CREDIT ACCEPTANCE CORP
For the period ended Jun 30, 2026. Filed Aug 4, 2026.
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, 2026 · Filed Aug 4, 2026
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 2026-03-31; filed 2026-05-05.
0000885550-26-000080
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-04.
0000885550-26-000182
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 132 previous paragraphs and 167 current paragraphs.
94 unchanged; 27 reworded; 33 added; 11 removed; 0 previous and 13 current paragraphs rearranged.
Tables are not compared: 16 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 (33)
Current report
•Consumer Loan assignment unit volume declined 1.0% to 84,615 while dollar volume grew 0.1% to $1.0 billion, compared to the second quarter of 2025. Monthly unit volume returned to year-over-year growth in June, which continued into July.
Current report
•Forecasted net cash flows from our Loan portfolio declined by $39.1 million, or 0.3%, compared to a decline of $55.8 million, or 0.5%, in the second quarter of 2025.
Current report
For the six months ended June 30, 2026, consolidated net income was $271.7 million, or $25.04 per diluted share, compared to consolidated net income of $193.7 million, or $16.11 per diluted share, for the same period in 2025. The increase was primarily due to decreases in provision for credit losses, interest expense, and operating expenses.
Current report
•Forecasted net cash flows from our Loan portfolio declined by $48.2 million, or 0.4%, compared to a decline of $76.7 million, or 0.7%, in the first six months of 2025.
Current report
•Deal optimization: Enhanced our deal structuring experience, which helps Dealers find an optimal deal. 90% of active Dealers used the new capability during the quarter.
Current report
•AI-enabled call-center agent:67% of inbound customer service and account solutions calls were routed to the AI agent in June, up from 27% in March, driving improved efficiency, enabling faster 24/7 customer self-service, and reducing cost-to-serve at scale. This performance reflects continued expansion of a production-deployed AI capability that is now integrated into core servicing workflows. We expect further gains in call handling and unit economics as we scale this platform throughout 2026.
Current report
•Named one of the 100 Best Companies to Work For®by Great Place to Work® and Fortune magazine for the twelfth time, with a #18 ranking, our highest ranking ever.
Current report
(2)The forecasted collection rate for 2026 Consumer Loans as of June 30, 2026 includes both Consumer Loans that were in our portfolio as of March 31, 2026 and Consumer Loans assigned during the most recent quarter. The following table provides forecasted collection rates for each of these segments:
Current report
The decreases in forecasted net cash flows for the quarterly periods presented above were composed of ordinary decreases in forecasted net cash flows and the following adjustment applied to our forecasting methodology:
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
(4)The averages for 2026 Consumer Loans include both Consumer Loans that were in our portfolio as of March 31, 2026 and Consumer Loans assigned
Current report
during the most recent quarter. The following table provides averages for each of these segments:
Current report
(2)Represents the forecasted collection rate less the advance rate.
Current report
(3)Represents the forecasted future collections we expect to collect on Consumer Loans less the forecasted future Dealer Holdback and accelerated Dealer Holdback payments we expect to make to Dealers.
Current report
(5)The forecasted collection rate, advance rate and spread for 2026 Consumer Loans as of June 30, 2026 include both Consumer Loans that were in our portfolio as of March 31, 2026 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
The risk of a material change in our forecasted collection rate declines as the Consumer Loans age. Because Consumer Loans assigned in 2022 and prior years represent only approximately 10% of total forecasted future net cash flows from Consumer Loans, changes in the forecasted collection rate for those Loans would generally be expected to have a relatively modest impact on total forecasted future net cash flows. In contrast, Consumer Loans assigned since 2022 represent a larger portion of expected future net cash flows, and a significant portion of their total forecasted collections has not yet been realized. Accordingly, changes in the forecasted collection rate for those more recent loans would generally be expected to have a more significant impact on total forecasted future net cash flows.
Current report
Finance Charges. The increase of $5.5 million, or 1.0%, was the result of an increase in the average yield on our Loan portfolio, partially offset by a decrease in the average net Loans receivable balance, as follows:
Current report
•A decrease in salaries and wages expense of $5.6 million, or 6.7%, primarily due to a reduction in headcount. The impact of team member separation costs on operating expenses in the second quarter of 2026 was not material, as higher severance expense was offset by lower stock-based compensation expense.
Current report
Provision for Credit Losses. The decrease of $13.4 million, or 7.8%, was due to a decrease in provision for credit losses on forecast changes, partially offset by an increase in provision for credit losses on new Consumer Loan assignments.
Current report
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. 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
The 8.8% increase in provision for credit losses on new Consumer Loan assignments was primarily due to a 10.0% increase in the average provision per Consumer Loan assignment, partially offset by a 1.0% decrease in Consumer Loan assignment unit volume. The increase in the average provision per Consumer Loan assignment was primarily due to a higher average provision for Purchased Loans, driven by a lower initial forecast and spread, and a greater proportion of Purchased Loans in the mix of Consumer Loan assignments received during the second quarter of 2026.
Current report
Provision for Income Taxes. For the three months ended June 30, 2026, the effective income tax rate decreased to 19.4% from 25.8% for the same period in 2025. The decrease was primarily due to (i) a research and development tax credit recognized during the second quarter of 2026, (ii) changes in state tax laws enacted during the second quarter of 2025 that increased our effective income tax rate for that period, whereas the second quarter of 2026 had relatively few state tax law changes enacted, resulting in minimal impact to our effective income tax rate for that period, and (iii) the recognition of excess tax benefits primarily for stock option exercises in the second quarter of 2026, as opposed to a tax deficiency recognized in 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, 2026 Compared to Six Months Ended June 30, 2025
Current report
The increase in the average yield of our Loan portfolio was primarily due to higher contractual yields on more recent Consumer Loan assignments. The decrease in the average net Loans receivable balance was primarily due to the principal collected on Loans receivable exceeding the dollar volume of new Consumer Loan assignments.
Current report
Operating Expenses. The decrease of $15.7 million, or 5.4%, was due to:
Current report
•A decrease in general and administrative expense of $16.4 million, or 24.4%, primarily due to the recognition of a $23.4 million contingent loss during the three months ended June 30, 2025 related to previously disclosed legal matters, partially offset by higher professional services costs related to strategic market analysis initiatives.
Current report
•A decrease in salaries and wages expense of $5.6 million, or 3.3%, primarily due to a reduction in headcount. The impact of team member separation costs on operating expenses in the second quarter of 2026 was not material, as higher severance expense was substantially offset by lower stock-based compensation expense.
Current report
Provision for Credit Losses. The decrease of $35.7 million, or 10.7%, was due to a decrease in provision for credit losses on forecast changes, partially offset by an increase in provision for credit losses on new Consumer Loan assignments.
Current report
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. 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.
Current report
The 3.8% increase in provision for credit losses on new Consumer Loan assignments was due to a 6.7% increase in the average provision per Consumer Loan assignment, partially offset by a 2.8% decrease in Consumer Loan assignment unit volume. The increase in the average provision per Consumer Loan assignment was primarily due to a higher percentage of Purchased Loans in the mix of Consumer Loan assignments received during 2026.
Current report
We endeavor to operate conservatively, with low leverage and significant unused capacity on our revolving credit facilities. While forecasting collection rates involves inherent uncertainty, particularly in periods of economic volatility, our operating model is designed to maintain appropriate margins of safety across the portfolio.
Current report
Our securitization structures incorporate multiple forms of credit enhancement, including overcollateralization, subordination, and reserve accounts. Historically, our securitization trusts have paid all required principal and interest on time and have not experienced early amortization or other adverse performance events. Based on current estimates, we believe expected cash flows from our portfolio provide substantial coverage relative to our obligations.
Current report
On June 9, 2026, we extended the maturity of our revolving secured line of credit facility from June 22, 2028 to June 22, 2029. The interest rate on borrowings under the facility was decreased from (i) at our option, SOFR plus 197.5 basis points or the prime rate plus 87.5 basis points to (ii) at our option, SOFR plus 175.0 basis points or the prime rate plus 75.0 basis points.
Removed paragraphs (11)
Previous report
•Forecasted net cash flows from our Loan portfolio declined modestly by $9.1 million, or 0.1%, representing the smallest quarterly change in the past three years.
Previous report
•AI-enabled call-center agent: In March 2026, 27% of inbound customer service and account solutions calls were routed to the AI agent, up from 6% in December 2025. We expect to further expand use of this agent in 2026, supporting more efficient and scalable servicing operations and enabling consumers to quickly access account information and complete payments.
Previous report
•Digital credit applications: The number of Dealers using our digital applications product continues to grow, helping Dealers more efficiently and securely capture consumer information across in‑store, web, and marketing channels. During the first quarter of 2026, 2,383 Dealers used this product, up 30% from the previous quarter.
Previous report
•New contract origination experience for Dealers: Since its February 2026 expansion, nearly 2,000 Dealers have enabled this experience as we focus on testing, learning, and refining the workflow. The experience is designed to support how franchise and large independent Dealers operate in today’s market, with features including deeper RouteOne e‑contracting integration, enhanced deal‑structuring and optimization tools, and broader support for finance and insurance products.
Previous report
(2)Presented as a percentage of total forecasted collections.
Previous report
The risk of a material change in our forecasted collection rate declines as the Consumer Loans age. For 2021 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.
Previous report
Access to Capital
Previous report
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 March 31, 2026. 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 report
Operating Expenses. The increase of $5.7 million, or 4.2%, was due to:
Previous report
We endeavor to run our business conservatively, with a large margin of safety in Loan pricing in the aggregate, low leverage on the balance sheet, and significant unused availability on our revolving credit facilities. Our forecasting models have performed best during relatively stable economic periods but have been less accurate during periods of volatility like we have experienced in recent years. Since forecasting collection rates is challenging, our business model is designed to produce acceptable returns in the aggregate even if Loan performance is worse than forecasted. When needed, we have made adjustments to our forecasts on both new and existing Loans, and our recent forecasts incorporate underperformance of post-pandemic vintages. We have also reduced advance rates to the Dealer on more recent vintages, which we believe increases the margin of safety in our business. Based on our current estimates, total forecasted collections for the portfolio as of March 31, 2026 are $12.3 billion, which provides over $4.5 billion of cushion to our lenders after considering $1.4 billion of estimated interest and operating expenses and $6.4 billion of outstanding debt.
Previous report
Since 1998, we have completed 61 term securitizations totaling $17.6 billion of debt issued. We believe our securitization trusts contain a significant margin of safety for investors, including structural features such as overcollateralization, subordination, and reserve accounts to protect our investors against credit risk. Our securitization trusts have paid timely interest and principal of all maturing securities in full and have never experienced an early amortization event, event of default, or other adverse event that would cause early or late repayment. Our securitization transactions are generally structured to withstand a 35% decline in the forecasted collection rate before the most junior bond is at risk of taking a principal loss. Accordingly, we believe future net cash flows from collateral securing our outstanding securitization debt are more than sufficient to repay all future obligations of our outstanding securitization trusts.
Reworded paragraphs (27)
Previous wording
For the three months ended March 31, 2026, consolidated net income was $135.8 million, or $12.40 per diluted share, compared to consolidated net income of $106.3 million, or $8.66 per diluted share, forthe same period in 2025. The increase was primarily due to a decrease in provision for credit losses.
Current wording
For the three months ended June 30, 2026, consolidated net income was $135.9 million, or $12.66 per diluted share, compared to consolidated net income of $87.4 million, or $7.42 per diluted share, forthe same period in 2025. The increase was primarily due to decreases in operating expenses and provision for credit losses.
Previous wording
•365,258 shares, or 3.4% of the shares outstanding at the beginning of the quarter, were repurchased at a cost of $178.9 million.
Current wording
•262,963 shares, or 2.5% of the shares outstanding at the beginning of the quarter, were repurchased at a cost of $141.4 million.
Previous wording
•$47.1 million in Dealer Holdback and accelerated Dealer Holdback payments to Dealers.
Current wording
•$43.5 million in Dealer Holdback and accelerated Dealer Holdback payments to Dealers.
Previous wording
•$1.3 billion in liquidity (unrestricted cash and cash equivalents and amounts available for borrowing under revolving lines of credit) as of March 31, 2026.
Current wording
•$1.4 billion in liquidity (amounts available for borrowing under revolving lines of credit and unrestricted cash and cash equivalents) as of June 30, 2026.
Previous wording
•$7.9 billion average balance of our Loan portfolio, consistent with the first quarter of 2025.
Current wording
•$7.9 billion average balance of our Loan portfolio, consistent with the first six months of 2025.
Previous wording
•Consumer Loan assignment unit volume of 95,992 and dollar volume of $1.1 billion, down 4.3% and 4.0%, respectively, compared to the first quarter of 2025.
Current wording
•Consumer Loan assignment unit volume of 180,607 and dollar volume of $2.1 billion, down 2.8% and 2.0%, respectively, compared to the first six months of 2025.
Previous wording
•Enrolled 1,526 new Dealers in our programs with a record 10,977 active Dealers during the quarter, reflecting continued engagement across our dealer network.
Current wording
•Enrolled 1,456 new Dealers in our programs with a record 11,004 active dealers during the quarter, reflecting continued engagement across our Dealer network.
Previous wording
(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, including both principal and interest. Forecasted collection rates are negatively impacted by canceled Consumer Loans because the contractual amount owed is not removed from the denominator used to calculate these rates. As a result, any declines in forecasted collection rates for Consumer Loans assigned in the most recent quarter primarily reflect the impact of cancellations rather than underlying Consumer Loan performance.
Current wording
(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, including both principal and interest. Forecasted collection rates are negatively impacted by canceled Consumer Loans because the contractual amount owed is not removed from the denominator used to calculate these rates. Any declines in forecasted collection rates for Consumer Loans assigned in the most recent quarter primarily reflect the impact of cancellations rather than underlying Consumer Loan performance.
Previous wording
For the three months ended March 31, 2026, forecasted collection rates improved for Consumer Loans assigned in 2021, declined for Consumer Loans assigned in 2023, and were generally consistent with expectations at the start of the period for all other assignment years presented. For Consumer Loans assigned in 2026, the decline in the current forecasted collection rate from the initial forecast primarily reflects the impact of canceled Consumer Loans, as described in the footnote to the table above. These Consumer Loans are not seasoned enough for changes in forecasted collection rates to be meaningfully influenced by performance.
Current wording
For the three months ended June 30, 2026, forecasted collection rates declined for Consumer Loans assigned in 2023 through 2025 and were generally consistent with expectations at the start of the period for all other assignment years presented. For Consumer Loans assigned in 2026, the increase in forecasted collection rate from March 31, 2026 was primarily due to a higher initial forecast on Consumer Loans assigned during the second quarter. For the six months ended June 30, 2026, forecasted collection rates improved for Consumer Loans assigned in 2021, declined for Consumer Loans assigned in 2023 through 2025, and were generally consistent with expectations at the start of the period for all other assignment years presented.
Previous wording
(3)Represents activity for the three months ended March 31, 2026. Information in this table for each of the years prior to 2026 represents activity for all 12 months of that year.
Current wording
(3)Represents activity for the six months ended June 30, 2026. Information in this table for each of the years prior to 2026 represents activity for all 12 months of that year.
Previous wording
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 March 31, 2026, as well as forecasted collection rates and spreads at the time of assignment. All amounts, unless otherwise noted, are presented as a percentage of the initial balance of the Consumer Loan (principal + interest). The table includes both Dealer Loans and Purchased Loans.
Current wording
The following table presents aggregate forecasted Consumer Loan collection rates, advance rates, spreads (the forecasted collection rate less the advance rate), and forecasted future net cash flows as of June 30, 2026, as well as forecasted collection rates and spreads at the time of assignment. All amounts, unless otherwise noted, are presented as a percentage of the initial balance of the Consumer Loan (principal + interest). The table includes both Dealer Loans and Purchased Loans.
Previous wording
The spread between the forecasted collection rate as of March 31, 2026 and the advance rate ranges from 11.9% to 24.2%, 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 lower spread for 2026 Consumer Loans relative to 2025 Consumer Loans as of March 31, 2026 was primarily a result of Consumer Loan performance, as the performance of 2026 Consumer Loans has been lower than our initial estimates while performance of 2025 Consumer Loans has exceeded our initial estimates.
Current wording
The spread between the forecasted collection rate as of June 30, 2026 and the advance rate ranges from 11.9% to 24.2%, 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 spread as of June 30, 2026 on 2026 Consumer Loans was 21.9%, consistent with 2025 Consumer Loans.
Previous wording
(1)The forecasted collection rates presented for Dealer Loans and Purchased Loans reflect the Consumer Loan classification at the time of assignment. The forecasted collection rates represent 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, including both principal and interest. Forecasted collection rates are negatively impacted by canceled Consumer Loans because the contractual amount owed is not removed from the denominator used to calculate these rates. As a result, any declines in forecasted collection rates for Consumer Loans assigned in the most recent quarter primarily reflect the impact of cancellations rather than underlying Consumer Loan performance.
Current wording
(1)The forecasted collection rates presented for Dealer Loans and Purchased Loans reflect the Consumer Loan classification at the time of assignment. The forecasted collection rates represent 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, including both principal and interest. Forecasted collection rates are negatively impacted by canceled Consumer Loans because the contractual amount owed is not removed from the denominator used to calculate these rates. Any declines in forecasted collection rates for Consumer Loans assigned in the most recent quarter primarily reflect the impact of cancellations rather than underlying Consumer Loan performance.
Previous wording
The spread as of March 31, 2026 on both 2026 and 2025 Dealer Loans was 22.4%, reflecting the net impact of two offsetting factors. Consumer Loan performance decreased the spread from 2025 to 2026, primarily due to the performance of 2026 Dealer Loans, which has been lower than our initial estimates. The impact of Consumer Loan performance was offset by the higher initial spread on 2026 Dealer Loans, due to the advance rate decreasing by a greater margin than the initial forecast in our Dealer Loan portfolio.
Current wording
The spread as of June 30, 2026 on 2026 Dealer Loans was 22.4%, as compared to a spread of 22.1% on 2025 Dealer Loans. The increase was a result of a higher initial spread on 2026 Dealer Loans, due to the initial forecast increasing by a greater margin than the advance rate in our Dealer Loan portfolio.
Previous wording
The spread as of March 31, 2026 on 2026 Purchased Loans was 20.5%, as compared to a spread of 21.3% on 2025 Purchased Loans. The decrease was a result of (i) Consumer Loan performance, as the performance of 2026 Purchased Loans has been lower than our initial estimates while the performance of 2025 Purchased Loans has exceeded our initial estimates, and (ii) 2026 Purchased Loans having a lower initial spread, due to the initial forecast decreasing by a greater margin than the advance rate.
Current wording
The spread as of June 30, 2026 on 2026 Purchased Loans was 20.3%, as compared to a spread of 21.1% on 2025 Purchased Loans. The decrease was primarily a result of a lower initial spread on 2026 Purchased Loans, due to the initial forecast decreasing by a greater margin than the advance rate in our Purchased Loan portfolio.
Previous wording
Unit and dollar volumes declined 4.3% and 4.0%, respectively, during the first quarter of 2026 as the number of active Dealers increased 1.7% and the average unit volume per active Dealer declined 6.5%. Unit volume for April 2026 decreased 5.1% compared to the same period in 2025.
Current wording
Unit volume declined 1.0% while dollar volume increased 0.1% during the second quarter of 2026 as the number of active Dealers increased 3.3% and the average unit volume per active Dealer declined 3.8%. Monthly unit volume returned to year-over-year growth in June, which continued into July. Unit volume for July 2026 increased 28.0% compared to the same period in 2025.
Previous wording
As of March 31, 2026 and December 31, 2025, the net Dealer Loans receivable balance was 71.7% and 72.1%, respectively, 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 higher percentage of Purchased Loans in Consumer Loan assignment volume since 2024 has been primarily related to Consumer Loans assigned under this expanded Dealer access.
Current wording
As of June 30, 2026 and December 31, 2025, the net Dealer Loans receivable balance was 71.0% and 72.1%, respectively, of the total net Loans receivable balance.
Previous wording
The increase in the average yield on our Loan portfolio was primarily due to higher contractual yields on more recent Consumer Loan assignments.
Current wording
The increase in the average yield on our Loan portfolio was primarily due to higher contractual yields on more recent Consumer Loan assignments. The decrease in the average net Loans receivable balance was primarily due to the principal collected on Loans receivable exceeding the dollar volume of new Consumer Loan assignments.
Previous wording
Provision for Credit Losses. The decrease of $22.3 million, or 13.8%, was primarily due to a decrease in provision for credit losses on forecast changes.
Current wording
Operating Expenses. The decrease of $21.4 million, or 13.8%, was primarily due to:
Previous wording
•An increase in general and administrative expense of $2.7 million, or 12.2%, primarily due to higher professional services costs related to strategic market analysis initiatives.
Current wording
•A decrease in general and administrative expense of $19.1 million, or 42.3%, primarily due to the recognition of a $23.4 million contingent loss during the three months ended June 30, 2025 related to previously disclosed legal matters. The decrease was partially offset by higher professional services costs related to strategic market analysis initiatives.
Previous wording
Interest. The decrease in interest expense of $6.3 million, or 5.5%, was due to decreases in our average cost of debt and average outstanding debt balance.
Current wording
Interest. The decrease in interest expense of $10.7 million, or 9.1%, was due to decreases in our average cost of debt and average outstanding debt balance.
Previous wording
Finance Charges. The increase of $11.7 million, or 2.2%, was primarily a result of an increase in the average yield on our Loan portfolio as follows:
Current wording
Finance Charges. The increase of $17.2 million, or 1.6%, was the result of an increase in the average yield on our Loan portfolio, partially offset by a decrease in the net Loans receivable balance as follows:
Previous wording
•An increase in sales and marketing expense of $3.0 million, or 12.1%, primarily due to increases in the size of our sales force and advertising expenses.
Current wording
•An increase in sales and marketing expense of $6.3 million, or 12.3%, primarily due to increases in advertising expenses and in the size of our sales force.
Previous wording
The decrease in provision for credit losses related to forecast changes in the first quarter of 2026 compared to the first quarter of 2025 reflected a smaller decline in Consumer Loan performance and changes in forecasted net cash flow timing. During the first quarter of 2026, we decreased our estimate of future net cash flows modestly by $9.1 million, or 0.1%, and slowed our forecasted net cash flow timing to reflect lower-than-expected Consumer Loan prepayments, which remained below historical averages. 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.
Current wording
The decrease in provision for credit losses related to forecast changes during the first six months of 2026 compared to the first six months of 2025 reflected a smaller decline in Consumer Loan performance and changes in forecasted net cash flow timing. During the first six months of 2026, we decreased our estimate of future net cash flows by $48.2 million, or 0.4%, 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.
Previous wording
Provision for Income Taxes. For the three months ended March 31, 2026, the effective income tax rate decreased to 22.4% from 25.0% for the same period in 2025. The decrease was primarily due to a reversal of previously recognized non-deductible executive compensation expenses, related to the retirement of executive officers during the first quarter of 2026, and a decrease in the impact of state and local income taxes on our effective income tax rate, primarily related to uncertain tax position estimates. 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, 2026, our effective income tax rate decreased to 20.9% from 25.4% for the six months ended June 30, 2025. The decrease was primarily due to (i) a research and development tax credit recognized in 2026, (ii) a decrease in state and local income taxes due to a decrease in the proportion of our consolidated net income reserved for uncertain tax positions, and (iii) the reversal of previously recognized non-deductible executive compensation expenses, related to the retirement of executive officers in 2026.
Previous wording
We need capital to maintain and grow our business. Our primary sources of capital are cash flows from operating activities, collections of Consumer Loans, and borrowings under: (1) our revolving secured line of credit facility; (2) Warehouse facilities; (3) Term ABS financings; and (4) senior notes. There are various restrictive covenants to which we are subject under each financing arrangement, and we were in compliance with those covenants as of March 31, 2026. For information regarding these financings and the covenants included in the related documents, see Note 9 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
We need capital to maintain and grow our business and seek to access such capital on acceptable terms by maintaining consistent financial performance, modest financial leverage, and multiple funding sources. Our primary sources of capital are cash flows from operating activities, collections of Consumer Loans, and borrowings under: (1) our revolving secured line of credit facility; (2) Warehouse facilities; (3) Term ABS financings; and (4) senior notes. There are various restrictive covenants to which we are subject under each financing arrangement, and we were in compliance with those covenants as of June 30, 2026. For information regarding these financings and the covenants included in the related documents, see Note 9 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.
Previous wording
Cash and cash equivalents were $25.7 million as of March 31, 2026 and $22.8 million as of December 31, 2025. As of March 31, 2026 and December 31, 2025, we had $1,264.4 million and $1,627.7 million, respectively, in unused and available revolving lines of credit. Our total balance sheet indebtedness as of March 31, 2026 and December 31, 2025 was $6,408.6 million and $6,353.9 million, respectively.
Current wording
Cash and cash equivalents were $1.4 million as of June 30, 2026 and $22.8 million as of December 31, 2025. As of June 30, 2026 and December 31, 2025, we had $1,432.2 million and $1,627.7 million, respectively, in unused and available revolving lines of credit. Our total balance sheet indebtedness as of June 30, 2026 and December 31, 2025 was $6,286.2 million and $6,353.9 million, respectively.
Rearranged current paragraphs (13)
Current report — wording carried from elsewhere
•$8.0 billion average balance of our Loan portfolio, consistent with the second quarter of 2025.
Current report — wording carried from elsewhere
Our financial results for the six months ended June 30, 2026 included the following:
Current report — wording carried from elsewhere
•628,221 shares, or 5.9% of the shares outstanding at the beginning of the year, were repurchased at a cost of $320.3 million.
Current report — wording carried from elsewhere
•$90.6 million in Dealer Holdback and accelerated Dealer Holdback payments to Dealers.
Current report — wording carried from elsewhere
(4)Represents activity for the six months ended June 30, 2026. Information in this table for each of the years prior to 2026 represents activity for all 12 months of that year.
Current report — wording carried from elsewhere
The decrease in provision for credit losses related to forecast changes in the second quarter of 2026 compared to the second quarter of 2025 reflected a smaller decline in Consumer Loan performance and changes in forecasted net cash flow timing. During the second quarter of 2026, we decreased our estimate of future net cash flows by $39.1 million, or 0.3%, and slowed our forecasted net cash flow timing to reflect lower-than-expected Consumer Loan prepayments, which remained below historical averages.
Current report — wording carried from elsewhere
The following is a discussion of our results of operations and income statement data on a consolidated basis.
Current report — wording carried from elsewhere
The following table summarizes the impact each component had on the overall increase in finance charges for the six months ended June 30, 2026:
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
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 decrease in interest expense of $17.0 million, or 7.3%, was due to decreases in our average cost of debt and average outstanding debt balance.
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, 2026 as compared to the six months ended June 30, 2025:
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.