Texas, and the State of Iowa have withdrawn from the multistate investigation. In addition, governmental regulations that would deplete the supply of used vehicles, such as environmental protection regulations governing emissions or fuel consumption, could have a material adverse effect on us.
The vast majority of our team members w ork remotely from locations within the United States, with approximately half of our team members located outside of Michigan. Our Company is highly diverse, as more than half of our team members are women, and more than half belong to a minority ethnicity.
The vast majority of our team members work remotely from locations within the United States, with more than half of our team members located outside of Michigan. Our remote-first work environment allows us to take advantage of the national talent pool and hire the most qualified team members.
Removed
Business Segment Information We currently operate in one reportable segment which represents our core business of offering Dealers financing programs and related products and services that enable them to sell vehicles to consumers, regardless of their credit history.
Added
We expect that regulatory investigations of our business by both state and federal agencies will continue and that the results of these investigations could have a material adverse impact on us.
Removed
The Company has been informed that the State of Kansas, the State of Texas, and the State of Iowa have withdrawn from the multistate investigation. • On December 9, 2014, we received a civil investigative subpoena from the U.S.
Added
See the description below of the lawsuit commenced by the Bureau on January 4, 2023.
Removed
The sale of vehicle service contracts and GAP by Dealers in connection with Consumer Loans assigned to us from Dealers is also subject to state laws and regulations.
Added
Community Financial Services Association of America Ltd ., No. 22-448 (“CFSA”). On July 1, 2024, the court lifted the stay in view of the decision in CFSA and requested revised briefing on the Company’s motion to dismiss that would address the intervening legal developments and sharpen the issues for resolution.
Added
Dealers must also comply with credit and trade practice statutes and regulations.
Added
We engage in initiatives that encourage our team members to generate concrete actions that we can take together to enhance the environment of inclusion, a sense of belonging, and acceptance of others to make our culture and our Company stronger. We believe these factors naturally contribute to the diversity of our workforce.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe and our third-party service providers face ongoing threats to our systems and data and from time to time experience cyberattacks and other security incidents. There is no guarantee that our security controls, or those of our third-party service providers, will protect against all threats.
Biggest changeThe security measures we have implemented to protect against cybersecurity incidents, or those of our third-party service providers, may not always prevent or mitigate the impact of a cybersecurity incident, and there can be no assurance that future efforts to prevent or mitigate a cybersecurity incident will be effective either.
If third parties or our team members are able to breach our network security, the network security of a third party that we share information with, or otherwise misappropriate our consumers’ and team members’ personal information, or if we give third parties or our team members improper access to our consumers’ and team members’ personal information, we could be subject to liability.
If third parties or our team members breach or are able to breach our network security or the network security of a third party that we share information with or otherwise are able to misappropriate our consumers’ and team members’ personal information, or if we give third parties or our team members improper access to our consumers’ and team members’ personal information, we could be subject to liability.
The regulations to which we are or may become subject could result in a material adverse effect on our business. Reference should be made to Item 1. Business “Regulation” for a discussion of regulatory risk factors. 22
The regulations to which we are or may become subject could result in a material adverse effect on our business. Reference should be made to Item 1. Business “Regulation” for a discussion of regulatory risk factors.
A small number of our shareholders have the ability to significantly influence matters requiring shareholder approval and such shareholders have interests which may conflict with the interests of our other security holders. As of December 31, 2023, based on filings made with the SEC and other information made available to us, Allan V.
A small number of our shareholders have the ability to significantly influence matters requiring shareholder approval and such shareholders have interests which may conflict with the interests of our other security holders. As of December 31, 2024, based on filings made with the SEC and other information made available to us, Allan V.
The relief requested by plaintiffs varies but may include requests for compensatory, statutory, and punitive damages and injunctive relief, and plaintiffs may seek treatment as purported class actions or they may file individual arbitration demands for which arbitration providers may request separate filings fees.
The relief requested by plaintiffs varies but may include requests for compensatory, statutory, and punitive damages and injunctive relief, and plaintiffs may seek treatment as purported class actions or they may file individual arbitration demands for which arbitration providers may request separate filing fees.
In the ordinary course of our business, we collect and store sensitive data, including our proprietary business information and personally identifiable information of our consumers and team members, on our computer networks. The secure processing, maintenance, and transmission of this information is critical to our operations and business strategy.
In the ordinary course of our business, we collect and store sensitive data on our computer networks. This sensitive data includes our proprietary business information and personally identifiable information of our consumers and team members. The secure processing, maintenance, and transmission of this information is critical to our operations and business strategy.
We are dependent on our senior management and the loss of any of these individuals or an inability to hire additional team members could adversely affect our ability to operate profitably. Our senior management average over 14 years of experience with us. Our success is dependent upon the management and the leadership skills of this team.
We are dependent on our senior management, and the loss of any of these individuals or an inability to hire additional team members could adversely affect our ability to operate profitably. Our senior management average 16 years of experience with us. Our success is dependent upon the management and the leadership skills of this team.
Our failure or inability to perfect our ownership or security interest in the Consumer Loans could materially adversely affect our financial position, liquidity, and results of operations. Failure to properly safeguard confidential consumer and team member information could subject us to liability, decrease our profitability, and damage our reputation.
Our failure or inability to perfect our ownership or security interest in the Consumer Loans could materially adversely affect our financial position, liquidity, and results of operations. 21 Failure to properly safeguard our proprietary business information or confidential consumer and team member personal information could subject us to liability, decrease our profitability, and damage our reputation.
During the year ended December 31, 2023, our five largest states (measured by advances paid to Dealers on Consumer Loans assigned under our Portfolio Program and one-time payments made to Dealers to purchase Consumer Loans assigned under our Purchase Program) contained 27.7% of Dealers.
During the year ended December 31, 2024, our five largest states (measured by advances paid to Dealers on Consumer Loans assigned under the Portfolio Program and one-time payments made to Dealers to purchase Consumer Loans assigned under the Purchase Program) contained 28.7% of Dealers.
Their interests may conflict with the interests of our other security holders. 17 The beneficial ownership reported by Mr. Apple and Mr. Neary includes, in each case, beneficial ownership in their capacity as trustees of shares held in a marital trust established by our late founder, Donald Foss, and representing 9.2% of our common stock as of December 31, 2023.
Their interests may conflict with the interests of our other security holders. 17 The beneficial ownership reported by Mr. Apple and Mr. Neary includes, in each case, beneficial ownership in their capacity as trustees of shares held in a marital trust established by our late founder, Donald Foss, and representing 8.6% of our common stock as of December 31, 2024.
Neary beneficially owned 9.2% of our common stock (representing, collectively, beneficial ownership of 45.2% of our common stock, after taking into account those shares reported as beneficially owned by more than one of these shareholders).
Neary beneficially owned 8.6% of our common stock (representing, collectively, beneficial ownership of 42.8% of our common stock, after taking into account those shares reported as beneficially owned by more than one of these shareholders).
We provide reserves for potential payments of tax to various tax authorities related to uncertain tax positions. Please see the Critical Accounting Estimates – Uncertain Tax Positions section in Item 7 of this Form 10-K, which is incorporated herein by reference.
At any one time, multiple tax years are subject to audit by various taxing jurisdictions. We provide reserves for potential payments of tax to various tax authorities related to uncertain tax positions. Please see the Critical Accounting Estimates – Uncertain Tax Positions section in Item 7 of this Form 10-K, which is incorporated herein by reference.
Increases in statutory income tax rates and other adverse changes in applicable law in these jurisdictions could have an adverse effect on our results of operations. In the ordinary course of business, there are transactions and calculations where the ultimate tax determination is uncertain. At any one time, multiple tax years are subject to audit by various taxing jurisdictions.
We are subject to income tax in many of the various jurisdictions in which we operate. Increases in statutory income tax rates and other adverse changes in applicable law in these jurisdictions could have an adverse effect on our results of operations. In the ordinary course of business, there are transactions and calculations where the ultimate tax determination is uncertain.
This liability could include identity theft or other similar fraud-related claims. This liability could also include claims for other misuses or losses of personal information, including for unauthorized marketing purposes.
This liability could include identity theft or other similar fraud-related claims. This liability could also include claims for other misuses or losses of personal information, including for unauthorized marketing purposes. Other liabilities could include claims alleging misrepresentation of our privacy and data security practices.
Other liabilities could include claims alleging misrepresentation of our privacy and data security practices. 21 We rely on encryption and authentication technology licensed from third parties to provide the security and authentication necessary to secure online transmission of confidential consumer and team member information.
We rely on encryption and authentication technology licensed from third parties to provide the security and authentication necessary to secure online transmission of confidential consumer and team member information, which can include personal information.
Apple beneficially owned 22.5% of our common stock, Prescott General Partners, LLC and its affiliates beneficially owned 18.7% of our common stock, Jill Foss Watson beneficially owned 16.5% of our common stock, and John P.
Apple beneficially owned 20.0% of our common stock, Prescott General Partners LLC and its affiliates beneficially owned 19.3% of our common stock, Jill Foss Watson beneficially owned 14.2% of our common stock, and John P.
For a description of significant litigation to which we are a party, see Note 16 to the consolidated financial statements contained in Item 8 of this Form 10-K, which is incorporated herein by reference.
For a description of significant litigation to which we are a party, see Note 15 to the consolidated financial statements contained in Item 8 of this Form 10-K, which is incorporated herein by reference. 22 Changes in tax laws and the resolution of uncertain income tax matters could have a material adverse effect on our results of operations and cash flows from operations.
Removed
Our and our third-party service providers’ security measures may not be able to anticipate, prevent, detect or identify cybersecurity incidents in a timely manner or at all.
Added
We and our third-party service providers face ongoing threats to our systems and data and from time to time experience cyberattacks and other security incidents. Numerous national finance companies have disclosed security breaches involving sophisticated cyber-attacks, including ransomware, that were not recognized or detected until after such companies had been affected, notwithstanding the preventive measures such companies had in place.
Removed
Changes in tax laws and the resolution of uncertain income tax matters could have a material adverse effect on our results of operations and cash flows from operations. We are subject to income tax in many of the various jurisdictions in which we operate.
Added
Further, the rapid evolution and increased adoption of artificial intelligence technologies, increased sophistication and activities of organized crime, hackers, terrorists, activists and other external parties may increase our level of cybersecurity risk.
Added
Additionally, our increased use of mobile and cloud technologies could heighten these and other operational risks by increasing our attack surface, and any failure by mobile or cloud technology service providers to adequately safeguard their systems and prevent cyber-attacks could disrupt our operations and result in misappropriation, corruption or loss of confidential or propriety information.
Added
Moreover, the loss of confidential customer personal information could harm our reputation, result in the loss of business, and subject us to liability under laws that protect personal information, resulting in increased costs, loss of revenues and substantial penalties.
Added
For instance, the California Consumer Privacy Act of 2018, as amended (“CCPA”), provides for enhanced consumer protections for California residents and statutory fines for data security breaches or other CCPA violations.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe CISO, in coordination with the Director of Engineering Security and Compliance and the information security managers, is responsible for leading the assessment and management of cybersecurity risks. The Company’s information security team has extensive experience in information security and previous information security work experience in several industries, including defense, manufacturing, and financial services.
Biggest changeThe Company’s information security team has extensive experience in information security and previous information security work experience in several industries, including defense, manufacturing, and financial services. The CISO reports to the board of directors, the audit committee, and senior management on cybersecurity threats.
We have adopted aspects of the ISO 27002 and NIST SP 800-37 Rev. 2 frameworks, to which risk management in relation to our information systems is aligned. We categorize our information systems as either critical or secondary, depending on business value and/or risk of financial or compliance impact of cybersecurity incidents.
We have adopted aspects of the ISO 27002, NIST SP 800-37 Rev. 2, and NIST Cybersecurity frameworks, to which risk management in relation to our information systems is aligned. We categorize our information systems as either critical or secondary, depending on business value and/or risk of financial or compliance impact of cybersecurity incidents.
For more information about these risks, see the disclosure under the heading “Technology and Cybersecurity Risks” in Part I, Item 1A. Risk Factors. Our board of directors oversees the Company’s risk management process, including cybersecurity risks, directly and through its committees.
For more information about these risks, see the disclosure under the heading “Technology and Cybersecurity Risks” in Part I, Item 1A. Risk Factors. 23 Our board of directors oversees the Company’s risk management process, including cybersecurity risks, directly and through its committees.
The audit plan is reassessed throughout the year, and the plan is subject to modification by our internal audit team, e.g., based on such considerations as changes to resources, business operations, or internal or external risk factors.
The audit plan is reassessed throughout the year, and the plan is subject to modification by our internal audit team, e.g., based on such considerations as changes to resources, business operations, or internal or external risk factors. The CISO also issues an annual written report to the board of directors on the Program and material cybersecurity risks.
The Company routinely engages third-party industry experts to work in conjunction with our internal audit team in performing risk assessments of the Program and the Plan and of the Company’s execution of the Program and the Plan.
The Company routinely engages third-party industry experts to work in conjunction with our internal audit team in performing risk assessments of the Program and the Plan and of the Company’s execution of the Program and the Plan. The CISO, in coordination with the information security managers, is responsible for leading the assessment and management of cybersecurity risks.
The results of the risk assessment and the proposed audit plan are communicated to various leaders within the Company as well as the audit committee of the board of directors for input.
At least annually, our internal audit team conducts a formal risk assessment and develops an audit plan that identifies, assesses, and prioritizes risks that include cybersecurity. The results of the risk assessment and the proposed audit plan are communicated to various leaders within the Company as well as the audit committee of the board of directors for input.
The CISO, the Vice President, Engineering – Security, Compliance and Trust, or the Director of Engineering Security and Compliance also issues an annual written report to the board of directors on the Program and material cybersecurity risks. 23 The Company takes a risk-based approach to cybersecurity and has implemented cybersecurity policies throughout its operations that are designed to address cybersecurity threats and incidents.
The Company takes a risk-based approach to cybersecurity and has implemented cybersecurity policies throughout its operations that are designed to address cybersecurity threats and incidents.
Removed
Furthermore, the Company conducts periodic cybersecurity assessments and preparedness analyses, supervised by our designated Chief Information Security Officer (“CISO”). At least annually, our internal audit team conducts a formal risk assessment and develops an audit plan that identifies, assesses, and prioritizes risks that include cybersecurity.
Added
Furthermore, the Company conducts periodic cybersecurity assessments and preparedness analyses, supervised by our Vice President, Engineering – Security, Compliance, and Trust, who maintains a CRISC certification, has more than twenty years of experience in information security, risk management, and regulatory compliance in the financial services industry, and serves as our designated Chief Information Security Officer (“CISO”).
Removed
The CISO reports to the board of directors, the audit committee, and senior management on cybersecurity threats.
Added
The Company requires all team members with access to any of its information systems, including contractors, to complete social engineering, cybersecurity, and compliance training programs annually.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES Our headquarters is located in Southfield, Michigan, in an office building we purchased in 1993, which includes approximately 136,000 square feet of space. We also own a second office building in Southfield that we purchased in 2018, which includes approximately 297,000 square feet of space.
Biggest changeITEM 2. PROPERTIES Our headquarters is located in Southfield, Michigan, in an office building we purchased in 1993, which includes approximately 136,000 square feet of space. To take advantage of the national talent pool and to maximize team member satisfaction, we utilize a “remote first” strategy.
While remote work has become the primary experience for most of our team members, some team members, due to their personal preference or the nature of their responsibilities, have continued to work primarily in one of our office properties. Additionally, we have various on-site meetings, events and team building activities for which in-person attendance is encouraged.
While remote work has become the primary experience for most of our team members, some team members, due to the nature of their responsibilities, continue to work primarily on site at our headquarters. Additionally, we have various on-site meetings, events, and team building activities for which in-person attendance is encouraged.
Removed
We have a mortgage loan from a commercial bank that is secured by a first mortgage lien on the second office property. The COVID-19 pandemic had a significant impact on our work environment, as the vast majority of our team members began working remotely.
Added
Therefore, we continue to have a need for office space. 24
Removed
Because our remote operations and processes proved successful early on, we now pursue a “remote first” strategy to take advantage of the national talent pool and an increased rate of team member satisfaction.
Removed
Therefore, we continue to have a need for some amount of office space. As a result of the “remote first” strategy, we have significant excess space in the two office buildings that we own in Southfield, Michigan.
Removed
We are actively exploring options to reduce our office space, which could result in the sale or lease of one or both of our buildings.
Removed
As there is currently a significant amount of unoccupied office space in Southfield, we believe the market value of our buildings and improvements, land and land improvements, and office furniture and equipment is significantly less than their combined carrying value of $34.4 million.
Removed
If we were to reclassify one or both of these buildings as held for sale, we would be required to record an impairment charge to reduce the carrying value of the buildings held for sale to their estimated market value less costs to sell. 24

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeFor a description of significant litigation to which we are a party, see Note 16 to the consolidated financial statements contained in Item 8 of this Form 10-K, which is incorporated herein by reference.
Biggest changeFor a description of significant litigation to which we are a party, see Note 15 to the consolidated financial statements contained in Item 8 of this Form 10-K, which is incorporated herein by reference.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeAll rights reserved. 26 Stock Repurchases The following table summarizes our stock repurchases for the three months ended December 31, 2023: ISSUER PURCHASES OF EQUITY SECURITIES Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (1) October 1 through October 31, 2023 1,650 (2) $ 407.27 — 1,886,035 November 1 through November 30, 2023 — — — 1,886,035 December 1 through December 31, 2023 102,174 (3) 515.23 80,028 1,806,007 103,824 $ 513.52 80,028 (1) On August 21, 2023, our board of directors authorized the repurchase by us from time to time of up to two million shares of our common stock (the "August 2023 Authorization").
Biggest changeAll rights reserved. 26 Stock Repurchases The following table summarizes our stock repurchases for the three months ended December 31, 2024: ISSUER PURCHASES OF EQUITY SECURITIES Period Total Number of Shares Purchased Average Price Paid per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (2) October 1 through October 31, 2024 1,945 (3) $ 465.22 — 1,346,570 November 1 through November 30, 2024 178 (3) 463.76 — 1,346,570 December 1 through December 31, 2024 123,771 (4) 485.88 101,479 1,245,091 125,894 $ 485.53 101,479 (1) Average price paid per share excludes excise tax.
Stock Performance Graph The following graph compares the percentage change in the cumulative total shareholder return on our common stock during the five-year period ended December 31, 2023 with the cumulative total return on the NASDAQ Composite Index and a peer group index based upon approximately 100 companies included in the Dow Jones U.S. Financial Services Index.
Stock Performance Graph The following graph compares the percentage change in the cumulative total shareholder return on our common stock during the five-year period ended December 31, 2024 with the cumulative total return on the NASDAQ Composite Index and a peer group index based upon approximately 100 companies included in the Dow Jones U.S. Financial Services Index.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is traded on The Nasdaq Global Select Market ® under the symbol “CACC.” Holders As of February 1, 2024, we had 75 shareholders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is traded on The Nasdaq Global Select Market ® under the symbol “CACC.” Holders As of February 4, 2025, we had approximately 50 shareholders of record of our common stock.
The comparison assumes that $100 was invested on December 31, 2018 in our common stock and in the foregoing indices and assumes the reinvestment of dividends. Source: Zacks Investment Research, Inc. Used with permission. All rights reserved. Copyright 1980-2024. Index Data: Copyright NASDAQ OMX, Inc. Used with permission. All rights reserved. Index Data: Copyright Dow Jones, Inc. Used with permission.
The comparison assumes that $100 was invested on December 31, 2019 in our common stock and in the foregoing indices and assumes the reinvestment of dividends. Source: Zacks Investment Research, Inc. Used with permission. All rights reserved. Copyright 1980-2025. Index Data: Copyright Nasdaq, Inc. Used with permission. All rights reserved. Index Data: Copyright S&P Dow Jones Indices LLC.
(3) Amount includes 22,146 shares of common stock released to us by team members as payment of tax withholdings upon the conversion of restricted stock units to common stock.
(4) Amount includes 22,292 shares of common stock released to us by team members as payment of tax withholdings upon the settlement of restricted stock units in common stock.
The August 2023 Authorization, which was announced on August 24, 2023, does not have a specified expiration date. Repurchases under the August 2023 Authorization may be made in the open market, through privately negotiated transactions, through block trades, pursuant to trading plans adopted in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934 or otherwise.
Repurchases under the August 2023 Authorization may be made in the open market, through privately negotiated transactions, through block trades, pursuant to trading plans adopted in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934 or otherwise.
(2) Amount includes 1,650 shares of common stock released to us by team members as payment of tax withholdings upon the conversion of restricted stock units to common stock and the vesting of restricted stock units.
(3) Consists of shares of common stock released to us by team members as payment of tax withholdings upon the settlement of restricted stock units in common stock and the vesting of restricted stock units.
Added
As of January 1, 2023, our share repurchases in excess of issuances are subject to a 1% excise tax enacted by the Inflation Reduction Act of 2022. Any excise tax incurred is recognized as part of the cost basis of the shares acquired in the consolidated statements of shareholders’ equity.
Added
(2) On August 21, 2023, our board of directors authorized the repurchase by us from time to time of up to two million shares of our common stock (the "August 2023 Authorization"). The August 2023 Authorization, which was announced on August 24, 2023, does not have a specified expiration date.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeForecasting collection rates accurately is challenging, so we have designed our business model to produce acceptable levels of profitability across our portfolio, even if Loan performance is less than forecasted in the aggregate. 30 The following table presents information on Consumer Loan assignments for each of the last 10 years: Average Total Assignment Volume Consumer Loan Assignment Year Consumer Loan (1) Advance (2) Initial Loan Term (in months) Unit Volume Dollar Volume (2) (in millions) 2014 $ 15,692 $ 7,492 47 223,998 $ 1,675.7 2015 16,354 7,272 50 298,288 2,167.0 2016 18,218 7,976 53 330,710 2,635.5 2017 20,230 8,746 55 328,507 2,873.1 2018 22,158 9,635 57 373,329 3,595.8 2019 23,139 10,174 57 369,805 3,772.2 2020 24,262 10,656 59 341,967 3,641.2 2021 25,632 11,790 59 268,730 3,167.8 2022 27,242 12,924 60 280,467 3,625.3 2023 27,025 12,475 61 332,499 4,147.8 (1) Represents the repayments that we were contractually owed on Consumer Loans at the time of assignment, which include both principal and interest.
Biggest changeThe quarterly changes to our forecast of future net cash flows from our Loan portfolio for the period from January 1, 2020 through December 31, 2024 are shown in the following table: (Dollars in millions) Increase (Decrease) in Forecasted Net Cash Flows Three Months Ended Total Loans % Change from Forecast at Beginning of Period March 31, 2020 $ (206.5) -2.3 % June 30, 2020 24.4 0.3 % September 30, 2020 138.5 1.5 % December 31, 2020 (2.7) 0.0 % March 31, 2021 107.4 1.1 % June 30, 2021 104.5 1.1 % September 30, 2021 82.3 0.9 % December 31, 2021 31.9 0.3 % March 31, 2022 110.2 1.2 % June 30, 2022 (43.4) -0.5 % September 30, 2022 (85.4) -0.9 % December 31, 2022 (41.1) -0.5 % March 31, 2023 9.4 0.1 % June 30, 2023 (89.3) -0.9 % September 30, 2023 (69.4) -0.7 % December 31, 2023 (57.0) -0.6 % March 31, 2024 (30.8) -0.3 % June 30, 2024 (189.3) -1.7 % September 30, 2024 (62.8) -0.6 % December 31, 2024 (31.1) -0.3 % 31 The following table presents information on Consumer Loan assignments for each of the last 10 years: Average Total Assignment Volume Consumer Loan Assignment Year Consumer Loan (1) Advance (2) Initial Loan Term (in months) Unit Volume Dollar Volume (2) (in millions) 2015 $ 16,354 $ 7,272 50 298,288 $ 2,167.0 2016 18,218 7,976 53 330,710 2,635.5 2017 20,230 8,746 55 328,507 2,873.1 2018 22,158 9,635 57 373,329 3,595.8 2019 23,139 10,174 57 369,805 3,772.2 2020 24,262 10,656 59 341,967 3,641.2 2021 25,632 11,790 59 268,730 3,167.8 2022 27,242 12,924 60 280,467 3,625.3 2023 27,025 12,475 61 332,499 4,147.8 2024 26,497 11,961 61 386,126 4,618.4 (1) Represents the repayments that we were contractually owed on Consumer Loans at the time of assignment, which include both principal and interest.
Our results for the year ended December 31, 2023 included: • A larger decrease in forecasted collection rates The decrease in forecasted collection rates decreased forecasted net cash flows from our Loan portfolio by $206.3 million, or 2.3%, compared to a decrease in forecasted collection rates during 2022 that decreased forecasted net cash flows from our Loan portfolio by $59.7 million, or 0.7%. • A decrease in forecasted profitability for Consumer Loans assigned in 2020 through 2022 Forecasted profitability was lower than our estimates at December 31, 2022, due to a decline in forecasted collection rates during 2023 and slower forecasted net cash flow timing during 2023, primarily as a result of a decrease in Consumer Loan prepayments to below-average levels. • Growth in Consumer Loan assignment volume and the average balance of our Loan portfolio Unit and dollar volumes grew 18.6% and 14.4%, respectively, as compared to 2022.
Our results for the year ended December 31, 2023 included: • A larger decline in forecasted collection rates The decline in forecasted collection rates decreased forecasted net cash flows from our Loan portfolio by $206.3 million, or 2.3%, compared to a decrease in forecasted collection rates during 2022 that decreased forecasted net cash flows from our Loan portfolio by $59.7 million, or 0.7%. • A decrease in forecasted profitability for Consumer Loans assigned in 2020 through 2022 Forecasted profitability was lower than our estimates at December 31, 2022, due to a decline in forecasted collection rates during 2023 and slower forecasted net cash flow timing during 2023, primarily as a result of a decrease in Consumer Loan prepayments to below-average levels. • Growth in Consumer Loan assignment volume and the average balance of our Loan portfolio Unit and dollar volumes grew 18.6% and 14.4%, respectively, as compared to 2022.
Because our business is focused on consumers who do not qualify for conventional automobile financing, the actual rates of delinquencies, defaults, repossessions, and losses on our Consumer Loans could be higher than those experienced in the general automobile finance industry and could be more dramatically affected by a general economic downturn. 41 Premiums Earned Nature of Estimates Required.
Because our business is focused on consumers who do not qualify for conventional automobile financing, the actual rates of delinquencies, defaults, repossessions, and losses on our Consumer Loans could be higher than those experienced in the general automobile finance industry and could be more dramatically affected by a general economic downturn. Premiums Earned Nature of Estimates Required.
To the extent we prevail in matters for which a liability has been established or are required to pay amounts in excess of our established liability, our effective income tax rate in future periods could be materially affected. 42 Liquidity and Capital Resources We need capital to maintain and grow our business.
To the extent we prevail in matters for which a liability has been established or are required to pay amounts in excess of our established liability, our effective income tax rate in future periods could be materially affected. Liquidity and Capital Resources We need capital to maintain and grow our business.
We estimate the amount and timing of future collections and Dealer Holdback payments. These estimates impact Loans receivable and allowance for credit losses on our balance sheet and finance charges and provision for credit losses on our income statement. 39 Assumptions and Approaches Used.
We estimate the amount and timing of future collections and Dealer Holdback payments. These estimates impact Loans receivable and allowance for credit losses on our balance sheet and finance charges and provision for credit losses on our income statement. Assumptions and Approaches Used.
(2) Represents advances paid to Dealers on Consumer Loans assigned under our Portfolio Program and one-time payments made to Dealers to purchase Consumer Loans assigned under our Purchase Program as a percentage of the initial balance of the Consumer Loans. Payments of Dealer Holdback and accelerated Dealer Holdback are not included.
(2) Represents advances paid to Dealers on Consumer Loans assigned under the Portfolio Program and one-time payments made to Dealers to purchase Consumer Loans assigned under the Purchase Program as a percentage of the initial balance of the Consumer Loans. Payments of Dealer Holdback and accelerated Dealer Holdback are not included.
If the various financing alternatives were to become limited or unavailable to us, our operations and liquidity could be materially and adversely affected. Market Risk We are exposed primarily to market risks associated with movements in interest rates. Our policies and procedures prohibit the use of financial instruments for speculative purposes.
If the various financing alternatives were to become limited or unavailable to us, our operations and liquidity could be materially and adversely affected. Market Risk We are exposed primarily to market risks associated with movements in interest rates. Our policies and procedures prohibit the use of financial instruments for speculative purposes. 44 Interest Rate Risk.
The average balance of our Loan portfolio increased 5.0% as compared to 2022. • An increase in the initial spread on Consumer Loan assignments The initial spread increased to 21.3% compared to 20.1% on Consumer Loans assigned in 2022. • An increase in our average cost of debt The increase in our average cost of debt was primarily a result of higher interest rates on recently-completed or extended secured financings and the repayment of older secured financings with lower interest rates. • A decrease in common shares outstanding due to stock repurchases We repurchased 0.4 million shares, or 2.8% of the shares outstanding at the beginning of the year.
The average balance of our Loan portfolio increased 5.0% as compared to 2022. • An increase in the initial spread on Consumer Loan assignments The initial spread increased to 21.3% compared to 20.1% on Consumer Loans assigned in 2022. • An increase in our average cost of debt Our average cost of debt increased from 3.6% to 5.5%, primarily as a result of higher interest rates on recently completed or extended secured financings and the repayment of older secured financings with lower interest rates. • A decrease in common shares outstanding due to stock repurchases We repurchased 0.4 million shares, or 2.8% of the shares outstanding at the beginning of the year.
For 2019 and prior Consumer Loan assignments, the risk of a material forecast variance is modest, as we have currently realized in excess of 90% of the expected collections. Conversely, the forecasted collection rates for more recent Consumer Loan assignments are less certain as a significant portion of our forecast has not been realized.
For 2020 and prior Consumer Loan assignments, the risk of a material forecast variance is modest, as we have currently realized in excess of 90% of the expected collections. Conversely, the forecasted collection rates for more recent Consumer Loan assignments are less certain as a significant portion of our forecast has not been realized.
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
The following table compares our aggregated forecast of Consumer Loan collection rates as of December 31, 2023, with the aggregated forecasts as of December 31, 2022, as of December 31, 2021, and at the time of assignment, segmented by year of assignment: Forecasted Collection Percentage as of (1) Current Forecast Variance from Consumer Loan Assignment Year December 31, 2023 December 31, 2022 December 31, 2021 Initial Forecast December 31, 2022 December 31, 2021 Initial Forecast 2014 71.7 % 71.7 % 71.5 % 71.8 % 0.0 % 0.2 % -0.1 % 2015 65.2 % 65.2 % 65.1 % 67.7 % 0.0 % 0.1 % -2.5 % 2016 63.8 % 63.8 % 63.6 % 65.4 % 0.0 % 0.2 % -1.6 % 2017 64.7 % 64.7 % 64.4 % 64.0 % 0.0 % 0.3 % 0.7 % 2018 65.5 % 65.2 % 65.1 % 63.6 % 0.3 % 0.4 % 1.9 % 2019 66.9 % 66.6 % 66.5 % 64.0 % 0.3 % 0.4 % 2.9 % 2020 67.6 % 67.8 % 67.9 % 63.4 % -0.2 % -0.3 % 4.2 % 2021 64.5 % 66.2 % 66.5 % 66.3 % -1.7 % -2.0 % -1.8 % 2022 62.7 % 66.3 % — 67.5 % -3.6 % — -4.8 % 2023 67.4 % — — 67.5 % — — -0.1 % (1) Represents the total forecasted collections we expect to collect on the Consumer Loans as a percentage of the repayments that we were contractually owed on the Consumer Loans at the time of assignment.
The following table compares our aggregated forecast of Consumer Loan collection rates as of December 31, 2024, with the aggregated forecasts as of December 31, 2023, as of December 31, 2022, and at the time of assignment, segmented by year of assignment: Forecasted Collection Percentage as of (1) Current Forecast Variance from Consumer Loan Assignment Year December 31, 2024 December 31, 2023 December 31, 2022 Initial Forecast December 31, 2023 December 31, 2022 Initial Forecast 2015 65.3 % 65.2 % 65.2 % 67.7 % 0.1 % 0.1 % -2.4 % 2016 63.9 % 63.8 % 63.8 % 65.4 % 0.1 % 0.1 % -1.5 % 2017 64.7 % 64.7 % 64.7 % 64.0 % 0.0 % 0.0 % 0.7 % 2018 65.5 % 65.5 % 65.2 % 63.6 % 0.0 % 0.3 % 1.9 % 2019 67.2 % 66.9 % 66.6 % 64.0 % 0.3 % 0.6 % 3.2 % 2020 67.7 % 67.6 % 67.8 % 63.4 % 0.1 % -0.1 % 4.3 % 2021 63.8 % 64.5 % 66.2 % 66.3 % -0.7 % -2.4 % -2.5 % 2022 60.2 % 62.7 % 66.3 % 67.5 % -2.5 % -6.1 % -7.3 % 2023 64.3 % 67.4 % — 67.5 % -3.1 % — -3.2 % 2024 66.5 % — — 67.2 % — — -0.7 % (1) Represents the total forecasted collections we expect to collect on the Consumer Loans as a percentage of the repayments that we were contractually owed on the Consumer Loans at the time of assignment.
For additional information, see Note 11 to the consolidated financial statements contained in Item 8 of this Form 10-K, which is incorporated herein by reference. Critical Accounting Estimates Our consolidated financial statements are prepared in accordance with GAAP.
For additional information, see Note 10 to the consolidated financial statements contained in Item 8 of this Form 10-K, which is incorporated herein by reference. 39 Critical Accounting Estimates Our consolidated financial statements are prepared in accordance with GAAP.
The following table presents aggregate forecasted Consumer Loan collection rates, advance rates, and spreads (the forecasted collection rate less the advance rate), and the percentage of the forecasted collections that had been realized as of December 31, 2023, as well as forecasted collection rates and spreads at the time of assignment.
The following table presents aggregate forecasted Consumer Loan collection rates, advance rates, and spreads (the forecasted collection rate less the advance rate), and the percentage of the forecasted collections that had been realized as of December 31, 2024, as well as forecasted collection rates and spreads at the time of assignment.
Payments of Dealer Holdback and accelerated Dealer Holdback are not included. (2) Presented as a percentage of total forecasted collections. 31 The risk of a material change in our forecasted collection rate declines as the Consumer Loans age.
Payments of Dealer Holdback and accelerated Dealer Holdback are not included. (2) Presented as a percentage of total forecasted collections. 32 The risk of a material change in our forecasted collection rate declines as the Consumer Loans age.
(2) We have contractual obligations to pay Dealer Holdback to Dealers. Payments of Dealer Holdback are contingent upon the receipt of consumer payments and the repayment of advances. The amounts presented represent our forecast as of December 31, 2023.
(2) We have contractual obligations to pay Dealer Holdback to Dealers. Payments of Dealer Holdback are contingent upon the receipt of consumer payments and the repayment of advances. The amounts presented represent our forecast as of December 31, 2024.
Changes in the amount and timing of forecasted net cash flows are recognized in the period of change through provision for credit losses. The implementation of the adjustment to our forecasting methodology during the second quarter of 2023 reduced forecasted net cash flows by $44.5 million, or 0.5%, and increased provision for credit losses by $71.3 million.
Changes in the amount and timing of forecasted net cash flows are recognized in the period of change as a provision for credit losses. The implementation of the adjustment to our forecasting methodology during the second quarter of 2023 reduced forecasted net cash flows by $44.5 million, or 0.5%, and increased provision for credit losses by $71.3 million.
(2) Represents advances paid to Dealers on Consumer Loans assigned under our Portfolio Program and one-time payments made to Dealers to purchase Consumer Loans assigned under our Purchase Program. Payments of Dealer Holdback and accelerated Dealer Holdback are not included.
(2) Represents advances paid to Dealers on Consumer Loans assigned under the Portfolio Program and one-time payments made to Dealers to purchase Consumer Loans assigned under the Purchase Program. Payments of Dealer Holdback and accelerated Dealer Holdback are not included.
The following table compares our forecast of aggregate Consumer Loan collection rates as of December 31, 2023 with the forecasts at the time of assignment, for Dealer Loans and Purchased Loans separately: Dealer Loans Purchased Loans Forecasted Collection Percentage as of (1) Forecasted Collection Percentage as of (1) Consumer Loan Assignment Year December 31, 2023 Initial Forecast Variance December 31, 2023 Initial Forecast Variance 2014 71.6 % 71.9 % -0.3 % 72.6 % 70.9 % 1.7 % 2015 64.6 % 67.5 % -2.9 % 68.9 % 68.5 % 0.4 % 2016 63.0 % 65.1 % -2.1 % 66.1 % 66.5 % -0.4 % 2017 64.0 % 63.8 % 0.2 % 66.3 % 64.6 % 1.7 % 2018 64.9 % 63.6 % 1.3 % 66.8 % 63.5 % 3.3 % 2019 66.5 % 63.9 % 2.6 % 67.5 % 64.2 % 3.3 % 2020 67.4 % 63.3 % 4.1 % 67.8 % 63.6 % 4.2 % 2021 64.2 % 66.3 % -2.1 % 65.0 % 66.3 % -1.3 % 2022 62.0 % 67.3 % -5.3 % 64.3 % 68.0 % -3.7 % 2023 66.4 % 66.8 % -0.4 % 70.1 % 69.4 % 0.7 % (1) The forecasted collection rates presented for Dealer Loans and Purchased Loans reflect the Consumer Loan classification at the time of assignment.
The following table compares our forecast of aggregate Consumer Loan collection rates as of December 31, 2024 with the forecasts at the time of assignment, for Dealer Loans and Purchased Loans separately: Dealer Loans Purchased Loans Forecasted Collection Percentage as of (1) Forecasted Collection Percentage as of (1) Consumer Loan Assignment Year December 31, 2024 Initial Forecast Variance December 31, 2024 Initial Forecast Variance 2015 64.6 % 67.5 % -2.9 % 69.0 % 68.5 % 0.5 % 2016 63.1 % 65.1 % -2.0 % 66.1 % 66.5 % -0.4 % 2017 64.1 % 63.8 % 0.3 % 66.3 % 64.6 % 1.7 % 2018 64.9 % 63.6 % 1.3 % 66.8 % 63.5 % 3.3 % 2019 66.8 % 63.9 % 2.9 % 67.9 % 64.2 % 3.7 % 2020 67.5 % 63.3 % 4.2 % 67.9 % 63.6 % 4.3 % 2021 63.5 % 66.3 % -2.8 % 64.3 % 66.3 % -2.0 % 2022 59.5 % 67.3 % -7.8 % 62.1 % 68.0 % -5.9 % 2023 63.1 % 66.8 % -3.7 % 67.7 % 69.4 % -1.7 % 2024 65.4 % 66.3 % -0.9 % 70.7 % 70.7 % 0.0 % (1) The forecasted collection rates presented for Dealer Loans and Purchased Loans reflect the Consumer Loan classification at the time of assignment.
There are various restrictive covenants to which we are subject under each financing arrangement, and we were in compliance with those covenants as of December 31, 2023.
There are various restrictive covenants to which we are subject under each financing arrangement, and we were in compliance with those covenants as of December 31, 2024.
Forecasted collection rates are negatively impacted by canceled Consumer Loans as the contractual amount owed is not removed from the denominator for purposes of computing forecasted collection rates. 32 The following table presents aggregate forecasted Consumer Loan collection rates, advance rates, and spreads (the forecasted collection rate less the advance rate) as of December 31, 2023 for Dealer Loans and Purchased Loans separately.
Forecasted collection rates are negatively impacted by canceled Consumer Loans as the contractual amount owed is not removed from the denominator for purposes of computing forecasted collection rates. 33 The following table presents aggregate forecasted Consumer Loan collection rates, advance rates, and spreads (the forecasted collection rate less the advance rate) as of December 31, 2024 for Dealer Loans and Purchased Loans separately.
During the first half of 2023, we experienced a decrease in Consumer Loan prepayments to below-average levels and, as a result, slowed our forecasted net cash flow timing. The below-average levels of Consumer Loan prepayments continued through the fourth quarter of 2023. Historically, Consumer Loan prepayments have been lower in periods with less availability of consumer credit.
We had experienced a decrease in Consumer Loan prepayments to below-average levels and, as a result, slowed our forecasted net cash flow timing. The below-average levels of Consumer Loan prepayments continued through the fourth quarter of 2023. Historically, Consumer Loan prepayments have been lower in periods with less availability of consumer credit.
Access to Capital Our strategy for accessing capital on acceptable terms needed to maintain and grow the business is to: (1) maintain consistent financial performance; (2) maintain modest financial leverage; and (3) maintain multiple funding sources. Our funded debt to equity ratio was 2.9 to 1 as of December 31, 2023.
Access to Capital Our strategy for accessing capital on acceptable terms needed to maintain and grow the business is to: (1) maintain consistent financial performance; (2) maintain modest financial leverage; and (3) maintain multiple funding sources. Our funded debt to equity ratio was 3.6 to 1 as of December 31, 2024.
New Accounting Update Not Yet Adopted See Note 2 to the consolidated financial statements contained in Item 8 of this Form 10-K, which is incorporated herein by reference, for information concerning the following new accounting update and the impact of the implementation of this update on our financial statements: • Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative. • Improvements to Reportable Segment Disclosures • Improvements to Income Tax Disclosures Forward-Looking Statements We make forward-looking statements in this report and may make such statements in future filings with the SEC.
New Accounting Updates Not Yet Adopted See Note 2 to the consolidated financial statements contained in Item 8 of this Form 10-K, which is incorporated herein by reference, for information concerning the following new accounting updates and the impact of the implementation of these updates on our financial statements: • Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative • Improvements to Income Tax Disclosures • Disaggregation of Income Statement Expenses Forward-Looking Statements We make forward-looking statements in this report and may make such statements in future filings with the SEC.
We currently utilize the following primary forms of debt financing: (1) our revolving secured line of credit facility; (2) Warehouse facilities; (3) Term ABS financings; and (4) senior notes. 33 Consumer Loan Volume The following table summarizes changes in Consumer Loan assignment volume in each of the last three years as compared to the same period in the previous year: Year over Year Percent Change For the Year Ended December 31, Unit Volume Dollar Volume (1) 2021 -21.4 % -13.0 % 2022 4.4 % 14.5 % 2023 18.6 % 14.4 % (1) Represents advances paid to Dealers on Consumer Loans assigned under our Portfolio Program and one-time payments made to Dealers to purchase Consumer Loans assigned under our Purchase Program.
We currently utilize the following primary forms of debt financing: (1) our revolving secured line of credit facility; (2) Warehouse facilities; (3) Term ABS financings; and (4) senior notes. 34 Consumer Loan Volume The following table summarizes changes in Consumer Loan assignment volume in each of the last three years as compared to the same period in the previous year: Year over Year Percent Change For the Year Ended December 31, Unit Volume Dollar Volume (1) 2022 4.4 % 14.5 % 2023 18.6 % 14.4 % 2024 16.1 % 11.3 % (1) Represents advances paid to Dealers on Consumer Loans assigned under the Portfolio Program and one-time payments made to Dealers to purchase Consumer Loans assigned under the Purchase Program.
Consumer Loans are assigned to us as either Dealer Loans through our Portfolio Program or Purchased Loans through our Purchase Program.
Consumer Loans are assigned to us as either Dealer Loans through the Portfolio Program or Purchased Loans through the Purchase Program.
We adjusted our methodology for forecasting the amount and timing of future net cash flows from our Loan portfolio through the utilization of more recent Consumer Loan performance and Consumer Loan prepayment data.
During the second quarter of 2023, we adjusted our methodology for forecasting the amount and timing of future net cash flows from our Loan portfolio through the utilization of more recent Consumer Loan performance and Consumer Loan prepayment data.
Forecasted Collection % as of Spread % as of Consumer Loan Assignment Year December 31, 2023 Initial Forecast Advance % (1) December 31, 2023 Initial Forecast % of Forecast Realized (2) 2014 71.7 % 71.8 % 47.7 % 24.0 % 24.1 % 99.8 % 2015 65.2 % 67.7 % 44.5 % 20.7 % 23.2 % 99.5 % 2016 63.8 % 65.4 % 43.8 % 20.0 % 21.6 % 99.1 % 2017 64.7 % 64.0 % 43.2 % 21.5 % 20.8 % 98.7 % 2018 65.5 % 63.6 % 43.5 % 22.0 % 20.1 % 96.9 % 2019 66.9 % 64.0 % 44.0 % 22.9 % 20.0 % 92.5 % 2020 67.6 % 63.4 % 43.9 % 23.7 % 19.5 % 83.7 % 2021 64.5 % 66.3 % 46.0 % 18.5 % 20.3 % 69.1 % 2022 62.7 % 67.5 % 47.4 % 15.3 % 20.1 % 43.5 % 2023 67.4 % 67.5 % 46.2 % 21.2 % 21.3 % 14.2 % (1) Represents advances paid to Dealers on Consumer Loans assigned under our Portfolio Program and one-time payments made to Dealers to purchase Consumer Loans assigned under our Purchase Program as a percentage of the initial balance of the Consumer Loans.
Forecasted Collection % as of Spread % as of Consumer Loan Assignment Year December 31, 2024 Initial Forecast Advance % (1) December 31, 2024 Initial Forecast % of Forecast Realized (2) 2015 65.3 % 67.7 % 44.5 % 20.8 % 23.2 % 99.7 % 2016 63.9 % 65.4 % 43.8 % 20.1 % 21.6 % 99.5 % 2017 64.7 % 64.0 % 43.2 % 21.5 % 20.8 % 99.2 % 2018 65.5 % 63.6 % 43.5 % 22.0 % 20.1 % 98.6 % 2019 67.2 % 64.0 % 44.0 % 23.2 % 20.0 % 96.9 % 2020 67.7 % 63.4 % 43.9 % 23.8 % 19.5 % 92.4 % 2021 63.8 % 66.3 % 46.0 % 17.8 % 20.3 % 83.6 % 2022 60.2 % 67.5 % 47.4 % 12.8 % 20.1 % 66.0 % 2023 64.3 % 67.5 % 46.2 % 18.1 % 21.3 % 43.1 % 2024 66.5 % 67.2 % 45.1 % 21.4 % 22.1 % 15.1 % (1) Represents advances paid to Dealers on Consumer Loans assigned under the Portfolio Program and one-time payments made to Dealers to purchase Consumer Loans assigned under the Purchase Program as a percentage of the initial balance of the Consumer Loans.
The financing has an expected average annualized cost of 6.8% (including the initial purchasers’ fees and other costs), and it will revolve for 24 months, after which it will amortize based upon the cash flows on the underlying Loans.
The financing has an expected average annualized cost of 6.4% (including upfront fees and other costs), and it will revolve for 24 months, after which it will amortize based upon the cash flows on the underlying Loans.
Variances in the pattern of future claims from our current estimates would impact the timing of premiums recognized in future periods. A 10% change in premiums earned for the year ended December 31, 2023 would have affected 2023 consolidated net income by approximately $6.1 million. Contingencies Nature of Estimates Required.
Variances in the pattern of future claims from our current estimates would impact the timing of premiums recognized in future periods. A 10% change in premiums earned for the year ended December 31, 2024 would have affected 2024 consolidated net income by approximately $7.4 million. Contingencies Nature of Estimates Required.
Due to the GAAP treatment of contractual net cash flows we do not expect to realize at the time of loan assignment (i.e. significant expense at the time of loan assignment, which is offset by higher revenue in subsequent periods), we do not believe the GAAP methodology we employ provides sufficient transparency into the economics of our business.
Due to the GAAP treatment of contractual net cash flows we do not expect to realize at the time of loan assignment (i.e. significant expense at the time of loan assignment, which is offset by higher revenue in subsequent periods), we do not believe the GAAP methodology we employ provides sufficient transparency into the economics of our business, including our results of operations, financial condition, and financial leverage.
(3) A lease liability of $2.7 million is recognized within accounts payable and accrued liabilities in our consolidated balance sheet as of December 31, 2023. (4) Purchase obligations consist primarily of contractual obligations related to our information system needs.
(3) A lease liability of $1.6 million is recognized within accounts payable and accrued liabilities in our consolidated balance sheet as of December 31, 2024. (4) Purchase obligations consist primarily of contractual obligations related to our information system needs.
The $206.3 million decrease in forecasted net cash flows during 2023 included the impact of an adjustment to our forecasting methodology during the second quarter of 2023, which, upon implementation, decreased our estimate of future net cash flows by $44.5 million, or 0.5%, and increased our provision for credit losses by $71.3 million.
The $206.3 million decrease in forecasted net cash flows during 2023 was composed of an ordinary decrease in forecasted net cash flows of $161.8 million, or 1.8%, and an adjustment to our forecasting methodology during the second quarter of 2023, which, upon implementation, decreased our estimate of future net cash flows by $44.5 million, or 0.5%, and increased our provision for credit losses by $71.3 million.
Dollar volume increased less than unit volume in 2023 due to a decrease in the average advance paid, due to decreases in the average advance rate and the average size of Consumer Loans assigned. Unit volume for 2023 was 10.9% less than unit volume for 2018, which was the highest unit volume in our history.
Dollar volume increased less than unit volume in 2024 due to a decrease in the average advance paid, due to decreases in the average advance rate and the average size of Consumer Loans assigned. Unit volume for 2024 was the highest unit volume in our history.
Dealer Loans Purchased Loans Consumer Loan Assignment Year Forecasted Collection % (1) Advance % (1)(2) Spread % Forecasted Collection % (1) Advance % (1)(2) Spread % 2014 71.6 % 47.2 % 24.4 % 72.6 % 51.8 % 20.8 % 2015 64.6 % 43.4 % 21.2 % 68.9 % 50.2 % 18.7 % 2016 63.0 % 42.1 % 20.9 % 66.1 % 48.6 % 17.5 % 2017 64.0 % 42.1 % 21.9 % 66.3 % 45.8 % 20.5 % 2018 64.9 % 42.7 % 22.2 % 66.8 % 45.2 % 21.6 % 2019 66.5 % 43.1 % 23.4 % 67.5 % 45.6 % 21.9 % 2020 67.4 % 43.0 % 24.4 % 67.8 % 45.5 % 22.3 % 2021 64.2 % 45.1 % 19.1 % 65.0 % 47.7 % 17.3 % 2022 62.0 % 46.4 % 15.6 % 64.3 % 50.1 % 14.2 % 2023 66.4 % 44.8 % 21.6 % 70.1 % 49.8 % 20.3 % (1) The forecasted collection rates and advance rates presented for Dealer Loans and Purchased Loans reflect the Consumer Loan classification at the time of assignment.
Dealer Loans Purchased Loans Consumer Loan Assignment Year Forecasted Collection % (1) Advance % (1)(2) Spread % Forecasted Collection % (1) Advance % (1)(2) Spread % 2015 64.6 % 43.4 % 21.2 % 69.0 % 50.2 % 18.8 % 2016 63.1 % 42.1 % 21.0 % 66.1 % 48.6 % 17.5 % 2017 64.1 % 42.1 % 22.0 % 66.3 % 45.8 % 20.5 % 2018 64.9 % 42.7 % 22.2 % 66.8 % 45.2 % 21.6 % 2019 66.8 % 43.1 % 23.7 % 67.9 % 45.6 % 22.3 % 2020 67.5 % 43.0 % 24.5 % 67.9 % 45.5 % 22.4 % 2021 63.5 % 45.1 % 18.4 % 64.3 % 47.7 % 16.6 % 2022 59.5 % 46.4 % 13.1 % 62.1 % 50.1 % 12.0 % 2023 63.1 % 44.8 % 18.3 % 67.7 % 49.8 % 17.9 % 2024 65.4 % 44.1 % 21.3 % 70.7 % 48.9 % 21.8 % (1) The forecasted collection rates and advance rates presented for Dealer Loans and Purchased Loans reflect the Consumer Loan classification at the time of assignment.
Although the advance rate on Purchased Loans is higher as compared to the advance rate on Dealer Loans, Purchased Loans do not require us to pay Dealer Holdback. The spread as of December 31, 2023 on 2023 Dealer Loans was 21.6%, as compared to a spread of 15.6% on 2022 Dealer Loans.
Although the advance rate on Purchased Loans is higher as compared to the advance rate on Dealer Loans, Purchased Loans do not require us to pay Dealer Holdback. The spread as of December 31, 2024 on 2024 Dealer Loans was 21.3%, as compared to a spread of 18.3% on 2023 Dealer Loans.
Key Factors. Variances in the amount and timing of future net cash flows from current estimates could materially impact earnings in future periods. A 1% decline in the forecasted future net cash flows on Loans as of December 31, 2023 would have reduced 2023 consolidated net income by approximately $51.2 million.
Variances in the amount and timing of future net cash flows from current estimates could materially impact earnings in future periods. A 1% decline in the forecasted future net cash flows on Loans as of December 31, 2024 would have reduced 2024 consolidated net income by approximately $59.7 million.
We follow a two-step approach for recognizing uncertain tax positions. First, we evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more-likely-than-not that the position will be sustained upon examination, including resolution of related appeals or litigation processes, if any.
First, we evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more-likely-than-not that the position will be sustained upon examination, including resolution of related appeals or litigation processes, if any.
For the year ended December 31, 2022, forecasted collection rates improved for Consumer Loans assigned in 2014, 2016, and 2017, declined for Consumer Loans assigned in 2021 and 2022, and were generally consistent with expectations at the start of the period for all other assignment years presented.
For the year ended December 31, 2024, forecasted collection rates improved for Consumer Loans assigned in 2019, declined for Consumer Loans assigned in 2021 through 2024, and were generally consistent with expectations at the start of the period for all other assignment years presented.
The following table shows the percentage of Consumer Loans assigned to us under each of the programs for each of the last three years: Unit Volume Dollar Volume (1) For the Years Ended December 31, Portfolio Program Purchase Program Portfolio Program Purchase Program 2021 67.9 % 32.1 % 65.0 % 35.0 % 2022 73.5 % 26.5 % 69.8 % 30.2 % 2023 74.0 % 26.0 % 70.7 % 29.3 % (1) Represents advances paid to Dealers on Consumer Loans assigned under our Portfolio Program and one-time payments made to Dealers to purchase Consumer Loans assigned under our Purchase Program.
The following table shows the percentage of Consumer Loans assigned to us under each of the programs for each of the last three years: Unit Volume Dollar Volume (1) For the Years Ended December 31, Portfolio Program Purchase Program Portfolio Program Purchase Program 2022 73.5 % 26.5 % 69.8 % 30.2 % 2023 74.0 % 26.0 % 70.7 % 29.3 % 2024 78.7 % 21.3 % 77.5 % 22.5 % (1) Represents advances paid to Dealers on Consumer Loans assigned under the Portfolio Program and one-time payments made to Dealers to purchase Consumer Loans assigned under the Purchase Program.
The financing has an expected average annualized cost of 7.3% (including the initial purchasers’ fees and other costs), and it will revolve for 24 months, after which it will amortize based upon the cash flows on the underlying Loans.
The financing has an expected average annualized cost of 7.8% (including upfront fees and other costs), and it will revolve for 36 months, after which it will amortize based upon the cash flows on the underlying Loans.
The financing has an expected average annualized cost of 7.3% (including the initial purchasers’ fees and other costs), and it will revolve for 24 months, after which it will amortize based upon the cash flows on the underlying Loans.
The financing has an expected average annualized cost of 6.5% (including upfront fees and other costs), and it will revolve for 24 months, after which it will amortize based upon the cash flows on the underlying Loans.
We use a statistical model to estimate the expected collection rate for each Consumer Loan at the time of assignment. We continue to evaluate the expected collection rate for each Consumer Loan subsequent to assignment. Our evaluation becomes more accurate as the Consumer Loans age, as we use actual performance data in our forecast.
We continue to evaluate the expected collection rate for each Consumer Loan subsequent to assignment. Our evaluation becomes more accurate as the Consumer Loans age, as we use actual performance data in our forecast.
The increase of $69.1 million, or 4.1%, was primarily due to an increase in the average net Loans receivable balance, as follows: (Dollars in millions) For the Years Ended December 31, 2023 2022 Change Average net Loans receivable balance $ 6,627.8 $ 6,311.3 $ 316.5 Average yield on our Loan portfolio 26.5 % 26.7 % -0.2 % The following table summarizes the impact each component had on the overall increase in finance charges for the year ended December 31, 2023: (In millions) Impact on finance charges: For the Year Ended December 31, 2023 Due to an increase in the average net Loans receivable balance $ 84.6 Due to a decrease in the average yield (15.5) Total increase in finance charges $ 69.1 37 The increase in the average net Loans receivable balance was primarily due to the dollar volume of new Consumer Loan assignments exceeding the principal collected on Loans receivable.
The increase of $237.3 million, or 13.5%, was primarily due to an increase in the average net Loans receivable balance, as follows: (Dollars in millions) For the Years Ended December 31, 2024 2023 Change Average net Loans receivable balance $ 7,530.7 $ 6,627.8 $ 902.9 Average yield on our Loan portfolio 26.5 % 26.5 % — % 37 The following table summarizes the impact each component had on the overall increase in finance charges for the year ended December 31, 2024: (In millions) Impact on finance charges: For the Year Ended December 31, 2024 Due to an increase in the average net Loans receivable balance $ 239.1 Due to a decrease in the average yield (1.8) Total increase in finance charges $ 237.3 The increase in the average net Loans receivable balance was primarily due to the dollar volume of new Consumer Loan assignments exceeding the principal collected on Loans receivable.
The removal of the COVID forecast adjustment and the implementation of the enhanced forecasting methodology during the first quarter of 2022 impacted forecasted net cash flows and provision for credit losses as follows: (In millions) Increase / (Decrease) in Forecasting Methodology Changes Forecasted Net Cash Flows Provision for Credit Losses Removal of COVID forecast adjustment $ 149.5 $ (118.5) Implementation of enhanced forecasting methodology (53.8) 47.9 Total $ 95.7 $ (70.6) Our provision for credit losses for the year ended December 31, 2023, included: • $322.5 million provision for credit losses on new Consumer Loan assignments, which reduced consolidated net income by $248.3 million, or $19.08 per diluted share; and • $413.7 million provision for credit losses on forecast changes related to changes in the amount and timing of expected future net cash flows, which reduced consolidated net income by $318.5 million, or $24.48 per diluted share.
The removal of the COVID forecast adjustment and the implementation of the enhanced forecasting methodology during the first quarter of 2022 impacted forecasted net cash flows and provision for credit losses as follows: (In millions) Increase / (Decrease) in Forecasting Methodology Changes Forecasted Net Cash Flows Provision for Credit Losses Removal of COVID forecast adjustment $ 149.5 $ (118.5) Implementation of enhanced forecasting methodology (53.8) 47.9 Total $ 95.7 $ (70.6) Our provision for credit losses for the year ended December 31, 2024, included: • $320.9 million provision for credit losses on new Consumer Loan assignments, which reduced consolidated net income by $247.1 million, or $19.82 per diluted share; and • $493.8 million provision for credit losses on forecast changes related to changes in the amount and timing of expected future net cash flows, which reduced consolidated net income by $380.2 million, or $30.49 per diluted share.
Based on the actual principal amounts outstanding under our revolving secured line of credit facility, our Warehouse facilities, our Term ABS financings, and our senior notes as of December 31, 2023, the forecasted principal amounts outstanding on all other debt, and the actual interest rates in effect as of December 31, 2023, interest is expected to be approximately $303.0 million during 2024; $249.7 million during 2025; and $219.4 million during 2026 and thereafter.
Based on the actual principal amounts outstanding under our revolving secured line of credit facility, our Warehouse facilities, our Term ABS financings, and our senior notes as of December 31, 2024, the forecasted principal amounts outstanding on all other debt, and the actual interest rates in effect as of December 31, 2024, interest is expected to be approximately $397.8 million during 2025; $271.8 million during 2026; and $180.9 million during 2027 and thereafter.
Our pricing strategy is intended to maximize the amount of economic profit we generate, within the confines of capital and infrastructure constraints. During 2023, unit and dollar volumes increased 18.6% and 14.4%, respectively, as the number of active Dealers increased 19.1% while average volume per active Dealer decreased 0.4%.
Our pricing strategy is intended to maximize the amount of economic profit we generate, within the confines of capital and infrastructure constraints. During 2024, unit and dollar volumes increased 16.1% and 11.3%, respectively, as the number of active Dealers increased 9.1% while average volume per active Dealer increased 6.4%.
During the first half of 2023, we experienced a decrease in Consumer Loan prepayments to below-average levels and, as a result, slowed our forecasted net cash flow timing. The below-average levels of Consumer Loan prepayments continued through the fourth quarter of 2023. Historically, Consumer Loan prepayments have been lower in periods with less availability of consumer credit.
We had experienced a decrease in Consumer Loan prepayments to below-average levels and, as a result, slowed our forecasted net cash flow timing. Historically, Consumer Loan prepayments have been lower in periods with less availability of consumer credit.
The increase of $16.9 million, or 27.0%, was primarily due to growth in the size of our reinsurance portfolio, which resulted from growth in new Consumer Loan assignments and an increase in the average premium written per reinsured vehicle service contract in recent periods. Other Income .
Premiums Earned. The increase of $16.5 million, or 20.7%, was primarily due to growth in the size of our reinsurance portfolio, which resulted from growth in new Consumer Loan assignments and an increase in the average premium written per reinsured vehicle service contract in recent periods. Operating Expenses .
As of December 31, 2023, we had $79.2 million of floating rate debt outstanding under our revolving secured lines of credit, without interest rate protection. For every 100-basis-point increase in interest rates on our revolving secured lines of credit, annual after-tax earnings would decrease by approximately $0.6 million, assuming we maintain a level amount of floating rate debt.
As of December 31, 2024, we had $300.0 million in floating rate debt outstanding under Term ABS 2022-2, without interest rate protection. For every 100-basis-point increase in interest rates on Term ABS 2022-2, annual after-tax earnings would decrease by approximately $2.3 million, assuming we maintain a level amount of floating rate debt.
The decrease in provision for credit losses related to new Consumer Loan assignments was due to a 20.9% decrease in the average provision per new Consumer Loan assignment, partially offset by an 18.6% increase in Consumer Loan assignment unit volume.
The decrease in provision for credit losses related to new Consumer Loan assignments was due to a 14.3% decrease in the average provision per new Consumer Loan assignment, partially offset by a 16.1% increase in Consumer Loan assignment unit volume.
The increase was primarily as a result of Consumer Loan performance, as the performance of 2022 Purchased Loans has been significantly lower than our initial estimates, while the performance of 2023 Purchased Loans has exceeded our initial estimates. Additionally, 2023 Purchased Loans had a higher initial spread, due to a higher initial forecast and a lower advance rate.
The increase was primarily a result of a higher initial spread on 2024 Purchased Loans, due to a higher initial forecast and lower advance rate. Additionally, the performance of 2023 Purchased Loans has been lower than our initial estimates.
For the year ended December 31, 2023, the effective income tax rate decreased to 22.2% from 24.7% for the year ended December 31, 2022.
For the year ended December 31, 2024, the effective income tax rate increased to 24.8% from 22.2% for the year ended December 31, 2023.
On May 25, 2023, we completed a $400.0 million Term ABS financing, which was used to repay outstanding indebtedness and for general corporate purposes.
On March 28, 2024, we completed a $500.0 million Term ABS financing, which was used to repay outstanding indebtedness and for general corporate purposes.
On November 30, 2023, we completed a $200.0 million Term ABS financing, which was used to repay outstanding indebtedness and for general corporate purposes.
On June 20, 2024, we completed a $550.0 million Term ABS financing, which was used to repay outstanding indebtedness and for general corporate purposes.
On December 21, 2023, we completed a $294.0 million Term ABS financing, which was used to repay outstanding indebtedness and for general corporate purposes.
On September 26, 2024, we completed a $600.0 million Term ABS financing, which was used to repay outstanding indebtedness and for general corporate purposes.
The spread between the forecasted collection rate as of December 31, 2023 and the advance rate ranges from 15.3% to 24.0% for Consumer Loans assigned over the last 10 years.
The spread between the forecasted collection rate as of December 31, 2024 and the advance rate ranges from 12.8% to 23.8% for Consumer Loans assigned over the last 10 years.
On January 1, 2020, we adopted Accounting Standards Update 2016-13, Measurement of Credit Losses on Financial Instruments, which is known as the current expected credit loss model, or CECL. Prior to the adoption of CECL on January 1, 2020, we accounted for our Loans as loans acquired with significant credit deterioration.
On January 1, 2020, we adopted Accounting Standards Update 2016-13, Measurement of Credit Losses on Financial Instruments, which is known as the current expected credit loss model, or CECL.
During 2023, we decreased our estimate of future net cash flows by $206.3 million, or 2.3%, to reflect a decline in forecasted collection rates during the period and slowed our forecasted net cash flow timing to reflect a decrease in Consumer Loan prepayments to below-average levels.
During 2024, we decreased our estimate of future net cash flows by $314.0 million, or 3.1%, to reflect a decline in forecasted collection rates during the period and slowed our forecasted net cash flow timing to reflect a decrease in Consumer Loan prepayments, which remain below historical averages.
A summary as of December 31, 2023 of our material financial obligations requiring future repayments is as follows: (In millions) Payments Due as of December 31, 2023 In less than 12 months In 12 months or more Total Long-term debt, including current maturities (1) $ 953.4 $ 4,153.2 $ 5,106.6 Dealer Holdback (2) 202.9 562.9 765.8 Operating lease obligations (3) 1.5 1.5 3.0 Purchase obligations (4) 7.0 4.6 11.6 Total financial obligations $ 1,164.8 $ 4,722.2 $ 5,887.0 (1) The amounts presented consist solely of principal and do not reflect deferred debt issuance costs of $36.6 million and unamortized debt discount of $2.5 million.
A summary as of December 31, 2024 of our material financial obligations requiring future repayments is as follows: (In millions) Payments Due as of December 31, 2024 In less than 12 months In 12 months or more Total Long-term debt, including current maturities (1) $ 1,249.6 $ 5,142.3 $ 6,391.9 Dealer Holdback (2) 139.5 450.5 590.0 Operating lease obligations (3) 1.0 0.7 1.7 Purchase obligations (4) 2.4 14.8 17.2 Total financial obligations $ 1,392.5 $ 5,608.3 $ 7,000.8 (1) The amounts presented consist solely of principal and do not reflect deferred debt issuance costs of $37.7 million and unamortized debt discount of $1.3 million.
Consumer Loan Metrics At the time a Consumer Loan is submitted to us for assignment, we forecast future expected cash flows from the Consumer Loan. Based on the amount and timing of these forecasts and expected expense levels, an advance or one-time purchase payment is made to the related Dealer at a price designed to maximize economic profit.
Based on the amount and timing of these forecasts and expected expense levels, an advance or one-time purchase payment is made to the related Dealer at a price designed to maximize economic profit. We use a statistical model to estimate the expected collection rate for each Consumer Loan at the time of assignment.
The changes in forecasted collection rates impacted forecasted net cash flows (forecasted collections less forecasted Dealer Holdback payments) as follows: (In millions) For the Years Ended December 31, Increase (Decrease) in Forecasted Net Cash Flows 2023 2022 2021 Dealer Loans $ (125.3) $ (41.6) $ 87.7 Purchased Loans (81.0) (18.1) 238.4 Total $ (206.3) $ (59.7) $ 326.1 % change from forecast at beginning of period -2.3 % -0.7 % 3.4 % During the second quarter of 2023, we adjusted our methodology for forecasting the amount and timing of future net cash flows from our Loan portfolio through the utilization of more recent Consumer Loan performance and Consumer Loan prepayment data.
The changes in forecasted collection rates impacted forecasted net cash flows (forecasted collections less forecasted Dealer Holdback payments) as follows: (In millions) For the Years Ended December 31, Decrease in Forecasted Net Cash Flows 2024 2023 2022 Dealer Loans $ (204.6) $ (125.3) $ (41.6) Purchased Loans (109.4) (81.0) (18.1) Total $ (314.0) $ (206.3) $ (59.7) % change from forecast at beginning of period -3.1 % -2.3 % -0.7 % 30 During the second quarter of 2024, we applied an adjustment to our methodology for forecasting the amount of future net cash flows from our Loan portfolio, which reduced the forecasted collection rates for Consumer Loans assigned in 2022 through 2024.
The following table summarizes the changes in Consumer Loan unit volume and active Dealers: For the Years Ended December 31, For the Years Ended December 31, 2023 2022 % Change 2022 2021 % Change Consumer Loan unit volume 332,499 280,467 18.6 % 280,467 268,730 4.4 % Active Dealers (1) 14,174 11,901 19.1 % 11,901 11,410 4.3 % Average volume per active Dealer 23.5 23.6 -0.4 % 23.6 23.6 0.0 % Consumer Loan unit volume from Dealers active both periods 282,008 259,999 8.5 % 250,114 250,214 0.0 % Dealers active both periods 9,506 9,506 — 8,691 8,691 — Average volume per Dealer active both periods 29.7 27.4 8.5 % 28.8 28.8 0.0 % Consumer Loan unit volume from Dealers not active both periods 50,491 20,468 146.7 % 30,353 18,516 63.9 % Dealers not active both periods 4,668 2,395 94.9 % 3,210 2,719 18.1 % Average volume per Dealer not active both periods 10.8 8.5 27.1 % 9.5 6.8 39.7 % (1) Active Dealers are Dealers who have received funding for at least one Consumer Loan during the period. 34 The following table provides additional information on the changes in Consumer Loan unit volume and active Dealers: For the Years Ended December 31, For the Years Ended December 31, 2023 2022 % Change 2022 2021 % Change Consumer Loan unit volume from new active Dealers 46,741 28,223 65.6 % 28,223 18,267 54.5 % New active Dealers (1) 4,070 2,819 44.4 % 2,819 2,094 34.6 % Average volume per new active Dealer 11.5 10.0 15.0 % 10.0 8.7 14.9 % Attrition (2) -7.3 % -6.9 % -6.9 % -7.7 % (1) New active Dealers are Dealers who enrolled in our program and have received funding for their first Loan from us during the period.
The following table summarizes the changes in Consumer Loan unit volume and active Dealers: For the Years Ended December 31, For the Years Ended December 31, 2024 2023 % Change 2023 2022 % Change Consumer Loan unit volume 386,126 332,499 16.1 % 332,499 280,467 18.6 % Active Dealers (1) 15,463 14,174 9.1 % 14,174 11,901 19.1 % Average volume per active Dealer 25.0 23.5 6.4 % 23.5 23.6 -0.4 % Consumer Loan unit volume from Dealers active both periods 339,361 304,779 11.3 % 282,008 259,999 8.5 % Dealers active both periods 10,637 10,637 — 9,506 9,506 — Average volume per Dealer active both periods 31.9 28.7 11.3 % 29.7 27.4 8.5 % Consumer Loan unit volume from Dealers not active both periods 46,765 27,720 68.7 % 50,491 20,468 146.7 % Dealers not active both periods 4,826 3,537 36.4 % 4,668 2,395 94.9 % Average volume per Dealer not active both periods 9.7 7.8 24.4 % 10.8 8.5 27.1 % (1) Active Dealers are Dealers who have received funding for at least one Consumer Loan during the period. 35 The following table provides additional information on the changes in Consumer Loan unit volume and active Dealers: For the Years Ended December 31, For the Years Ended December 31, 2024 2023 % Change 2023 2022 % Change Consumer Loan unit volume from new active Dealers 43,985 46,741 -5.9 % 46,741 28,223 65.6 % New active Dealers (1) 4,330 4,070 6.4 % 4,070 2,819 44.4 % Average volume per new active Dealer 10.2 11.5 -11.3 % 11.5 10.0 15.0 % Attrition (2) -8.3 % -7.3 % -7.3 % -6.9 % (1) New active Dealers are Dealers who enrolled in our program and have received funding for their first Loan from us during the period.
For every 100-basis-point increase in interest rates on Term ABS 2021-1 up to the cap rate of 5.46%, annual after-tax earnings would decrease by approximately $0.8 million, assuming we maintain a level amount of floating rate debt.
As of December 31, 2024, we had $100.0 million in floating rate debt outstanding under Term ABS 2021-1, without interest rate protection. For every 100-basis-point increase in interest rates on Term ABS 2021-1, annual after-tax earnings would decrease by approximately $0.8 million, assuming we maintain a level amount of floating rate debt.
For additional information, see Note 5 to the consolidated financial statements contained in Item 8 of this Form 10-K, which is incorporated herein by reference.
For information regarding these financings and the covenants included in the related documents, see Note 9 to the consolidated financial statements contained in Item 8 of this Form 10-K, which is incorporated herein by reference.
For the year ended December 31, 2023, consolidated net income was $286.1 million, or $21.99 per diluted share, compared to $535.8 million, or $39.32 per diluted share, for the same period in 2022. The decrease in consolidated net income was primarily due to increases in provision for credit losses and interest expense.
For the year ended December 31, 2024, consolidated net income was $247.9 million, or $19.88 per diluted share, compared to $286.1 million, or $21.99 per diluted share, for the same period in 2023. The decrease in consolidated net income was primarily due to increases in interest expense and provision for credit losses, partially offset by an increase in finance charges.
We recognize provision for credit losses on new Consumer Loan assignments for contractual net cash flows that are not expected to be realized at the time of assignment. We also recognize provision for credit losses on forecast changes in the amount and timing of expected future net cash flows subsequent to assignment.
We also recognize provision for credit losses on forecast changes in the amount and timing of expected future net cash flows subsequent to assignment.
Our provision for credit losses for the year ended December 31, 2022, included: • $343.7 million provision for credit losses on new Consumer Loan assignments, which reduced consolidated net income by $264.6 million, or $19.42 per diluted share; and • $137.7 million provision for credit losses on forecast changes related to changes in the amount and timing of expected future net cash flows, which reduced consolidated net income by $106.0 million, or $7.78 per diluted share.
Our provision for credit losses for the year ended December 31, 2023, included: • $322.5 million provision for credit losses on new Consumer Loan assignments, which reduced consolidated net income by $248.3 million, or $19.08 per diluted share; and • $413.7 million provision for credit losses on forecast changes related to changes in the amount and timing of expected future net cash flows, which reduced consolidated net income by $318.5 million, or $24.48 per diluted share. 41 Key Factors.
For information regarding current actions to which we are a party, see Note 16 to the consolidated financial statements contained in Item 8 of this Form 10-K, which is incorporated herein by reference. Key Factors. Negative variances in the ultimate disposition of claims and litigation outstanding from current estimates could result in additional expense in future periods.
For information regarding current actions to which we are a party, see Note 15 to the consolidated financial statements contained in Item 8 of this Form 10-K, which is incorporated herein by reference. Key Factors.
The decrease in average provision per new Consumer Loan assignment was primarily due to a decrease in the average advance rate for 2023 Consumer Loans. Interest.
The decrease in average provision per new Consumer Loan assignment was primarily due to a decrease in the average advance rate for 2024 Consumer Loans and a lower percentage of Purchased Loans in the mix of Consumer Loan assignments received during 2024. Interest.
The following table summarizes the provision for credit losses for each of these components: (In millions) For the Years Ended December 31, Provision for Credit Losses 2023 2022 Change Forecast changes $ 413.7 $ 137.7 $ 276.0 New Consumer Loan assignments 322.5 343.7 (21.2) Total $ 736.2 $ 481.4 $ 254.8 The increase in provision for credit losses related to forecast changes was primarily due to a greater decline in Consumer Loan performance during 2023 compared to 2022.
The following table summarizes the provision for credit losses for each of these components: (In millions) For the Years Ended December 31, Provision for Credit Losses 2024 2023 Change Forecast changes $ 493.8 $ 413.7 $ 80.1 New Consumer Loan assignments 320.9 322.5 (1.6) Total $ 814.7 $ 736.2 $ 78.5 The increase in provision for credit losses related to forecast changes was due to a greater decline in Consumer Loan performance during 2024 compared to 2023 and slower net cash flow timing during 2024 compared to 2023.
Uncertain Tax Positions Nature of Estimates Required. We estimate the impact of an uncertain income tax position on the income tax return. These estimates impact income taxes receivable and accounts payable and accrued liabilities on our balance sheet and provision for income taxes on our income statement. Assumptions and Approaches Used.
These estimates impact income taxes receivable and accounts payable and accrued liabilities on our balance sheet and provision for income taxes on our income statement. Assumptions and Approaches Used. We follow a two-step approach for recognizing uncertain tax positions.
Overview We offer financing programs that enable automobile dealers to sell vehicles to consumers, regardless of their credit history.
Overview We make vehicle ownership possible by providing innovative financing solutions that enable automobile dealers to sell vehicles to consumers, regardless of their credit history.
Economic profit measures how efficiently we utilize our total capital, both debt and equity, and is a function of the return on capital in excess of the cost of capital and the amount of capital invested in the business.
Economic profit measures how efficiently we utilize our total capital, both debt and equity, and is a function of the return on capital in excess of the cost of capital and the amount of capital invested in the business. 29 Consumer Loan Metrics At the time a Consumer Loan is submitted to us for assignment, we forecast future expected cash flows from the Consumer Loan.
The increase was primarily as a result of Consumer Loan performance, as the performance of 2022 Dealer Loans has been significantly lower than our initial estimates. Additionally, 2023 Dealer Loans had a higher initial spread, due to the advance rate decreasing by a greater margin than the initial forecast.
The higher spread for 2024 Consumer Loans relative to 2023 Consumer Loans as of December 31, 2024 was primarily a result of Consumer Loan performance, as the performance of 2023 Consumer Loans has been lower than our initial estimates by a greater margin than 2024 Consumer Loans.
The decrease in consolidated net income was primarily due to an increase in provision for credit losses, a decrease in finance charges, and an increase in operating expenses.
The decrease in consolidated net income was primarily due to increases in provision for credit losses and interest expense.
For additional information, see Note 2 and Note 5 to the consolidated financial statements contained in Item 8 of this Form 10-K, which is incorporated herein by reference. 36 Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 (Dollars in millions, except per share data) For the Years Ended December 31, 2023 2022 $ Change % Change Revenue: Finance charges $ 1,755.4 $ 1,686.3 $ 69.1 4.1 % Premiums earned 79.6 62.7 16.9 27.0 % Other income 66.9 83.4 (16.5) -19.8 % Total revenue 1,901.9 1,832.4 69.5 3.8 % Costs and expenses: Salaries and wages 280.2 262.0 18.2 6.9 % General and administrative 87.2 88.7 (1.5) -1.7 % Sales and marketing 91.7 75.6 16.1 21.3 % Total operating expenses 459.1 426.3 32.8 7.7 % Provision for credit losses on forecast changes 413.7 137.7 276.0 200.4 % Provision for credit losses on new Consumer Loan assignments 322.5 343.7 (21.2) -6.2 % Total provision for credit losses 736.2 481.4 254.8 52.9 % Interest 266.5 166.6 99.9 60.0 % Provision for claims 70.7 46.4 24.3 52.4 % Loss on extinguishment of debt 1.8 — 1.8 — % Total costs and expenses 1,534.3 1,120.7 413.6 36.9 % Income before provision for income taxes 367.6 711.7 (344.1) -48.3 % Provision for income taxes 81.5 175.9 (94.4) -53.7 % Net income $ 286.1 $ 535.8 $ (249.7) -46.6 % Net income per share: Basic $ 22.09 $ 39.50 $ (17.41) -44.1 % Diluted $ 21.99 $ 39.32 $ (17.33) -44.1 % Weighted average shares outstanding: Basic 12,953,424 13,563,885 (610,461) -4.5 % Diluted 13,010,735 13,625,081 (614,346) -4.5 % Finance Charges.
For additional information, see Note 2 and Note 5 to the consolidated financial statements contained in Item 8 of this Form 10-K, which is incorporated herein by reference. 36 Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 (Dollars in millions, except per share data) For the Years Ended December 31, 2024 2023 $ Change % Change Revenue: Finance charges $ 1,992.7 $ 1,755.4 $ 237.3 13.5 % Premiums earned 96.1 79.6 16.5 20.7 % Other income 73.6 66.9 6.7 10.0 % Total revenue 2,162.4 1,901.9 260.5 13.7 % Costs and expenses: Salaries and wages 309.2 280.2 29.0 10.3 % General and administrative 97.9 87.2 10.7 12.3 % Sales and marketing 94.4 91.7 2.7 2.9 % Total operating expenses 501.5 459.1 42.4 9.2 % Provision for credit losses on forecast changes 493.8 413.7 80.1 19.4 % Provision for credit losses on new Consumer Loan assignments 320.9 322.5 (1.6) -0.5 % Total provision for credit losses 814.7 736.2 78.5 10.7 % Interest 419.5 266.5 153.0 57.4 % Provision for claims 73.5 70.7 2.8 4.0 % Loss on extinguishment of debt — 1.8 (1.8) -100.0 % Loss on sale of building 23.7 — 23.7 — % Total costs and expenses 1,832.9 1,534.3 298.6 19.5 % Income before provision for income taxes 329.5 367.6 (38.1) -10.4 % Provision for income taxes 81.6 81.5 0.1 0.1 % Net income $ 247.9 $ 286.1 $ (38.2) -13.4 % Net income per share: Basic $ 20.12 $ 22.09 $ (1.97) -8.9 % Diluted $ 19.88 $ 21.99 $ (2.11) -9.6 % Weighted average shares outstanding: Basic 12,323,261 12,953,424 (630,163) -4.9 % Diluted 12,469,283 13,010,735 (541,452) -4.2 % Finance Charges.
On August 4, 2023, we extended the date on which our $75.0 million Warehouse Facility VI will cease to revolve from September 30, 2024 to September 30, 2026. On August 24, 2023, we completed a $400.0 million Term ABS financing, which was used to repay outstanding indebtedness and for general corporate purposes.
On February 16, 2024, we extended the $100.0 million Term ABS 2021-1 financing and extended the date on which the financing will cease to revolve from December 16, 2024 to February 17, 2026. On February 27, 2024, we completed a $200.0 million Term ABS financing, which was used to repay outstanding indebtedness and for general corporate purposes.
The implementation of the adjustment to our forecasting methodology during the second quarter of 2023 reduced forecasted net cash flows by $44.5 million, or 0.5%, and increased provision for credit losses by $71.3 million. 40 The COVID-19 pandemic created conditions that increased the level of uncertainty associated with our estimate of the amount and timing of future net cash flows from our Loan portfolio.
Changes in the amount and timing of forecasted net cash flows are recognized in the period of change as a provision for credit losses. The implementation of the adjustment to our forecasting methodology during the second quarter of 2023 reduced forecasted net cash flows by $44.5 million, or 0.5%, and increased provision for credit losses by $71.3 million.
The financing has an expected average annualized cost of 8.6% (including the initial purchasers’ fees and other costs), and it will revolve for 24 months, after which it will amortize based upon the cash flows on the underlying Loans. On December 19, 2023, we issued $600.0 million of 9.250% senior notes due 2028 (the “2028 senior notes”).
The financing has an expected average annualized cost of 5.2% (including upfront fees and other costs), and it will revolve for 24 months, after which it will amortize based upon the cash flows on the underlying Loans.
As of December 31, 2023 and 2022, the net Dealer Loans receivable balance was 67.7% and 64.7%, respectively, of the total net Loans receivable balance. 35 Results of Operations The following is a discussion of our 2023 and 2022 results of operations and income statement data on a consolidated basis, including year-to-year comparisons between 2023 and 2022.
Results of Operations The following is a discussion of our 2024 and 2023 results of operations and income statement data on a consolidated basis, including year-to-year comparisons between 2024 and 2023.

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