CREDIT ACCEPTANCE CORP
For the period ended Jun 30, 2025. Filed Jul 31, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Jul 31, 2025
CACC$529.56+1.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-04-30.
0000885550-25-000055
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-07-31.
0000885550-25-000085
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 121 previous paragraphs and 167 current paragraphs.
89 unchanged; 30 reworded; 32 added; 2 removed; 0 previous and 16 current paragraphs rearranged.
Tables are not compared: 15 previous and 24 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (32)
Current report
•$23.4 million contingent loss related to previously disclosed legal matters.
Current report
•Named one of the 100 Best Companies to Work For®by Great Place to Work® and Fortune magazine for the eleventh time, with a #34 ranking, and a Spring 2025 Top Workplaces Culture Excellence award winner in the following five categories: Work-Life Flexibility, Leadership, Innovation, Purpose & Values, and Compensation & Benefits.
Current report
For thesix months ended June 30, 2025, consolidated net income was $193.7 million, or $16.11 per diluted share, compared to consolidated net income of $17.2 million, or $1.37 per diluted share, for the same period in 2024. The increase was primarily due to a decrease in provision for credit losses and an increase in finance charges, partially offset by increases in provision for income taxes and operating expenses. Our results and achievements for the six months ended June 30, 2025 included the following:
Current report
•A decline in Consumer Loan assignment unit and dollar volumes of 12.2% and 17.1% respectively, as compared to the first six months of 2024.
Current report
•The enrollment of 3,205 new Dealers, with 13,008 active Dealers during the first six months of 2025.
Current report
•$23.4 million contingent loss related to previously disclosed legal matters.
Current report
•Received awards from Great Place to Work®and Fortune magazine and from Top Workplaces USA.
Current report
(2)The forecasted collection rate for 2025 Consumer Loans as of June 30, 2025 includes both Consumer Loans that were in our portfolio as of March 31, 2025 and Consumer Loans assigned during the most recent quarter. The following table provides forecasted collection rates for each of these segments:
Current report
During the second quarter of 2025, 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 2024. Consumer Loans assigned in 2024 prior to the implementation of our scorecard adjustment during the third quarter of 2024 had underperformed relative to the forecast adjustment we implemented during the second quarter of 2024. Accordingly, in the second quarter of 2025, we applied an adjustment to that segment of the Consumer Loans assigned in 2024 to reduce forecasted collection rates to what we believed the ultimate collection rates would be based on these trends. 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 this forecast adjustment during the second quarter of 2025 reduced forecasted net cash flows by $18.6 million, or 0.2%, and increased provision for credit losses by $16.5 million.
Current report
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. Consumer Loans assigned in 2022 had continued to underperform our expectations for several quarters. Consumer Loans assigned in 2023 had also begun exhibiting similar trends of underperformance, although not as severe as Consumer Loans assigned in 2022. During the second quarter of 2024, we determined that we had sufficient Consumer Loan performance experience to estimate the magnitude by which we expected Consumer Loans assigned in 2022 through 2024 would likely underperform our historical collection rates on Consumer Loans with similar characteristics. Accordingly, we applied an adjustment to Consumer Loans assigned in 2022 through 2024 to reduce forecasted collection rates to what we believed the ultimate collection rates would be based on these trends. 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 this forecast adjustment during the second quarter of 2024 reduced forecasted net cash flows by $147.2 million, or 1.4%, and increased provision for credit losses by $127.5 million.
Current report
(4)The averages for 2025 Consumer Loans include both Consumer Loans that were in our portfolio as of March 31, 2025 and Consumer Loans assigned
Current report
during the most recent quarter. The following table provides averages for each of these segments:
Current report
(3)The forecasted collection rate, advance rate and spread for 2025 Consumer Loans as of June 30, 2025 include both Consumer Loans that were in our portfolio as of March 31, 2025 and Consumer Loans assigned during the most recent quarter. The following table provides forecasted collection rates, advance rates, and spreads for each of these segments:
Current report
Operating Expenses. The increase of $31.1 million, or 25.0%, was primarily due to:
Current report
•An increase in general and administrative expense of $22.0 million, or 94.8%, primarily due to an increase in legal expenses, which included the recognition of a $23.4 million contingent loss during the second quarter of 2025 related to previously disclosed legal matters.
Current report
The decrease in provision for credit losses related to forecast changes was due to a smaller decline in Consumer Loan performance during the second quarter of 2025 compared to the second quarter of 2024. During the second quarter of 2025, we decreased our estimate of future net cash flows by $55.8 million, or 0.5%, to reflect a decline in forecasted collection rates during the period and slowed our forecasted net cash flow timing to reflect lower-than-expected Consumer Loan prepayments, which remained below historical averages. Historically, Consumer Loan prepayments have been lower in periods with less availability of consumer credit. The $55.8 million decrease in forecasted net cash flows for the second quarter of 2025 was composed of an ordinary decrease in forecasted net cash flows of $37.2 million, or 0.3%, and an adjustment applied to our forecasting methodology, which upon implementation, reduced forecasted net cash flows by $18.6 million, or 0.2%, and increased our provision for credit losses by $16.5 million. Consumer Loans assigned in 2024 prior to the implementation of our scorecard adjustment during the third quarter of 2024 had underperformed relative to the forecast adjustment we implemented during the second quarter of 2024. Accordingly, in the second quarter of 2025, we applied an adjustment to that segment of the Consumer Loans assigned in 2024 to reduce forecasted collection rates to what we believed the ultimate collection rates would be based on these trends.
Current report
During the second quarter of 2024, we decreased our estimate of future net cash flows by $189.3 million, or 1.7%, 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 remained below historical averages. The $189.3 million decrease in forecasted net cash flows for the second quarter of 2024 was composed of an ordinary decrease in forecasted net cash flows of $42.1 million, or 0.3%, and an adjustment applied to our forecasting methodology, which upon implementation, reduced forecasted net cash flows by $147.2 million, or 1.4%, and increased our provision for credit losses by $127.5 million. Consumer Loans assigned in 2022 had continued to underperform our expectations for several quarters. Consumer Loans assigned in 2023 had also begun exhibiting similar trends of underperformance, although not as severe as Consumer Loans assigned in 2022. During the second quarter of 2024, we determined that we had sufficient Consumer Loan performance experience to estimate the magnitude by which we expected Consumer Loans assigned in 2022 through 2024 would likely underperform our historical collection rates on Consumer Loans with similar characteristics. Accordingly, we applied an adjustment to Consumer Loans assigned in 2022 through 2024 to reduce forecasted collection rates to what we believed the ultimate collection rates would be based on these trends.
Current report
Loss on Sale of Building. For the three months ended June 30, 2024, we recognized a loss on sale of a building of $23.7 million.
Current report
Provision for Income Taxes. For the three months ended June 30, 2025, the effective income tax rate increased to 25.8% from 14.8% for the same period in 2024. The increase was primarily due to changes in state tax laws enacted during the second quarter of 2024 that were effective retroactively to the beginning of 2024, which increased our state income taxes and reduced, rather than increased, our effective income tax rate, as we had a pre-tax loss that quarter compared to pre-tax income for the second quarter of 2025. For additional information, see Note 10 to the consolidated financial statements contained in Part I - Item 1 of this Quarterly Report on Form 10-Q, which is incorporated herein by reference.
Current report
Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024
Current report
Finance Charges. The increase of $100.5 million, or 10.4%, was primarily a result of an increase in the average net Loans receivable balance, as follows:
Current report
Other Income. The increase of $6.8 million, or 20.5%, was primarily due to:
Current report
•A $4.0 million increase in interest income primarily due to income earned on the investment of excess cash balances.
Current report
•A $2.5 million increase in ancillary product profit sharing income primarily due to growth in our Loan portfolio and an increase in the average cost of premiums written on vehicle service contracts.
Current report
Operating Expenses. The increase of $40.5 million, or 16.2%, was primarily due to:
Current report
•An increase in general and administrative expense of $20.4 million, or 43.5%, primarily due to an increase in legal expenses, which included the recognition of a $23.4 million contingent loss during the first six months of 2025 related to previously disclosed legal matters.
Current report
During the first six months of 2024, we decreased our estimate of future net cash flows by $220.1 million, or 2.2%, 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 remained below historical averages. The $220.1 million decrease in forecasted net cash flows for the first six months of 2024 was composed of an ordinary decrease in forecasted net cash flows of $72.9 million, or 0.8%, and an adjustment applied to our forecasting methodology, which upon implementation, reduced forecasted net cash flows by $147.2 million, or 1.4%, and increased our provision for credit losses by $127.5 million. Consumer Loans assigned in 2022 had continued to underperform our expectations for several quarters. Consumer Loans assigned in 2023 had also begun exhibiting similar trends of underperformance, although not as severe as Consumer Loans assigned in 2022. During the first six months of 2024, we determined that we had sufficient Consumer Loan performance experience to estimate the magnitude by which we expected Consumer Loans assigned in 2022 through 2024 would likely underperform our historical collection rates on Consumer Loans with similar characteristics. Accordingly, we applied an adjustment to Consumer Loans assigned in 2022 through 2024 to reduce forecasted collection rates to what we believed the ultimate collection rates would be based on these trends.
Current report
Loss on Sale of Building. For the six months ended June 30, 2024, we recognized a loss on sale of a building of $23.7 million.
Current report
On June 24, 2025, we extended the maturity of our revolving secured line of credit facility from June 22, 2027 to June 22, 2028.
Current report
On July 11, 2025, we extended the date on which our $75.0 million Warehouse Facility VI will cease to revolve from September 30, 2026 to September 30, 2028. The interest rate on borrowings under the facility has been decreased from the Secured Overnight Financing Rate (“SOFR”) plus 210 basis points to SOFR plus 185 basis points. The servicing fee has also been decreased from 6.0% to 4.0% of collections on the underlying consumer loans.
Current report
On July 30, 2025, we extended the date on which our $300.0 million Warehouse Facility IV will cease to revolve from December 29, 2026 to July 30, 2028. The interest rate on borrowings under the facility has been decreased from the Secured Overnight Financing Rate plus 221.4 basis points to SOFR plus 205 basis points.
Current report
During the second quarter of 2025, 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 2024. Consumer Loans assigned in 2024 prior to the implementation of our scorecard adjustment during the third quarter of 2024 had underperformed relative to the forecast adjustment we implemented during the second quarter of 2024. Accordingly, in the second quarter of 2025, we applied an adjustment to that segment of the Consumer Loans assigned in 2024 to reduce forecasted collection rates to what we believed the ultimate collection rates would be based on these trends. 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 this forecast adjustment during the second quarter of 2025 reduced forecasted net cash flows by $18.6 million, or 0.2%, and increased provision for credit losses by $16.5 million.
Removed paragraphs (2)
Previous report
•Maintained a strong liquidity position, with over $2.2 billion in unrestricted cash and cash equivalents and unused and available revolving lines of credit as of March 31, 2025.
Previous report
•Named a Top Workplaces USA award winner for the fifth year in a row, with a #2 ranking among companies of our size.
Reworded paragraphs (30)
Previous wording
For the three months ended March 31, 2025, consolidated net income was $106.3 million, or $8.66 per diluted share, compared to consolidated net income of $64.3 million, or $5.08 per diluted share, forthe same period in 2024. The increase was primarily due to an increase in finance charges and a decrease in provision for credit losses, partially offset by an increase in interest expense. Our results and achievements for the three months ended March 31, 2025 included the following:
Current wording
For the three months ended June 30, 2025, consolidated net income was $87.4 million, or $7.42 per diluted share, compared to consolidated net loss of $47.1 million, or $3.83 per diluted share, forthe same period in 2024. Theincrease was primarily due to a decrease in provision for credit losses and an increase in finance charges, partially offset by increases in provision for income taxes and operating expenses. Our results and achievements for the three months ended June 30, 2025 included the following:
Previous wording
•A modest decline in forecasted collection rates, which decreased forecasted net cash flows from our Loan portfolio by $20.9 million, or 0.2%, and slower forecasted net cash flow timing.
Current wording
•A decline in forecasted collection rates, which decreased forecasted net cash flows from our Loan portfolio by $55.8 million, or 0.5%, and slower forecasted net cash flow timing.
Previous wording
•An 11.0% increase in the average balance of our Loan portfolio from the first quarter of 2024 to $7.9 billion, which is our largest ever.
Current wording
•A 6.8% increase in the average balance of our Loan portfolio from the second quarter of 2024 to $8.0 billion, which is our largest ever.
Previous wording
•A decline in Consumer Loan assignment unit and dollar volumes of 10.1% and 15.5%, respectively, as compared to the first quarter of 2024.
Current wording
•A decline in Consumer Loan assignment unit and dollar volumes of 14.6% and 18.8%, respectively, as compared to the second quarter of 2024.
Previous wording
•The repurchase of approximately 329,000 shares, or 2.7% of the shares outstanding at the beginning of the quarter.
Current wording
•The repurchase of approximately 530,000 shares, or 4.5% of the shares outstanding at the beginning of the quarter.
Previous wording
•The enrollment of 1,617 new Dealers with 10,789 active Dealers during the quarter.
Current wording
•The enrollment of 1,560 new Dealers, with 10,655 active Dealers during the quarter.
Previous wording
•$68.0 million in Dealer Holdback and accelerated Dealer Holdback payments to Dealers.
Current wording
•$63.3 million in Dealer Holdback and accelerated Dealer Holdback payments to Dealers.
Previous wording
For the three months ended March 31, 2025, forecasted collection rates improved for Consumer Loans assigned in 2020, declined for Consumer Loans assigned in 2022, 2024, and 2025, and were generally consistent with expectations at the start of the period for all other assignment years presented.
Current wording
For the three months ended June 30, 2025, forecasted collection rates improved for Consumer Loans assigned in 2025, declined for Consumer Loans assigned in 2022 through 2024, and were generally consistent with expectations at the start of the period for all other assignment years presented. For the six months ended June 30, 2025, forecasted collection rates improved for Consumer Loans assigned in 2020, declined for Consumer Loans assigned in 2022 through 2024, and were generally consistent with expectations at the start of the period for all other assignment years presented.
Previous wording
The changes to our forecast of future net cash flows from our Loan portfolio (forecasted collections less forecasted Dealer Holdback payments) for each of the last five quarters are shown in the following table:
Current wording
The changes to our forecast of future net cash flows from our Loan portfolio (forecasted collections less forecasted Dealer Holdback payments) for each of the last eight quarters are shown in the following table:
Previous wording
(3)Represents activity for the three months ended March 31, 2025. Information in this table for each of the years prior to 2025 represents activity for all 12 months of that year.
Current wording
(3)Represents activity for the six months ended June 30, 2025. Information in this table for each of the years prior to 2025 represents activity for all 12 months of that year.
Previous wording
The spread between the forecasted collection rate as of March 31, 2025 and the advance rate ranges from 12.6% to 24.0%, on an annual basis, for Consumer Loans assigned over the last 10 years. The spreads with respect to 2019 and 2020 Consumer Loans have been positively impacted by Consumer Loan performance, which has exceeded our initial estimates by a greater margin than the other years presented. The spreads with respect to 2021 through 2023 Consumer Loans have been negatively impacted by Consumer Loan performance, which has been lower than our initial estimates by a greater margin than the other years presented. The higher spread for 2025 Consumer Loans relative to 2024 Consumer Loans as of March 31, 2025 was primarily a result of Consumer Loan performance, as the performance of 2024 Consumer Loans has been lower than our initial estimates by a greater margin than 2025 Consumer Loans.
Current wording
The spread between the forecasted collection rate as of June 30, 2025 and the advance rate ranges from 12.3% to 24.1%, on an annual basis, for Consumer Loans assigned over the last 10 years. The spreads with respect to 2019 and 2020 Consumer Loans have been positively impacted by Consumer Loan performance, which has exceeded our initial estimates by a greater margin than the other years presented. The spreads with respect to 2021 through 2024 Consumer Loans have been negatively impacted by Consumer Loan performance, which has been lower than our initial estimates by a greater margin than the other years presented. The higher spread for 2025 Consumer Loans relative to 2024 Consumer Loans as of June 30, 2025 was primarily a result of Consumer Loan performance, as the performance of 2024 Consumer Loans has been lower than our initial estimates.
Previous wording
The spread as of March 31, 2025 on 2025 Dealer Loans was 21.9%, as compared to a spread of 21.1% on 2024 Dealer Loans. The increase was primarily a result of Consumer Loan performance, as the performance of 2024 Dealer Loans has been lower than our initial estimates by a greater margin than 2025 Dealer Loans.
Current wording
The spread as of June 30, 2025 on 2025 Dealer Loans was 22.3%, as compared to a spread of 20.4% on 2024 Dealer Loans. The increase was primarily a result of Consumer Loan performance, as the performance of 2024 Dealer Loans has been lower than our initial estimates.
Previous wording
The spread as of March 31, 2025 on 2025 Purchased Loans was 21.4%, as compared to a spread of 21.7% on 2024 Purchased Loans. The decrease was primarily a result of a lower initial spread on 2025 Purchased Loans, due to a higher advance rate.
Current wording
The spread as of June 30, 2025 on 2025 Purchased Loans was 21.2%, as compared to a spread of 21.1% on 2024 Purchased Loans, reflecting the net impact of two offsetting factors. Consumer Loan performance increased the spread from 2024 to 2025, as the performance of 2024 Purchased Loans has been lower than our initial estimates. This impact of Consumer Loan performance was partially offset by the impact of a lower initial spread on 2025 Purchased Loans, due to the advance rate increasing by a greater margin than the initial forecast in our Purchased Loan portfolio.
Previous wording
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 3.9 to 1 as of March 31, 2025. 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.
Current wording
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 4.2 to 1 as of June 30, 2025. 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.
Previous wording
The following table summarizes changes in Consumer Loan assignment volume in each of the last five quarters as compared to the same period in the previous year:
Current wording
The following table summarizes changes in Consumer Loan assignment volume in each of the last eight quarters as compared to the same period in the previous year:
Previous wording
Unit and dollar volumes declined 10.1% and 15.5%, respectively, during the first quarter of 2025 as the number of active Dealers declined 0.1% and the average unit volume per active Dealer declined 9.7%. Dollar volume declined by more than unit volume during the first quarter of 2025 due to a decrease in the average advance paid, resulting from decreases in the average size of Consumer Loans assigned and the average advance rate. Unit volume for the 28-day period ended April 28, 2025 decreased 9.8% compared to the same period in 2024.
Current wording
Unit and dollar volumes declined 14.6% and 18.8%, respectively, during the second quarter of 2025 as the number of active Dealers declined 0.8% and the average unit volume per active Dealer declined 14.0%. Dollar volume declined by more than unit volume during the second quarter of 2025 due to a decrease in the average advance paid, primarily resulting from a decrease in the average size of Consumer Loans assigned. Unit volume for the 28-day period ended July 28, 2025 decreased 19.4% compared to the same period in 2024.
Previous wording
The following table shows the percentage of Consumer Loans assigned to us as Dealer Loans and Purchased Loans for each of the last five quarters:
Current wording
The following table shows the percentage of Consumer Loans assigned to us as Dealer Loans and Purchased Loans for each of the last eight quarters:
Previous wording
As of March 31, 2025 and December 31, 2024, the net Dealer Loans receivable balance was 72.7% and 72.3%, respectively, of the total net Loans receivable balance.
Current wording
As of both June 30, 2025 and December 31, 2024, the net Dealer Loans receivable balance was 72.3% of the total net Loans receivable balance. In 2025, we expanded Dealer access to the Purchase Program for Consumer Loans to consumers with higher credit ratings. The increase in the percentage of Purchased Loans in 2025 Consumer Loan assignment volume was primarily related to Consumer Loans assigned under this expanded Dealer access.
Previous wording
Finance Charges. The increase of $57.5 million, or 12.3%, was primarily due to an increase in the average net Loans receivable balance, as follows:
Current wording
Finance Charges. The increase of $43.0 million, or 8.6%, was primarily due to an increase in the average net Loans receivable balance, as follows:
Previous wording
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.
Current wording
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 in the average yield of our Loan portfolio was primarily due to higher contractual yields on more recent Consumer Loan assignments.
Previous wording
Provision for Credit Losses. The decrease of $24.1 million, or 13.0%, was due to decreases in provision for credit losses on forecast changes and provision for credit losses on new Consumer Loan assignments.
Current wording
Provision for Credit Losses. The decrease of $148.0 million, or 46.2%, was due to decreases in provision for credit losses on forecast changes and provision for credit losses on new Consumer Loan assignments.
Previous wording
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.
Current wording
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. The following table summarizes the provision for credit losses for each of these components:
Previous wording
Interest. The increase in interest expense of $22.2 million, or 24.0%, was primarily due to an increase in our average outstanding debt balance, primarily due to borrowings used to fund the growth of our Loan portfolio and stock repurchases.
Current wording
Interest. The increase in interest expense of $13.6 million, or 13.0%, was primarily due to an increase in our average outstanding debt balance, primarily due to borrowings used to fund the growth of our Loan portfolio and stock repurchases.
Previous wording
Operating Expenses. The increase of $9.4 million, or 7.5%, was primarily due to an increase in salaries and wages expense of $10.1 million, or 12.9%. The increase was primarily due to increases in (i) the number of team members as we are investing in our business with the goal of increasing the speed at which we enhance our product for Dealers and consumers, (ii) stock-based compensation expense, primarily due to equity awards granted to our executive officers and senior leaders, and (iii) fringe benefits, primarily due to higher medical claims.
Current wording
•An increase in salaries and wages expense of $18.0 million, or 11.7%, primarily due to increases in (i) the number of team members as we are investing in our business with the goal of increasing the speed at which we enhance our product for Dealers and consumers, (ii) stock-based compensation expense, primarily due to equity awards granted to our executive officers and senior leaders, and (iii) fringe benefits, primarily due to higher medical claims.
Previous wording
The decrease in provision for credit losses related to forecast changes was due to a smaller decline in Consumer Loan performance during the first quarter of 2025 compared to the first quarter of 2024. During the first quarter of 2025, we decreased our estimate of future net cash flows by $20.9 million, or 0.2%, to reflect a decline in forecasted collection rates during the period and slowed our forecasted net cash flow timing to reflect lower-than-expected Consumer Loan prepayments, which remained below historical averages. Historically, Consumer Loan prepayments have been lower in periods with less availability of consumer credit. During the first quarter of 2024, we decreased our estimate of future net cash flows by $30.8 million, or 0.3%, to reflect a decline in forecasted collection rates during the period and slowed our forecasted net cash flow timing to reflect lower-than-expected Consumer Loan prepayments.
Current wording
During the first six months of 2025, we decreased our estimate of future net cash flows by $76.7 million, or 0.7%, to reflect a decline in forecasted collection rates during the period and slowed our forecasted net cash flow timing to reflect lower-than-expected Consumer Loan prepayments, which remained below historical averages. Historically, Consumer Loan prepayments have been lower in periods with less availability of consumer credit. The $76.7 million decrease in forecasted net cash flows for the first six months of 2025 was composed of an ordinary decrease in forecasted net cash flows of $58.1 million, or 0.5%, and an adjustment applied to our forecasting methodology, which upon implementation, reduced forecasted net cash flows by $18.6 million, or 0.2%, and increased our provision for credit losses by $16.5 million. Consumer Loans assigned in 2024 prior to the implementation of our scorecard adjustment during the third quarter of 2024 had underperformed relative to the forecast adjustment we implemented during the second quarter of 2024. Accordingly, during the second quarter of 2025, we applied an adjustment to that segment of the Consumer Loans assigned in 2024 to reduce forecasted collection rates to what we believed the ultimate collection rates would be based on these trends.
Previous wording
The decrease in provision for credit losses related to new Consumer Loan assignments was due to a 10.1% decrease in Consumer Loan assignment unit volume and a 3.7% decrease in the average provision per Consumer Loan assignment. The decrease in the average provision per Consumer Loan assignment was primarily due to a decrease in the average advance rate for 2025 Consumer Loans.
Current wording
The 13.6% decrease in provision for credit losses related to new Consumer Loan assignments was due to a 12.2% decrease in Consumer Loan assignment unit volume and a 1.6% decrease in the average provision per Consumer Loan assignment. The decrease in the average provision per Consumer Loan assignment was due to a decrease in the average advance rate for 2025 Consumer Loans.
Previous wording
Provision for Income Taxes. For the three months ended March 31, 2025, the effective income tax rate decreased to 25.0% from 25.6% for the same period in 2024. The decrease was primarily due to a decrease in the impact of state and local income taxes on our effective income tax rate, primarily related to uncertain tax position estimates, and was partially offset by the recognition of a tax deficiency in the current quarter compared to an excess tax benefit recognized during the first quarter of 2024. For additional information, see Note 10 to the consolidated financial statements contained in Part I - Item 1 of this Quarterly Report on Form 10-Q, which is incorporated herein by reference.
Current wording
Provision for Income Taxes. For the six months ended June 30, 2025, our effective income tax rate decreased to 25.4% from 44.7% for the six months ended June 30, 2024. The decrease was primarily due to an increase in pre-tax income in the first six months of 2025 compared to the same period in 2024. The lower pre-tax income in the first six months of 2024 increased the impact of an adjustment to an uncertain tax position for state income taxes recorded in the second quarter of 2024 and non-deductible executive compensation expense on our 2024 effective income tax rate.
Previous wording
Cash and cash equivalents were $528.8 million as of March 31, 2025 and $343.7 million as of December 31, 2024. As of March 31, 2025 and December 31, 2024, we had $1,733.6 million and $1,734.9 million, respectively, in unused and available revolving lines of credit. Our total balance sheet indebtedness increased to $6,705.2 million as of March 31, 2025 from $6,352.9 million as of December 31, 2024, primarily due to borrowings used to fund the growth of our Loan portfolio and stock repurchases.
Current wording
Cash and cash equivalents were $70.0 million as of June 30, 2025 and $343.7 million as of December 31, 2024. As of June 30, 2025 and December 31, 2024, we had $1,733.5 million and $1,734.9 million, respectively, in unused and available revolving lines of credit. Our total balance sheet indebtedness increased to $6,471.2 million as of June 30, 2025 from $6,352.9 million as of December 31, 2024, primarily due to borrowings used to fund the growth of our Loan portfolio and stock repurchases.
Previous wording
Our consolidated financial statements are prepared in accordance with GAAP. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, we review our accounting policies, assumptions, estimates, and judgments to ensure that our financial statements are presented fairly and in accordance with GAAP. Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024 discusses several critical accounting estimates, which we believe involve a high degree of judgment and complexity. There have been no material changes to the estimates and assumptions associated with these critical accounting estimates from those discussed in our Annual Report on Form 10-K for the year ended December 31, 2024.
Current wording
Our consolidated financial statements are prepared in accordance with GAAP. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, we review our accounting policies, assumptions, estimates, and judgments to ensure that our financial statements are presented fairly and in accordance with GAAP. Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024 discusses several critical accounting estimates, which we believe involve a high degree of judgment and complexity. There have been no material changes to the estimates and assumptions associated with these critical accounting estimates from those discussed in our Annual Report on Form 10-K for the year ended December 31, 2024, except as described below.
Previous wording
We claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 for all of our forward-looking statements. These forward-looking statements represent our outlook only as of the date of this report. While we believe that our forward-looking statements are reasonable, actual results could differ materially since the statements are based on our current expectations, which are subject to risks and uncertainties. Factors that might cause such a difference include, but are not limited to, the factors set forth in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024, other risk factors discussed herein or listed from time to time in our reports filed with the SEC, and the following:
Current wording
We claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 for all of our forward-looking statements. These forward-looking statements represent our outlook only as of the date of this report. While we believe that our forward-looking statements are reasonable, actual results could differ materially since the statements are based on our current expectations, which are subject to risks and uncertainties. Factors that might cause such a difference include, but are not limited to, the factors set forth in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024, and in Part II - Item 1A of this report, other risk factors discussed herein or listed from time to time in our reports filed with the SEC, and the following:
Rearranged current paragraphs (16)
Current report — wording carried from elsewhere
•A decline in forecasted collection rates, which decreased forecasted net cash flows from our Loan portfolio by $76.7 million, or 0.7%, and slower forecasted net cash flow timing.
Current report — wording carried from elsewhere
•An 8.9% increase in the average balance of our Loan portfolio from the first six months of 2024 to $7.9 billion.
Current report — wording carried from elsewhere
•The repurchase of approximately 859,000 shares, or 7.1% of the shares outstanding at the beginning of the year.
Current report — wording carried from elsewhere
•$131.3 million in Dealer Holdback and accelerated Dealer Holdback payments to Dealers.
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•An increase in salaries and wages expense of $7.9 million, or 10.4%, primarily due to increases in (i) the number of team members as we are investing in our business with the goal of increasing the speed at which we enhance our product for Dealers and consumers and (ii) stock-based compensation expense, primarily due to equity awards granted to our executive officers and senior leaders.
Current report — wording carried from elsewhere
The 13.9% decrease in provision for credit losses related to new Consumer Loan assignments was primarily due to a 14.6% decrease in Consumer Loan assignment unit volume.
Current report — wording carried from elsewhere
The following is a discussion of our results of operations and income statement data on a consolidated basis.
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The following table summarizes the impact each component had on the overall increase in finance charges for the six months ended June 30, 2025:
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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 in the average yield of our Loan portfolio was primarily due to higher contractual yields on more recent Consumer Loan assignments.
Current report — wording carried from elsewhere
Provision for Credit Losses. The decrease of $172.1 million, or 34.0%, was due to a decreases in provision for credit losses on forecast changes and provision for credit losses on new Consumer Loan assignments.
Current report — wording carried from elsewhere
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. The following table summarizes the provision for credit losses for each of these components:
Current report — wording carried from elsewhere
The decrease in provision for credit losses related to forecast changes was primarily due to a smaller decline in Consumer Loan performance during the first six months of 2025 compared to the firstsix months of 2024.
Current report — wording carried from elsewhere
For additional information, see Note 6 to the consolidated financial statements contained in Part I - Item 1 of this Quarterly Report on Form 10-Q, which is incorporated herein by reference.
Current report — wording carried from elsewhere
Interest. The increase in interest expense of $35.8 million, or 18.2%, was primarily due to an increase in our average outstanding debt balance, primarily due to borrowings used to fund the growth of our Loan portfolio and stock repurchases.
Current report — wording carried from elsewhere
The following table presents the change in interest expense, average outstanding debt balance, and average cost of debt for the six months ended June 30, 2025 as compared to thesix months ended June 30, 2024:
Current report — wording carried from elsewhere
For additional information, see Note 10 to the consolidated financial statements contained in Part I - Item 1 of this Quarterly Report on Form 10-Q, which is incorporated herein by reference.