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Credit Acceptance: Loan Performance Update

Feb. 04, 2019 3:59 PM ETCredit Acceptance Corporation (CACC)4 Comments
Zero Gravitas profile picture
Zero Gravitas


  • Updating expected loan book performance using the company's most recently released statistics.
  • Seasoned/older vintages show almost no change.
  • More recent vintages show minor variations.
  • Buybacks and insider sales.

About six months ago I provided a simple framework to evaluate the performance of sub-prime auto-lender/collector Credit Acceptance's (NASDAQ:CACC) loan book. Namely, in its quarterly disclosure, CACC provides detailed information about cash collections on loans by vintage year (stretching back 10 years from date of filing; all data is gleaned from the company's SEC filings). With this data, it is simply a number crunching matter to determine IRRs on cash in/out on CACC's loan book. Modeling IRRs for collections in the future using previous experience (historic collection curves) is a slightly more involved, but still quite straightforward exercise.

The purpose of this note is to provide an update on experienced as well as expected/modeled loan/collections performance based on the additional six months of data now available.

Let me start by simply providing the data, commentary will follow.

First, we have realized IRRs:

Year % of collections realized Realized IRR
2008 99.8% 24.9%
2009 99.9% 37.1%
2010 99.7% 31.5%
2011 99.3% 26.3%
2012 98.8% 24.3%
2013 98.1% 21.8%
2014 95.6% 19.4%
2015 87.0% 13.7%

As a reminder, CACC's eventual IRRs on the above vintages will be better than the stated amounts; since the calculations above only take into account cash flows that have already been realized.

This brings us to an update on modeled IRRs. For comparative purposes I have included the old modeled IRRs (from six months ago; in future updates I intend to provide the original forecaster IRR as well as the most recent two forecasts).

Year % of collections realized Old forecast (NYSE:IRR) Current forecast (IRR)
2008 99.8% 24.9% 24.9%
2009 99.9% 37.1% 37.1%
2010 99.7% 31.5% 31.5%
2011 99.3% 26.4% 26.4%
2012 98.8% 24.5% 24.4%
2013 98.1% 22.2% 22.3%
2014 95.6% 20.3% 20.5%
2015 87.0%

This article was written by

Zero Gravitas profile picture
Absolutely zero gravitas.

Analyst’s Disclosure: I am/we are long CACC. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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