Credit Acceptance Up Over 9%, on Pace for Largest Percent Increase Since February 2023 — Data Talk

Southfield, Michigan, Jan. 29, 2026 (GLOBE NEWSWIRE) -- Credit Acceptance Corporation (referred to as the “Company”, “Credit Acceptance”, “we”, “our”, or “us”) today announced consolidated net income of $122.0 million, or $10.99 per diluted share, for the three months ended December 31, 2025. Adjusted net income, a non-GAAP financial measure, for the three months ended December 31, 2025 was $126.0 million, or $11.35 per diluted share. The following table summarizes our financial results:

“We are pleased to announce sequential growth in our financial results in the fourth quarter of 2025,” said Vinayak Hegde, CEO of Credit Acceptance. “These results, despite declines in loan volumes and loan performance, underscore the resilience of our business model and our ongoing commitment to our mission of maximizing intrinsic value and changing the lives of our customers.”

Fourth Quarter 2025 Financial Highlights

• $7.9 billion average balance of our loan portfolio.
• Consumer Loan assignment unit volume of 71,731 and dollar volume of $821.3 million.
• A moderate decline in forecasted collection rates, which decreased forecasted net cash flows from our loan portfolio by $34.2 million, or 0.3%, and slower net cash flow timing.
• $191.4 million in the repurchase of approximately 425,000 shares, or 3.8% of the shares outstanding at the beginning of the quarter.
• $47.6 million in dealer holdback and accelerated dealer holdback payments to dealers.
• $35.8 million contingent loss, which we have excluded from our adjusted results, related to previously disclosed legal matters.
• $1.7 billion in unrestricted cash and cash equivalents and unused and available revolving lines of credit as of December 31, 2025.

“We’re making progress on our product initiatives as we strive to provide a frictionless experience for dealers and consumers,” said Mr. Hegde. “We believe our recent product releases in digital credit applications, franchise dealer experience, and consumer self-service will strengthen dealer and consumer relationships and improve operational efficiency.”

Fourth Quarter 2025 Company Highlights

• Enrolled 1,207 new dealers in our programs and had 9,863 active dealers during the quarter.
• Progressed the following product initiatives:
  • Made it easier for dealers to seamlessly and securely capture consumer information across in-store, web, and marketing channels through our digital credit application. Dealer adoption of this product has nearly doubled since the third quarter.
  • Expanded the new contract origination experience designed for the way franchise and large independent dealers operate in today’s market. This experience includes deeper RouteOne e-contracting integration, enhanced deal-structuring and optimization tools, and broader support for F&I products. We expect to continue to expand the number of dealers using this experience in the first quarter of 2026.
  • Launched a new payment experience triggered by personalized text messages to allow consumers to securely click to pay without logging into a digital account. The majority of consumers using this experience completed their payment in less than 60 seconds.
  • Launched an AI-powered call-center agent to help consumers quickly access account information and complete payments. The agent successfully handled thousands of inbound calls during the fourth quarter, with broader deployment planned for 2026.
• Received five workplace awards, including being named one of America’s Top 100 Most Loved Workplaces for the second consecutive year, with a #6 ranking.

Consumer Loan Metrics

Dealers assign retail installment contracts (referred to as “Consumer Loans”) to Credit Acceptance. At the time a Consumer Loan is submitted to us for assignment, we forecast future expected cash flows from the Consumer Loan. Based on the amount and timing of these forecasts and expected expense levels, an advance or one-time purchase payment is made to the related dealer at a price designed to maximize economic profit, a non-GAAP financial measure that considers our return on capital, our cost of capital, and the amount of capital invested. 

We use a statistical model to estimate the expected collection rate for each Consumer Loan at the time of assignment. We continue to evaluate the expected collection rate for each Consumer Loan subsequent to assignment. Our evaluation becomes more accurate as the Consumer Loans age, as we use actual performance data in our forecast. By comparing our current expected collection rate for each Consumer Loan with the rate we projected at the time of assignment, we are able to assess the accuracy of our initial forecast. The following table compares our aggregated forecast of Consumer Loan collection rates as of December 31, 2025, with the aggregated forecasts as of September 30, 2025 and at the time of assignment, segmented by year of assignment:

(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. Contractual repayments include both principal and interest. Forecasted collection rates are negatively impacted by canceled Consumer Loans as the contractual amount owed is not removed from the denominator for purposes of computing forecasted collection rates.

(2) The forecasted collection rate for 2025 Consumer Loans as of December 31, 2025 includes both Consumer Loans that were in our portfolio as of September 30, 2025 and Consumer Loans assigned during the most recent quarter. The following table provides forecasted collection rates for each of these segments:

For the three months ended December 31, 2025, forecasted collection rates improved for Consumer Loans assigned in 2025, declined for Consumer Loans assigned in 2023 and 2024, and were generally consistent with expectations at the start of the period for all other assignment years presented. For Consumer Loans assigned during 2024, the underperformance was primarily related to Consumer Loans assigned prior to our scorecard change during the third quarter of 2024.

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:

The following table presents information on Consumer Loan assignments for each of the last 10 years:

(1) Represents the repayments that we were contractually owed on Consumer Loans at the time of assignment, which include both principal and interest.

(2) Represents advances paid to dealers on Consumer Loans assigned under the portfolio program and one-time payments made to dealers to purchase Consumer Loans assigned under the purchase program. Payments of dealer holdback and accelerated dealer holdback are not included.

(3) The averages for 2025 Consumer Loans include both Consumer Loans that were in our portfolio as of September 30, 2025 and Consumer Loans assigned during the most recent quarter. The following table provides averages for each of these segments:

The profitability of our loans is primarily driven by the amount and timing of the net cash flows we receive from the spread between the forecasted collection rate and the advance rate, less operating expenses and the cost of capital. Forecasting collection rates accurately at loan inception is difficult. With this in mind, we establish advance rates that are intended to allow us to achieve acceptable levels of profitability across our portfolio, even if collection rates are less than we initially forecast.

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 December 31, 2025, 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.

(1) Represents advances paid to dealers on Consumer Loans assigned under the portfolio program and one-time payments made to dealers to purchase Consumer Loans assigned under the purchase program as a percentage of the initial balance of the Consumer Loans. Payments of dealer holdback and accelerated dealer holdback are not included.

(2) Presented as a percentage of total forecasted collections.

(3) The forecasted collection rate, advance rate and spread for 2025 Consumer Loans as of December 31, 2025 include both Consumer Loans that were in our portfolio as of September 30, 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:

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.

The spread between the forecasted collection rate as of December 31, 2025 and the advance rate ranges from 11.9% 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 2022 and 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 December 31, 2025 was primarily a result of Consumer Loan performance, as the performance of 2025 Consumer Loans has exceeded our initial estimates while the performance of 2024 Consumer Loans has been lower than our initial estimates.

The following table compares our forecast of aggregate Consumer Loan collection rates as of December 31, 2025 with the forecasts at the time of assignment, for dealer loans and purchased loans separately:

(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. Contractual repayments include both principal and interest. Forecasted collection rates are negatively impacted by canceled Consumer Loans as the contractual amount owed is not removed from the denominator for purposes of computing forecasted collection rates.

The following table presents aggregate forecasted Consumer Loan collection rates, advance rates, and spreads (the forecasted collection rate less the advance rate) as of December 31, 2025 for dealer loans and purchased loans separately. All amounts are presented as a percentage of the initial balance of the Consumer Loan (principal + interest).

(1) The forecasted collection rates and advance rates presented for dealer loans and purchased loans reflect the Consumer Loan classification at the time of assignment.

(2) Represents advances paid to dealers on Consumer Loans assigned under the portfolio program and one-time payments made to dealers to purchase Consumer Loans assigned under the purchase program as a percentage of the initial balance of the Consumer Loans. Payments of dealer holdback and accelerated dealer holdback are not included.

Although the advance rate on purchased loans is higher as compared to the advance rate on dealer loans, purchased loans do not require us to pay dealer holdback.

The spread as of December 31, 2025 on 2025 dealer loans was 22.5%, as compared to a spread of 20.0% on 2024 dealer loans. The increase was primarily a result of Consumer Loan performance, as the performance of 2025 dealer loans has exceeded our initial estimates while the performance of 2024 dealer loans has been lower than our initial estimates.

The spread as of December 31, 2025 on 2025 purchased loans was 21.5%, as compared to a spread of 21.0% 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 2025 purchased loans has exceeded our initial estimates while 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.

Consumer Loan Volume

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:

(1) Represents advances paid to dealers on Consumer Loans assigned under the portfolio program and one-time payments made to dealers to purchase Consumer Loans assigned under the purchase program. Payments of dealer holdback and accelerated dealer holdback are not included.

Consumer Loan assignment volumes depend on a number of factors including (1) the overall demand for our financing programs and (2) the amount of capital available to fund new loans. Our pricing strategy is intended to maximize the amount of economic profit we generate, within the confines of capital constraints.

Unit and dollar volumes declined 9.1% and 11.3%, respectively, during the fourth quarter of 2025 as the number of active dealers declined 2.8% and the average unit volume per active dealer declined 6.4%. Dollar volume declined by more than unit volume during the fourth quarter of 2025 primarily due to a decrease in the average size of Consumer Loans assigned, which resulted in a decrease in the average advance paid. Unit volume for the 28-day period ended January 28, 2026 decreased 9.5% compared to the same period in 2025.

The following table summarizes the changes in Consumer Loan unit volume and active dealers:

(1) Active dealers are dealers who have received funding for at least one Consumer Loan during the period.

The following table provides additional information on the changes in Consumer Loan unit volume and active dealers: 

(1) New active dealers are dealers who enrolled in our program and have received funding for their first dealer loan or purchased loan from us during the period.

(2) Attrition is measured according to the following formula: decrease in Consumer Loan unit volume from dealers who have received funding for at least one dealer loan or purchased loan during the comparable period of the prior year but did not receive funding for any dealer loans or purchased loans during the current period divided by prior year comparable period Consumer Loan unit volume.

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:

(1) Represents advances paid to dealers on Consumer Loans assigned under the portfolio program and one-time payments made to dealers to purchase Consumer Loans assigned under the purchase program. Payments of dealer holdback and accelerated dealer holdback are not included.

As of December 31, 2025 and December 31, 2024, the net dealer loans receivable balance was 72.1% and 72.3%, 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.

Financial Results

The decrease in GAAP net income for the three months ended December 31, 2025, as compared to the same period in 2024, was primarily a result of the following:

• An increase in operating expenses of 33.5% ($40.7 million), primarily due to an increase in general and administrative expense of 162.7% ($35.8 million), primarily due to an increase in legal expenses, which included a $35.8 million contingent loss recognized during the fourth quarter of 2025 related to previously disclosed legal matters as to which we have recognized cumulative contingent losses of $82.6 million through the end of the fourth quarter of 2025. The cumulative amount reflects, among other things, preliminary alignment between us and representatives of the agencies involved in the previously disclosed multi-state and New York Attorney General legal matters on certain material terms of a potential settlement of those legal matters, including a potential cash payment by us of $75.5 million.
• An increase in provision for credit losses of 5.0% ($6.2 million), due to:
  • An increase in provision for credit losses on forecast changes of $9.7 million, reflecting slower forecasted net cash flow timing and a larger decline in Consumer Loan performance. We have continued to experience slowing of forecasted net cash flow timing as a result of lower-than-expected Consumer Loan prepayments.
  • A decrease in provision for credit losses on new Consumer Loan assignments of $3.5 million, primarily due to a 9.1% decrease in Consumer Loan assignment unit volume.
• A decrease in provision for income taxes of 12.5% ($5.0 million), primarily due to a decrease in pre-tax income.
• An increase in finance charges of 3.2% ($16.8 million), due to an increase in the average yield on our loan portfolio primarily due to higher contractual yields on more recent Consumer Loan assignments and an increase in the average balance of our loan portfolio.

Adjusted financial results are provided to help shareholders understand our financial performance. The financial data below is non-GAAP, unless labeled otherwise. We use adjusted financial information internally to measure financial performance and to determine certain incentive compensation. We also use economic profit as a framework to evaluate business decisions and strategies, with the objective to maximize economic profit over the long term. In addition, certain debt facilities utilize adjusted financial information for the determination of loan collateral values and to measure financial covenants. The table below shows our results following adjustments to reflect non-GAAP accounting methods. Material adjustments are explained in the table footnotes and the subsequent “Floating Yield Adjustment” section. Measures such as adjusted average capital, adjusted net income, adjusted net income per diluted share, interest expense (after-tax), adjusted net income plus interest expense (after-tax), adjusted return on capital, adjusted revenue, adjusted operating expenses, adjusted loans receivable, adjusted finance charges, adjusted average loans receivable, economic profit, and economic profit per diluted share are non-GAAP financial measures. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, our reported results prepared in accordance with GAAP.

Adjusted financial results for the three months ended December 31, 2025, compared to the same period in 2024, include the following:

Economic profit increased 3.9% for the three months ended December 31, 2025, as compared to the same period in 2024. Economic profit is a function of the return on capital in excess of the cost of capital and the amount of capital invested in the business. The following table summarizes the impact each of these components had on the changes in economic profit for the three months ended December 31, 2025, as compared to the same period in 2024:

The increase in economic profit for the three months ended December 31, 2025, as compared to the same period in 2024, was primarily a result of a decrease in our cost of capital, primarily due to a decrease in our cost of debt.

The following table shows adjusted finance charges as a percentage of adjusted average loans receivable, adjusted revenue and adjusted operating expenses as a percentage of adjusted average capital, the adjusted return on capital, and the percentage change in adjusted average capital for each of the last eight quarters, compared to the same period in the prior year:

(1) Annualized.

The following tables provide a reconciliation of non-GAAP measures to GAAP measures. Certain amounts do not recalculate due to rounding.