What changed in this filing

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Item 1. Business

2025-02-12 compared with 2024-02-12 · 32 added, 30 removed, 328 unchanged (16% of the section changed)

Since 1972, Credit Acceptance Corporation (referred to as the “Company”, “Credit Acceptance”, “we”, “our” or “us”) has offered financing programs that enable automobile dealers to sell vehicles to consumers, regardless of their credit history.

Credit Acceptance Corporation (referred to as the “Company”, “Credit Acceptance”, “we”, “our” or “us”) makes vehicle ownership possible by providing innovative financing solutions that enable automobile dealers to sell vehicles to consumers, regardless of their credit history.

Our financing programs are offered through a nationwide network of automobile dealers who benefit from sales of vehicles to consumers who otherwise could not obtain financing;

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Further, as we report to the three national credit reporting agencies, an important ancillary benefit of our programs is that we provide consumers with an opportunity to improve their lives by improving their credit score and move on to more traditional sources of financing.

Credit Acceptance was founded to collect retail installment contracts (referred to as “Consumer Loans”) originated by automobile dealerships owned by Donald Foss, our founder.

Credit Acceptance was founded in 1972 to collect retail installment contracts (referred to as “Consumer Loans”) originated by automobile dealerships owned by Donald Foss, our founder.

During the 1980s, we began to market this service to non-affiliated dealers and, at the same time, began to offer dealers a non-recourse cash payment (referred to as an “advance”) against anticipated future collections on Consumer Loans serviced for that dealer.

We refer to automobile dealers who participate in our programs and who share our commitment to changing consumers’ lives as “Dealers.” Upon enrollment in our financing programs, the Dealer enters into a Dealer servicing agreement with us that defines the legal relationship between Credit Acceptance and the Dealer.

We refer to automobile dealers who participate in our programs and who share our desire to provide an opportunity to consumers to improve their lives as “Dealers.” Upon enrollment in our financing programs, the Dealer enters into a Dealer servicing agreement with us that defines the legal relationship between Credit Acceptance and the Dealer.

The Dealer servicing agreement assigns the responsibilities for administering, servicing, and collecting the amounts due on Consumer Loans from the Dealers to us.

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80.6 % 80.9 % 84.8 %

In recent years, we have expanded our financing programs to consumers with higher credit ratings, which has contributed to the reduction in the percentage of total unit volume with either FICO ® scores below 650 or no FICO ® scores over the three year period presented above.

Business Segment Information

We currently operate in one reportable segment which represents our core business of offering Dealers financing programs and related products and services that enable them to sell vehicles to consumers, regardless of their credit history.

For information regarding our one reportable segment and related entity-wide disclosures, see Note 15 to the consolidated financial statements contained in Item 8 of this Form 10-K, which is incorporated herein by reference.

We currently operate in one reportable segment which represents our core business of offering innovative financing solutions and related products and services that enable Dealers to sell vehicles to consumers regardless of their credit history.

For information regarding our one reportable segment and related disclosures, see Note 14 to the consolidated financial statements contained in Item 8 of this Form 10-K, which is incorporated herein by reference.

Principal Business

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2024 78.7 % 21.3 % 77.5 % 22.5 %

(1) Represents advances paid to Dealers on Consumer Loans assigned under our Portfolio Program and one-time payments made to Dealers to purchase Consumer Loans assigned under our Purchase Program.

(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 (as defined below) and accelerated Dealer Holdback are not included.

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Purchase Program

The Purchase Program differs from our Portfolio Program in that the Dealer receives a one-time payment from us at the time of assignment to purchase the Consumer Loan instead of a cash advance at the time of assignment and future Dealer Holdback payments.

The Purchase Program differs from the Portfolio Program in that the Dealer receives a one-time payment from us at the time of assignment to purchase the Consumer Loan instead of a cash advance at the time of assignment and future Dealer Holdback payments.

For accounting purposes, the transactions described under the Purchase Program are considered to be originated by the Dealer and then purchased by us.

Program Enrollment

Dealers are granted access to our Portfolio Program upon enrollment.

Dealers are granted access to the Portfolio Program upon enrollment.

Access to the Purchase Program is typically only granted to Dealers that meet one of the following:

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Our agreement with one of our TPPs allow us to receive profit sharing payments depending on the performance of the GAP contracts.

Under our Purchase Program, we provide Dealers that meet certain criteria the ability to offer vehicle service contracts and GAP to consumers through the Dealers’ relationships with TPPs.

Under the Purchase Program, we provide Dealers that meet certain criteria the ability to offer vehicle service contracts and GAP to consumers through the Dealers’ relationships with TPPs.

The retail price of the vehicle service contract and/or GAP is included in the principal balance of the Consumer Loan and is paid to the Dealer.

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Texas 327.9 7.1 % 1,295 8.4 %

Ohio 245.2 5.9 % 986 7.0 %

New Jersey 303.5 6.6 % 386 2.5 %

Tennessee 216.0 5.2 % 569 4.0 %

Ohio 269.5 5.8 % 1,024 6.6 %

Florida 233.7 5.1 % 873 5.6 %

All other states 3,111.4 67.3 % 11,024 71.3 %

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Michigan $ 326.3 7.9 % 833 5.9 %

New York 229.8 6.3 % 687 5.8 %

Ohio 205.7 5.7 % 832 7.0 %

Texas 272.5 6.6 % 1,170 8.3 %

Ohio 245.2 5.9 % 986 7.0 %

New Jersey 238.2 5.7 % 357 2.5 %

Tennessee 216.0 5.2 % 569 4.0 %

All other states 2,849.6 68.7 % 10,259 72.3 %

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Texas 205.5 5.7 % 903 7.6 %

Tennessee 162.9 5.1 % 458 4.0 %

New Jersey 204.0 5.6 % 300 2.5 %

All other states 2,427.3 67.0 % 8,448 71.0 %

Total $ 3,625.3 100.0 % 11,901 100.0 %

(1) Represents advances paid to Dealers on Consumer Loans assigned under our Portfolio Program and one-time payments made to Dealers to purchase Consumer Loans assigned under our Purchase Program.

(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.

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Community Financial Services Association of America Ltd ., No.

22-448 (“CFSA”).

On July 1, 2024, the court lifted the stay in view of the decision in CFSA and requested revised briefing on the Company’s motion to dismiss that would address the intervening legal developments and sharpen the issues for resolution.

As of October 29, 2024, the Company's motion to dismiss has been fully briefed.

The Company intends to vigorously defend itself in this matter.

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The Company has been informed that the State of Kansas, the State of Texas, and the State of Iowa have withdrawn from the multistate investigation.

• On December 9, 2014, we received a civil investigative subpoena from the U.S.

Department of Justice pursuant to the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 directing us to produce certain information relating to subprime automotive finance and related securitization activities.

In addition, governmental regulations that would deplete the supply of used vehicles, such as environmental protection regulations governing emissions or fuel consumption, could have a material adverse effect on us.

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Our agreements with Dealers provide that the Dealer shall indemnify us with respect to any loss or expense we incur as a result of the Dealer’s failure to comply with applicable laws and regulations.

Our team members are organized into three operating functions:

Originations, Servicing, and Support.

Our team members are organized into four operating functions as follows:

The servicing function includes team members that are responsible for servicing Consumer Loans.

The majority of these team members are responsible for collection activities on delinquent Consumer Loans.

Originations.

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Originations also includes team members responsible for processing new Consumer Loan assignments.

The servicing function includes team members that are responsible for servicing the Consumer Loans.

The majority of these team members are responsible for collection activities on delinquent Consumer Loans.

The support function includes team members that are responsible for engineering, corporate legal and compliance, human resources, finance, analytics, and marketing and product management.

The table below presents team members by operating function:

Engineering, Analytics, Marketing, and Product Management .

This function consists of team members that are responsible for innovating, transforming, enhancing, modernizing, and optimizing our product for Dealers and consumers.

The support function includes team members that are responsible for corporate legal and compliance, human resources, and finance.

The following table presents team members by operating function:

Number of Team Members

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Operating Function 2024 2023 2022

Originations 533 505 500

Servicing 906 845 907

Originations 578 533 505

Engineering, Analytics, Marketing, and Product Management 512 420 425

Support 435 434 409

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All team members complete non-discrimination and anti-harassment training, promoting a safe and inclusive work environment.

The vast majority of our team members w ork remotely from locations within the United States, with approximately half of our team members located outside of Michigan.

Our Company is highly diverse, as more than half of our team members are women, and more than half belong to a minority ethnicity.

Our team members reflect diversity of nationality, faith, age, and sexual orientation.

We believe that our workplace is naturally diverse and inclusive due to our practices of maintaining open and transparent communication and fostering a climate in which all team members are welcome to speak up and contribute.

We have a Diversity and Inclusion Committee, chaired by a senior manager, tasked with generating concrete actions that we can take together to help our communities heal and make our culture and our Company stronger.

The vast majority of our team members work remotely from locations within the United States, with more than half of our team members located outside of Michigan.

Our remote-first work environment allows us to take advantage of the national talent pool and hire the most qualified team members.

We believe our workplace supports an inclusive culture due to our practices of maintaining open and transparent communication and fostering a climate in which all team members are welcome to speak up and contribute.

We engage in initiatives that encourage our team members to generate concrete actions that we can take together to enhance the environment of inclusion, a sense of belonging, and acceptance of others to make our culture and our Company stronger.

We believe these factors naturally contribute to the diversity of our workforce.

We place great importance on listening to our team members, as we believe that “ the people doing the work know the most about it.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business