Credit Acceptance: Subprime Trouble Ahead

Jan. 30, 2023 7:33 PM ETCredit Acceptance Corporation (CACC)4 Comments
Jaime Wild profile picture
Jaime Wild


  • Credit Acceptance has shown strong performance in the past decade but with worsening economic conditions, its business model is under threat.
  • The subprime lending industry as a whole may suffer as US consumer credit reaches all-time highs alongside lower savings rates.
  • In the short term, Credit Acceptance might struggle to sustain earnings as consumers struggle with rising interest rates and inflation.
  • A heavy debt burden may cause the stock to fall as interest expenses rise and cash flow fails to keep up.
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In the event of a recession, credit underperforms as default rates rise with subprime lenders being the most vulnerable. Credit Acceptance (NASDAQ:CACC) is one stock which we believe will suffer in worsening economic conditions after years of increasing leverage

This article was written by

Jaime Wild profile picture
Engineer, founder, teacher, business developer and personal investor. Learning equity analysis by doing and putting my investment ideas out there. Open to any and all feedback.

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. 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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