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Credit Acceptance: 2020 Collections Wrap-Up

Zero Gravitas profile picture
Zero Gravitas


  • Latest collections performance.
  • Updated forecasts for IRR by loan vintage.
  • A word on repurchase activity.

The purpose of this note is to provide an update on experienced as well as modeled loan/collections performance at Credit Acceptance (NASDAQ:CACC) based on the company's most recent (2020 year-end) update.

For comparison, the last update I provided is over a quarter stale. For the reader new to this series of updates (or for a refresher on the methodology being used and context), I suggest perusing the inception article of the series.

Regardless, a brief reminder: for 'realized IRR' I am effectively providing IRR calculations based on actual cash in/out data provided by the company. This is a backwards looking exercise.

The `modeled IRR' is a forward looking exercise that attempts to forecast eventual IRRs based on historic delinquency curves and the most recent collections data available. Crucially, no adjustments are made based on macro-economic factors.

As usual, we start with IRRs already realized for well-seasoned vintages:

Year Expected collections realized Realized IRR


2012 99.7% 24.4%
2013 99.4% 22%
2014 98.9% 20.4%
2015 97.8% 18.2%
2016 93.8% 15.6%
2017 84.3% 12%

Note that CACC's eventual IRRs on the above vintages will be better than the stated amounts, since the calculations above only take into account actual cash flows that have already been received. Of course, this improvement will be minor for 2015 and prior vintages, since the vast majority of the expected collections have already been received for these.

Next up, we have the meat of this exercise - modeled IRRs. For comparison, I have provided my initial forecasts as well as the forecast from my last update (a track record, if you will):

Expected collections realized Initial forecast Prev. forecast (Nov 2020) Current forecast
2011 99.8% 26.40% 26.40% 26.4%
2012 99.6% 24.50% 24.40% 24.4%
2013 99.3% 22.20% 22.20% 22.1%

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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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