SEC Filings

Credit Acceptance Cuts Collections Forecast By $185.2 Million, Posts $56.6 Million Quarterly Loss

The subprime auto lender reset its outlook on loans from 2022 through 2026 after quarters of small misses, even as loan volume jumped 51.0%.

Matteo Parrino Jonathan Ponciano

Matteo Parrino, Jonathan Ponciano

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Credit Acceptance Cuts Collections Forecast By $185.2 Million, Posts $56.6 Million Quarterly Loss

Credit Acceptance, the subprime auto lender, cut the cash it expects to collect on loans assigned from 2022 through 2026 by $185.2 million, or 1.5%, and booked a $56.6 million third-quarter net loss, according to its 10-Q filed Thursday. A year earlier it earned $108.2 million.

One big reset after small misses

The adjustment raised the provision for credit losses, the expense line that absorbs forecast changes, by $143.7 million. Total provision reached $410.9 million, against $152.0 million a year earlier. The loss works out to $5.43 per diluted share, versus earnings of $9.43 a year ago.

The company said it had seen small but consistent quarterly underperformance on these loans and had trimmed its forecast each quarter. Weakness was worst among borrowers in lower scorecard bands, and the hit lands mainly on older loans, those assigned ahead of the second-quarter 2026 scorecard change.

The prior quarter looked mild by comparison. Forecasted net cash flows fell only $39.1 million, or 0.3%, when it earned $135.9 million. This quarter the total decline was $291.2 million, or 2.5%, made up of $106.0 million of ordinary decreases plus the $185.2 million adjustment.

Forecasted collection rates dropped for the newest vintages. The 2025 loans fell to 64.9% from 66.9% at June 30, and the 2024 loans to 63.6% from 65.1%. Initial forecasts were 67.0% and 67.2%. The prior quarter's filing had attributed declines in the newest loans mainly to cancellations rather than loan performance; that line is gone, and the filing now says the adjustment set rates at the levels the company expects for the life of the loans.

A lender whose forecast is the business

Credit Acceptance lets auto dealers sell cars to buyers regardless of credit history, and most of its loans go to people with impaired or limited credit. It either advances dealers cash and services the loans, or buys the loans outright. Profit comes from the gap between forecast collections and what it pays out, so a lower forecast hits earnings directly.

The company had made a smaller adjustment before. In the second quarter of 2025 it cut forecasted cash flows by $18.6 million on 2024 loans.

Volume surged anyway. Loan assignments reached 110,010 units and $1.4 billion, up 37.7% and 51.0% from a year earlier, and active dealers hit a record 12,093. The company bought back 269,150 shares for $161.6 million in the quarter.

Settlements take effect November 2

The company has agreed to settle with state attorneys general without admitting wrongdoing. It paid $15.5 million to the states and $60.0 million into a remediation trust, and will waive balances estimated at $634.0 million for certain customers. The company said no charges beyond amounts already accrued are required.

Each of the 41 agreements needs court approval and is scheduled to take effect on November 2, 2026. As of October 22, approval had been obtained for 35 of them.

The company's market value stood at $5.7 billion at Thursday's close.

Sources

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