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Item 1. Financial Statements

2025-04-30 compared with 2024-10-30 · 164 added, 368 removed, 1178 unchanged (31% of the section changed)

3 unchanged sentences

(Dollars in millions, except per share data) As of

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Cash and cash equivalents $ 528.8 $ 343.7

14 unchanged sentences

Senior notes 1,085.8 991.3

Mortgage note — 8.4

Deferred income taxes, net 320.9 319.1

4 unchanged sentences

Preferred stock, $ .01 par value, 1,000,000 shares authorized, none issued

Common stock, $ .01 par value, 80,000,000 shares authorized, 12,111,600 and 12,522,397 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

Common stock, $ .01 par value, 80,000,000 shares authorized, 11,747,851 and 12,048,151 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively

Paid-in capital 351.7 335.1

7 unchanged sentences

(Dollars in millions, except per share data) For the Three Months Ended

September 30, For the Nine Months Ended

September 30,

2024 2023 2024 2023

Finance charges $ 526.7 $ 469.2

12 unchanged sentences

Provision for claims 16.1 17.0

Loss on sale of building — — 23.7 —

Loss on extinguishment of debt 1.2 —

Total costs and expenses 429.4 421.6

12 unchanged sentences

(In millions) For the Three Months Ended

September 30, For the Nine Months Ended

September 30,

2024 2023 2024 2023

Net income $ 106.3 $ 64.3

Other comprehensive gain (loss), net of tax:

Other comprehensive income (loss), net of tax:

Unrealized gain (loss) on securities, net of tax 0.9 ( 0.2 )

Other comprehensive gain (loss) 2.1 ( 0.2 ) 1.9 —

Other comprehensive income (loss) 0.9 ( 0.2 )

Comprehensive income $ 107.2 $ 64.1

2 unchanged sentences

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Dollars in millions) For the Three Months Ended September 30, 2024

(Dollars in millions) For the Three Months Ended March 31, 2025

Common Stock Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Shareholders’ Equity

7 unchanged sentences

Restricted stock units settled in common stock 11,963 — — — — —

Stock options exercised 16,800 — 5.6 — — 5.6

Balance, end of period 11,747,851 $ 0.1 $ 351.7 $ 1,358.5 $ 0.6 $ 1,710.9

(Dollars in millions) For the Three Months Ended September 30, 2023

(Dollars in millions) For the Three Months Ended March 31, 2024

Common Stock Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Shareholders’ Equity

6 unchanged sentences

( 351,368 ) — ( 1.0 ) ( 190.1 ) — ( 191.1 )

Stock options exercised 770 — 0.3 — — 0.3

Balance, end of period 12,566,219 $ 0.1 $ 271.3 $ 1,432.4 $ ( 2.9 ) $ 1,700.9

(Dollars in millions) For the Nine Months Ended September 30, 2024

Common Stock Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Shareholders’ Equity

Number of Shares Amount

Balance, beginning of period 12,522,397 $ 0.1 $ 279.0 $ 1,475.6 $ ( 1.0 ) $ 1,753.7

Net income — — — 96.0 — 96.0

Other comprehensive income — — — — 1.9 1.9

Stock-based compensation — — 32.2 — — 32.2

Repurchase of common stock ( 462,131 ) — ( 1.3 ) ( 250.6 ) — ( 251.9 )

Restricted stock units settled to common stock 8,908 — — — — —

Stock options exercised 42,426 — 14.6 — — 14.6

Balance, end of period 12,111,600 $ 0.1 $ 324.5 $ 1,321.0 $ 0.9 $ 1,646.5

(Dollars in millions) For the Nine Months Ended September 30, 2023

Common Stock Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Shareholders’ Equity

Number of Shares Amount

Balance, beginning of period 12,756,885 $ 0.1 $ 245.7 $ 1,381.1 $ ( 2.9 ) $ 1,624.0

Net income — — — 192.5 — 192.5

Stock-based compensation — — 29.0 — — 29.0

Repurchase of common stock ( 305,493 ) — ( 7.8 ) ( 141.2 ) — ( 149.0 )

Restricted stock units settled to common stock 101,757 — — — — —

Restricted stock units settled in common stock 7,125 — — — — —

Stock options exercised 42,426 — 14.6 — — 14.6

3 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions) For the Nine Months Ended September 30,

(In millions) For the Three Months Ended March 31,

Cash Flows From Operating Activities:

6 unchanged sentences

Stock-based compensation 12.9 10.9

Loss on sale of building 23.7 —

Loss on extinguishment of debt 1.2 —

Other 0.2 0.4

15 unchanged sentences

Purchases of property and equipment ( 0.3 ) ( 0.3 )

Proceeds from sale of building 3.2 —

Net cash used in investing activities ( 291.6 ) ( 583.9 )

4 unchanged sentences

Repayments of secured financing ( 396.0 ) ( 607.3 )

Proceeds from issuance of senior notes 500.0 —

Repayment of senior notes ( 400.0 ) —

Payments of debt issuance costs ( 10.6 ) ( 6.3 )

21 unchanged sentences

Actual results could differ from those estimates.

We have evaluated events and transactions occurring subsequent to the consolidated balance sheet date of September 30, 2024 for items that could potentially be recognized or disclosed in these financial statements.

We have evaluated events and transactions occurring subsequent to the consolidated balance sheet date of March 31, 2025 for items that could potentially be recognized or disclosed in these financial statements.

We did not identify any items that would require disclosure in or adjustment to the consolidated financial statements.

Reclassification

Certain amounts for prior periods have been reclassified to conform to the current presentation.

DESCRIPTION OF BUSINESS

10 unchanged sentences

The following table shows the percentage of Consumer Loans assigned to us with either FICO ® scores below 650 or no FICO ® scores:

For the Three Months Ended September 30, For the Nine Months Ended September 30,

For the Three Months Ended March 31,

Consumer Loan Assignment Volume 2025 2024

6 unchanged sentences

Under the Purchase Program, we buy the Consumer Loans from the Dealers (referred to as a “Purchased Loan”) and keep all amounts collected from the consumer.

Dealer Loans and Purchased Loans are collectively referred to as “Loans.” The following table shows the percentage of Consumer Loans assigned to us as Dealer Loans and Purchased Loans for each of the last seven quarters:

Unit Volume Dollar Volume (1)

5 unchanged sentences

March 31, 2025 77.0 % 23.0 % 75.1 % 24.9 %

June 30, 2024 78.5 % 21.5 % 77.3 % 22.7 %

September 30, 2024 79.5 % 20.5 % 78.4 % 21.6 %

(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.

28 unchanged sentences

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:

8 unchanged sentences

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

The consolidated financial statements reflect the financial results of our one reportable operating segment.

For information regarding our one reportable segment and related entity wide disclosures, see Note 14 .

Cash and Cash Equivalents and Restricted Cash and Cash Equivalents

Cash equivalents consist of readily marketable securities with original maturities at the date of acquisition of three months or less.

As of September 30, 2024 and December 31, 2023, we had $ 158.6 million and $ 12.8 million, respectively, in cash and cash equivalents that were not insured by the Federal Deposit Insurance Corporation (“FDIC”).

As of March 31, 2025 and December 31, 2024, we had $ 527.9 million and $ 342.7 million, respectively, in cash and cash equivalents that were not insured by the Federal Deposit Insurance Corporation (“FDIC”).

Restricted cash and cash equivalents consist of cash pledged as collateral for secured financings and cash held in a trust for future vehicle service contract claims.

As of September 30, 2024 and December 31, 2023, we had $ 551.8 million and $ 453.7 million, respectively, in restricted cash and cash equivalents that were not insured by the FDIC.

As of March 31, 2025 and December 31, 2024, we had $ 585.9 million and $ 497.0 million, respectively, in restricted cash and cash equivalents that were not insured by the FDIC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

1 unchanged sentence

(In millions) As of

September 30, 2024 December 31, 2023 September 30, 2023 December 31, 2022

March 31, 2025 December 31, 2024 March 31, 2024 December 31, 2023

Cash and cash equivalents $ 528.8 $ 343.7 $ 8.4 $ 13.2

59 unchanged sentences

transfers out.

Under our Portfolio Program, certain events may result in Dealers forfeiting their rights to Dealer Holdback.

Under the Portfolio Program, certain events may result in Dealers forfeiting their rights to Dealer Holdback.

We transfer the Dealer’s outstanding Dealer Loan balance and the related allowance for credit losses balance to Purchased Loans in the period this forfeiture occurs.

1 unchanged sentence

Allowance for Credit Losses.

The outstanding balance of the allowance for credit losses of each Loan represents the amount required to reduce net carrying amount of Loans (Loans receivable less allowance for credit losses) to the present value of expected future net cash flows discounted at the effective interest rate.

The outstanding balance of the allowance for credit losses of each Loan represents the amount required to reduce the net carrying amount of Loans (Loans receivable less allowance for credit losses) to the present value of expected future net cash flows discounted at the effective interest rate.

Expected future net cash flows for Dealer Loans are comprised of expected future collections on the assigned Consumer Loans, less any expected future Dealer Holdback payments.

5 unchanged sentences

Expected future Dealer Holdback payments are forecasted for each individual Dealer based on the expected future collections and current advance balance of each Dealer Loan.

We fully write off the outstanding balances of a Loan and the related allowance for credit losses once we are no longer forecasting any expected future net cash flows on the Loan.

Under our partial write-off policy, we write off the amount of the outstanding balances of a Loan and the related allowance for credit losses, if any, that exceeds 200% of the present value of expected future net cash flows on the Loan, as we deem this amount to be uncollectable.

We fully write off the outstanding balance of a Loan and the related allowance for credit losses once we are no longer forecasting any expected future net cash flows on the Loan.

Under our partial write-off policy, we write off the amount of the outstanding balance of a Loan and the related allowance for credit losses, if any, that exceeds 200% of the present value of expected future net cash flows on the Loan, as we deem this amount to be uncollectable.

Credit Quality.

16 unchanged sentences

Methodolo gy Changes .

During the second quarter of 2024, we applied an adjustment to our methodology for forecasting the amount of future net cash flows from our Loan portfolio, which reduced the forecasted collection rates for Consumer Loans assigned in 2022 through 2024.

During the second quarter of 2023, we adjusted our methodology for forecasting the amount and timing of future net cash flows from our Loan portfolio through the utilization of more recent Consumer Loan performance and Consumer Loan prepayment data.

For additional information, see Note 6.

For the three and nine months ended September 30, 2024 and 2023, we did not make any other methodology changes for Loans that had a material impact on our financial statements.

For the three months ended March 31, 2025 and 2024, we did not make any methodology changes for Loans that had a material impact on our financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

27 unchanged sentences

and all tangible and intangible property owned by Credit Acceptance.

We charge a monthly fee of $599 to Dealers participating in our Portfolio Program and we collect it from future Dealer Holdback payments.

We charge a monthly fee of $599 to Dealers participating in the Portfolio Program and we collect it from future Dealer Holdback payments.

Recognition Policy.

34 unchanged sentences

We are currently evaluating the impact the adoption of ASU 2023-06 will have on our consolidated financial statements and related disclosures.

Improvements to Reportable Segment Disclosures.

In November 2023, the FASB issued ASU 2023-07, which enhances the required disclosures for operating segments in our annual and interim consolidated financial statements.

ASU 2023-07 is effective on a retrospective basis for annual periods beginning after December 15, 2023, and interim periods beginning after December 15, 2024.

Early adoption is permitted but we have not yet adopted ASU 2023-07.

We are currently evaluating the impact the adoption of ASU 2023-07 will have on our consolidated financial statements and related disclosures.

Improvements to Income Tax Disclosures.

4 unchanged sentences

We are currently evaluating the impact the adoption of ASU 2023-09 will have on our consolidated financial statements and related disclosures.

Disaggregation of Income Statement Expenses.

In November 2024, the FASB issued ASU 2024-03, which requires disaggregated disclosure of income statement expenses.

ASU 2024-03 does not change the expense captions an entity presents on the face of the income statement;

rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements.

ASU 2024-03 is effective for annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027.

We are currently evaluating the impact the adoption of ASU 2024-03 will have on our consolidated financial statements and related disclosures.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

5 unchanged sentences

The fair value of U.S.

Government and agency securities, corporate bonds, and municipal securities is based on quoted market values in active markets.

Government and agency securities, corporate bonds, and municipal bonds is based on quoted market values in active markets.

For asset-backed securities, mortgage-backed securities, and commercial paper, we use model-based valuation techniques for which all significant assumptions are observable in the market.

8 unchanged sentences

The fair value is determined using quoted market prices in an active market.

Mortgage Note.

The fair value was determined by calculating the present value of the debt instrument based on current rates for debt with a similar risk profile and maturity.

A comparison of the carrying amount and estimated fair value of these financial instruments is as follows:

(In millions) As of September 30, 2024 As of December 31, 2023

(In millions) As of March 31, 2025 As of December 31, 2024

Amount Estimated Fair

8 unchanged sentences

Senior notes 1,085.8 1,127.4 991.3 1,035.3

Mortgage note — — 8.4 8.4

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

8 unchanged sentences

The following table provides the level of measurement used to determine the fair value for each of our financial instruments measured or disclosed at fair value:

(In millions) As of September 30, 2024

(In millions) As of March 31, 2025

Level 1 Level 2 Level 3 Total Fair Value

15 unchanged sentences

Senior notes (1) 1,035.3 — — 1,035.3

Mortgage note (1) — 8.4 — 8.4

(1) Measured at amortized cost with fair value disclosed.

3 unchanged sentences

Restricted securities available for sale consist of the following:

(In millions) As of September 30, 2024

(In millions) As of March 31, 2025

Amortized Cost Gross Unrealized

13 unchanged sentences

Asset-backed securities 20.1 0.1 — 20.2

Municipal securities 0.7 — — 0.7

Mortgage-backed securities 1.7 — — 1.7

1 unchanged sentence

The fair value and gross unrealized losses for restricted securities available for sale, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, are as follows:

(In millions) Securities Available for Sale with Gross Unrealized Losses as of September 30, 2024

(In millions) Securities Available for Sale with Gross Unrealized Losses as of March 31, 2025

Less than 12 Months 12 Months or More

26 unchanged sentences

(In millions) As of

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Contractual Maturity Amortized Cost Estimated Fair

8 unchanged sentences

Loans receivable and allowance for credit losses consist of the following:

(In millions) As of September 30, 2024

(In millions) As of March 31, 2025

Dealer Loans Purchased Loans Total

9 unchanged sentences

A summary of changes in Loans receivable and allowance for credit losses is as follows:

For the Three Months Ended September 30, 2024

For the Three Months Ended March 31, 2025

(In millions)

28 unchanged sentences

$ 8,734.1 $ 2,742.6 $ 11,476.7 $ ( 2,934.4 ) $ ( 564.1 ) $ ( 3,498.5 ) $ 5,799.7 $ 2,178.5 $ 7,978.2

For the Three Months Ended September 30, 2023

For the Three Months Ended March 31, 2024

(In millions)

28 unchanged sentences

$ 7,553.0 $ 2,930.5 $ 10,483.5 $ ( 2,471.2 ) $ ( 666.7 ) $ ( 3,137.9 ) $ 5,081.8 $ 2,263.8 $ 7,345.6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

For the Nine Months Ended September 30, 2024

(In millions) Loans Receivable Allowance for Credit Losses Loans Receivable, Net

Dealer Loans Purchased Loans Total Dealer Loans Purchased Loans Total Dealer Loans Purchased Loans Total

Balance, beginning of period $ 7,065.5 $ 2,954.6 $ 10,020.1 $ ( 2,355.7 ) $ ( 709.1 ) $ ( 3,064.8 ) $ 4,709.8 $ 2,245.5 $ 6,955.3

Finance charges 1,411.8 683.8 2,095.6 ( 474.9 ) ( 146.2 ) ( 621.1 ) 936.9 537.6 1,474.5

Provision for credit losses — — — ( 457.5 ) ( 233.8 ) ( 691.3 ) ( 457.5 ) ( 233.8 ) ( 691.3 )

New Consumer Loan assignments (1) 2,858.3 833.8 3,692.1 — — — 2,858.3 833.8 3,692.1

Collections (2) ( 2,650.5 ) ( 1,245.2 ) ( 3,895.7 ) — — — ( 2,650.5 ) ( 1,245.2 ) ( 3,895.7 )

Accelerated Dealer Holdback payments 46.9 — 46.9 — — — 46.9 — 46.9

Dealer Holdback payments 188.1 — 188.1 — — — 188.1 — 188.1

Transfers (3) ( 105.0 ) 105.0 — 34.8 ( 34.8 ) — ( 70.2 ) 70.2 —

Write-offs ( 481.0 ) ( 486.2 ) ( 967.2 ) 481.0 486.2 967.2 — — —

Recoveries (4) 3.0 3.1 6.1 ( 3.0 ) ( 3.1 ) ( 6.1 ) — — —

Deferral of Loan origination costs 11.6 — 11.6 — — — 11.6 — 11.6

Balance, end of period $ 8,348.7 $ 2,848.9 $ 11,197.6 $ ( 2,775.3 ) $ ( 640.8 ) $ ( 3,416.1 ) $ 5,573.4 $ 2,208.1 $ 7,781.5

For the Nine Months Ended September 30, 2023

(In millions) Loans Receivable Allowance for Credit Losses Loans Receivable, Net

Dealer Loans Purchased Loans Total Dealer Loans Purchased Loans Total Dealer Loans Purchased Loans Total

Balance, beginning of period $ 6,074.8 $ 3,090.7 $ 9,165.5 $ ( 2,000.0 ) $ ( 867.8 ) $ ( 2,867.8 ) $ 4,074.8 $ 2,222.9 $ 6,297.7

Finance charges 1,156.8 698.1 1,854.9 ( 386.7 ) ( 164.4 ) ( 551.1 ) 770.1 533.7 1,303.8

Provision for credit losses — — — ( 327.3 ) ( 245.2 ) ( 572.5 ) ( 327.3 ) ( 245.2 ) ( 572.5 )

New Consumer Loan assignments (1) 2,202.9 970.6 3,173.5 — — — 2,202.9 970.6 3,173.5

Collections (2) ( 2,376.9 ) ( 1,266.9 ) ( 3,643.8 ) — — — ( 2,376.9 ) ( 1,266.9 ) ( 3,643.8 )

Accelerated Dealer Holdback payments 35.3 — 35.3 — — — 35.3 — 35.3

Dealer Holdback payments 177.3 — 177.3 — — — 177.3 — 177.3

Transfers (3) ( 78.9 ) 78.9 — 28.5 ( 28.5 ) — ( 50.4 ) 50.4 —

Write-offs ( 417.2 ) ( 546.7 ) ( 963.9 ) 417.2 546.7 963.9 — — —

Recoveries (4) 1.3 2.9 4.2 ( 1.3 ) ( 2.9 ) ( 4.2 ) — — —

Deferral of Loan origination costs 9.2 — 9.2 — — — 9.2 — 9.2

Balance, end of period $ 6,784.6 $ 3,027.6 $ 9,812.2 $ ( 2,269.6 ) $ ( 762.1 ) $ ( 3,031.7 ) $ 4,515.0 $ 2,265.5 $ 6,780.5

(1) The Dealer Loans amount represents advances paid to Dealers on Consumer Loans assigned under our Portfolio Program.

The Purchased Loans amount represents one-time payments made to Dealers to purchase Consumer Loans assigned under our Purchase Program.

(1) The Dealer Loans amount represents advances paid to Dealers on Consumer Loans assigned under the Portfolio Program.

The Purchased Loans amount represents one-time payments made to Dealers to purchase Consumer Loans assigned under the Purchase Program.

(2) Represents repayments that we collected on Consumer Loans assigned under our programs.

(3) Under our Portfolio Program, certain events may result in Dealers forfeiting their rights to Dealer Holdback.

(3) Under the Portfolio Program, certain events may result in Dealers forfeiting their rights to Dealer Holdback.

We transfer the Dealer’s outstanding Dealer Loan balance and related allowance for credit losses balance to Purchased Loans in the period this forfeiture occurs.

6 unchanged sentences

(In millions)

For the Three Months Ended September 30, 2024

Provision for Credit Losses

Purchased Loans

New Consumer Loan assignments

$ 49.4 $ 29.4 $ 78.8

Forecast changes

74.1 31.8 105.9

$ 123.5 $ 61.2 $ 184.7

(In millions) For the Three Months Ended September 30, 2023

Provision for Credit Losses Dealer Loans Purchased Loans Total

New Consumer Loan assignments $ 37.4 $ 40.9 $ 78.3

Forecast changes 70.6 35.7 106.3

Total $ 108.0 $ 76.6 $ 184.6

(In millions)

For the Nine Months Ended September 30, 2024

For the Three Months Ended March 31, 2025

Provision for Credit Losses

5 unchanged sentences

$ 104.7 $ 57.2 $ 161.9

(In millions) For the Nine Months Ended September 30, 2023

(In millions) For the Three Months Ended March 31, 2024

Provision for Credit Losses Dealer Loans Purchased Loans Total

8 unchanged sentences

(In millions)

For the Three Months Ended September 30, 2024

For the Three Months Ended March 31, 2025

New Consumer Loan Assignments

12 unchanged sentences

$ 370.9 $ 124.4 $ 495.3

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

(In millions)

For the Three Months Ended September 30, 2023

For the Three Months Ended March 31, 2024

New Consumer Loan Assignments

12 unchanged sentences

$ 428.4 $ 140.6 $ 569.0

(In millions) For the Nine Months Ended September 30, 2024

New Consumer Loan Assignments Dealer Loans Purchased Loans Total

Contractual net cash flows at the time of assignment (1) $ 4,478.9 $ 1,703.1 $ 6,182.0

Expected net cash flows at the time of assignment (2) 4,064.2 1,213.2 5,277.4

Loans receivable at the time of assignment (3) 2,858.3 833.8 3,692.1

Provision for credit losses expense at the time of assignment $ ( 155.4 ) $ ( 105.0 ) $ ( 260.4 )

Expected future finance charges at the time of assignment (4) 1,361.3 484.4 1,845.7

Expected net Loan income at the time of assignment (5) $ 1,205.9 $ 379.4 $ 1,585.3

(In millions) For the Nine Months Ended September 30, 2023

New Consumer Loan Assignments Dealer Loans Purchased Loans Total

Contractual net cash flows at the time of assignment (1) $ 3,435.1 $ 1,948.9 $ 5,384.0

Expected net cash flows at the time of assignment (2) 3,118.1 1,357.7 4,475.8

Loans receivable at the time of assignment (3) 2,202.9 970.6 3,173.5

Provision for credit losses expense at the time of assignment $ ( 108.9 ) $ ( 144.2 ) $ ( 253.1 )

Expected future finance charges at the time of assignment (4) 1,024.1 531.3 1,555.4

Expected net Loan income at the time of assignment (5) $ 915.2 $ 387.1 $ 1,302.3

(1) The Dealer Loans amount represents repayments that we were contractually owed at the time of assignment on Consumer Loans assigned under our Portfolio Program, less the related Dealer Holdback payments that we would be required to make if we collected all of the contractual repayments.

The Purchased Loans amount represents repayments that we were contractually owed at the time of assignment on Consumer Loans assigned under our Purchase Program.

(2) The Dealer Loans amount represents repayments that we expected to collect at the time of assignment on Consumer Loans assigned under our Portfolio Program, less the related Dealer Holdback payments that we expected to make.

The Purchased Loans amount represents repayments that we expected to collect at the time of assignment on Consumer Loans assigned under our Purchase Program.

(1) The Dealer Loans amount represents repayments that we were contractually owed at the time of assignment on Consumer Loans assigned under the Portfolio Program, less the related Dealer Holdback payments that we would be required to make if we collected all of the contractual repayments.

The Purchased Loans amount represents repayments that we were contractually owed at the time of assignment on Consumer Loans assigned under the Purchase Program.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

(2) The Dealer Loans amount represents repayments that we expected to collect at the time of assignment on Consumer Loans assigned under the Portfolio Program, less the related Dealer Holdback payments that we expected to make.

The Purchased Loans amount represents repayments that we expected to collect at the time of assignment on Consumer Loans assigned under the Purchase Program.

The Loan amounts also represent the fair value at the time of assignment.

(3) The Dealer Loans amount represents advances paid to Dealers on Consumer Loans assigned under our Portfolio Program.

The Purchased Loans amount represents one-time payments made to Dealers to purchase Consumer Loans assigned under our Purchase Program.

(3) The Dealer Loans amount represents advances paid to Dealers on Consumer Loans assigned under the Portfolio Program.

The Purchased Loans amount represents one-time payments made to Dealers to purchase Consumer Loans assigned under the Purchase Program.

(4) Represents revenue that is expected to be recognized on a level-yield basis over the lives of the Loans.

(5) Represents the amount that expected net cash flows at the time of assignment exceed Loans receivable at the time of assignment.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

A summary of changes in expected future net cash flows is as follows:

(In millions)

For the Three Months Ended September 30, 2024

For the Three Months Ended March 31, 2025

Expected Future Net Cash Flows

13 unchanged sentences

(In millions)

For the Three Months Ended September 30, 2023

For the Three Months Ended March 31, 2024

Expected Future Net Cash Flows

12 unchanged sentences

$ 7,295.9 $ 3,527.1 $ 10,823.0

(In millions) For the Nine Months Ended September 30, 2024

Expected Future Net Cash Flows Dealer Loans Purchased Loans Total

Balance, beginning of period $ 6,707.2 $ 3,472.0 $ 10,179.2

New Consumer Loan assignments (1) 4,064.2 1,213.2 5,277.4

Realized net cash flows (2) ( 2,415.5 ) ( 1,245.2 ) ( 3,660.7 )

Forecast changes ( 173.0 ) ( 109.9 ) ( 282.9 )

Transfers (3) ( 105.8 ) 110.9 5.1

Balance, end of period $ 8,077.1 $ 3,441.0 $ 11,518.1

(In millions) For the Nine Months Ended September 30, 2023

Expected Future Net Cash Flows Dealer Loans Purchased Loans Total

Balance, beginning of period $ 5,637.9 $ 3,395.5 $ 9,033.4

New Consumer Loan assignments (1) 3,118.1 1,357.7 4,475.8

Realized net cash flows (2) ( 2,164.3 ) ( 1,266.9 ) ( 3,431.2 )

Forecast changes ( 89.3 ) ( 60.0 ) ( 149.3 )

Transfers (3) ( 73.4 ) 83.9 10.5

Balance, end of period $ 6,429.0 $ 3,510.2 $ 9,939.2

(1) The Dealer Loans amount represents repayments that we expected to collect at the time of assignment on Consumer Loans assigned under our Portfolio Program, less the related Dealer Holdback payments that we expected to make.

The Purchased Loans amount represents repayments that we expected to collect at the time of assignment on Consumer Loans assigned under our Purchase Program.

(2) The Dealer Loans amount represents repayments that we collected on Consumer Loans assigned under our Portfolio Program, less the Dealer Holdback and Accelerated Dealer Holdback payments that we made.

Purchased Loans amount represents repayments that we collected on Consumer Loans assigned under our Purchase Program.

(3) Under our Portfolio Program, certain events may result in Dealers forfeiting their rights to Dealer Holdback.

(1) The Dealer Loans amount represents repayments that we expected to collect at the time of assignment on Consumer Loans assigned under the Portfolio Program, less the related Dealer Holdback payments that we expected to make.

The Purchased Loans amount represents repayments that we expected to collect at the time of assignment on Consumer Loans assigned under the Purchase Program.

(2) The Dealer Loans amount represents repayments that we collected on Consumer Loans assigned under the Portfolio Program, less the Dealer Holdback and Accelerated Dealer Holdback payments that we made.

Purchased Loans amount represents repayments that we collected on Consumer Loans assigned under the Purchase Program.

(3) Under the Portfolio Program, certain events may result in Dealers forfeiting their rights to Dealer Holdback.

We transfer the Dealer’s outstanding Dealer Loan balance, related allowance for credit losses balance, and related expected future net cash flows to Purchased Loans in the period this forfeiture occurs.

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For additional information regarding credit quality, see Note 3 .

The following table compares our aggregated forecast of Consumer Loan collection rates as of September 30, 2024 with the aggregated forecasts as of June 30, 2024, December 31, 2023, and at the time of assignment, segmented by year of assignment:

The following table compares our aggregated forecast of Consumer Loan collection rates as of March 31, 2025 with the aggregated forecasts as of December 31, 2024 and at the time of assignment, segmented by year of assignment:

Forecasted Collection Percentage as of (1) Current Forecast Variance from

Consumer Loan

Assignment Year September 30, 2024 June 30, 2024 December 31, 2023 Initial

Forecast June 30, 2024 December 31, 2023 Initial

Assignment Year March 31, 2025 December 31, 2024 Initial

Forecast December 31, 2024 Initial

2016 63.9 % 63.9 % 65.4 % 0.0 % - 1.5 %

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Consumer Loan

Assignment Year September 30, 2024 June 30, 2024 December 31, 2023 Initial

Forecast June 30, 2024 December 31, 2023 Initial

Assignment Year March 31, 2025 December 31, 2024 Initial

Forecast December 31, 2024 Initial

2016 63.1 % 63.1 % 65.1 % 0.0 % - 2.0 %

12 unchanged sentences

Consumer Loan

Assignment Year September 30, 2024 June 30, 2024 December 31, 2023 Initial

Forecast June 30, 2024 December 31, 2023 Initial

Assignment Year March 31, 2025 December 31, 2024 Initial

Forecast December 31, 2024 Initial

2016 66.1 % 66.1 % 66.5 % 0.0 % - 0.4 %

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We evaluate and adjust the expected collection rate for each Consumer Loan subsequent to assignment primarily through the monitoring of consumer payment behavior.

The following table summarizes the past-due status of Consumer Loan assignments as of September 30, 2024 and December 31, 2023, segmented by year of assignment:

The following table summarizes the past-due status of Consumer Loan assignments as of March 31, 2025 and December 31, 2024, segmented by year of assignment:

(In millions)

Total Loans as of September 30, 2024 (1) (2)

Total Loans as of March 31, 2025 (1) (2)

Pre-term Consumer Loans (3)

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(In millions)

Dealer Loans as of September 30, 2024 (1)

Dealer Loans as of March 31, 2025 (1)

Pre-term Consumer Loans (3)

10 unchanged sentences

(In millions)

Purchased Loans as of September 30, 2024 (2)

Purchased Loans as of March 31, 2025 (2)

Pre-term Consumer Loans (3)

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(5) We consider a Consumer Loan to be current for purposes of forecasting expected collection rates if contractual repayments are less than 11 days past due.

The following table summarizes the write-offs for Consumer Loan assignments for the three and nine months ended September 30, 2024 and 2023, segmented by year of assignment:

(In millions) For the Three Months Ended September 30, 2024

Write-offs by Consumer Loan Assignment Year Dealer Loans Purchased Loans Total

2019 and prior $ 43.4 $ 31.7 $ 75.1

2020 27.9 17.5 45.4

2021 33.2 22.7 55.9

2022 47.0 33.4 80.4

2023 11.5 36.6 48.1

2024 4.0 17.9 21.9

$ 167.0 $ 159.8 $ 326.8

(In millions) For the Three Months Ended September 30, 2023

Write-offs by Consumer Loan Assignment Year Dealer Loans Purchased Loans Total

2018 and prior $ 29.5 $ 24.3 $ 53.8

2019 26.2 43.2 69.4

2020 28.9 23.8 52.7

2021 30.3 28.7 59.0

2022 31.7 38.5 70.2

2023 7.1 21.7 28.8

$ 153.7 $ 180.2 $ 333.9

(In millions) For the Nine Months Ended September 30, 2024

The following table summarizes the write-offs for Consumer Loan assignments for the three months ended March 31, 2025 and 2024, segmented by year of assignment:

(In millions) For the Three Months Ended March 31, 2025

Write-offs by Consumer Loan Assignment Year Dealer Loans Purchased Loans Total

6 unchanged sentences

$ 183.6 $ 145.8 $ 329.4

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

(In millions) For the Nine Months Ended September 30, 2023

(In millions) For the Three Months Ended March 31, 2024

Write-offs by Consumer Loan Assignment Year Dealer Loans Purchased Loans Total

6 unchanged sentences

$ 142.8 $ 168.6 $ 311.4

Consumer Loans assigned in 2022 had continued to underperform our expectations for several quarters.

More recently, Consumer Loans assigned in 2023 had also begun exhibiting similar trends of underperformance, although not as severe as Consumer Loans assigned in 2022.

During the second quarter of 2024, we determined that we had sufficient Consumer Loan performance experience to estimate the magnitude by which we expected Consumer Loans assigned in 2022 through 2024 would likely underperform our historical collection rates on Consumer Loans with similar characteristics.

Accordingly, we applied an adjustment to Consumer Loans assigned in 2022 through 2024 to reduce forecasted collection rates to what we believed the ultimate collection rates would be based on these trends.

Changes in the amount and timing of forecasted net cash flows are recognized in the period of change as a provision for credit losses.

The implementation of this forecast adjustment during the second quarter of 2024 reduced forecasted net cash flows by $ 147.2 million, or 1.4 %, and increased provision for credit losses by $ 127.5 million.

We had experienced a decrease in Consumer Loan prepayments to below-average levels and as a result, slowed our forecasted net cash flow timing.

Historically, Consumer Loan prepayments have been lower in periods with less availability of consumer credit.

Changes in the amount and timing of forecasted net cash flows are recognized in the period of change as a provision for credit losses.

The implementation of the adjustment to our forecasting methodology during the second quarter of 2023 reduced forecasted net cash flows by $ 44.5 million, or 0.5 %, and increased provision for credit losses by $ 71.3 million.

PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

(In millions) As of

September 30, 2024 December 31, 2023

Land and land improvements $ 2.7 $ 2.9

Building and improvements 17.5 58.8

Data processing equipment and software 45.4 50.0

Office furniture and equipment 2.2 2.6

Total property and equipment 67.8 114.3

Accumulated depreciation on property and equipment ( 52.6 ) ( 67.8 )

Total property and equipment, net $ 15.2 $ 46.5

As the vast majority of our team members now work remotely, we had significant excess space in the two office buildings that we owned in Southfield, Michigan.

During the second quarter of 2024, we sold the larger building for net sales proceeds of $ 3.2 million, and recognized a loss on sale of the building of $ 23.7 million.

The loss on sale of the building represented the amount by which the $ 26.9 million carrying value of the building and its improvements, the related land and land improvements, and office furniture and equipment exceeded the net sales proceeds of $ 3.2 million.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

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(In millions) For the Three Months Ended

September 30, For the Nine Months Ended

September 30,

2024 2023 2024 2023

Net assumed written premiums $ 25.6 $ 31.2

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(In millions) As of

Balance Sheet Location September 30, 2024 December 31, 2023

Balance Sheet Location March 31, 2025 December 31, 2024

Trust assets Restricted cash and cash equivalents $ 1.7 $ 0.3

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Other income consists of the following:

(In millions) For the Three Months Ended September 30, For the Nine Months Ended September 30,

2024 2023 2024 2023

(In millions) For the Three Months Ended March 31,

Ancillary product profit sharing $ 8.7 $ 7.3

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The following table disaggregates our other income by major source of income and timing of the revenue recognition:

(In millions) For the Three Months Ended September 30, 2024

Ancillary Product Profit Sharing Interest Remarketing Fees Other Total Other Income

Source of Income

Third-Party Providers $ 8.0 $ 6.4 $ — $ — $ 14.4

Dealers — — 2.9 0.3 3.2

Total $ 8.0 $ 6.4 $ 2.9 $ 0.3 $ 17.6

Timing of Revenue Recognition

Over time $ 8.0 $ 6.4 $ — $ 0.1 $ 14.5

At a point in time — — 2.9 0.2 3.1

Total $ 8.0 $ 6.4 $ 2.9 $ 0.3 $ 17.6

(In millions) For the Nine Months Ended September 30, 2024

(In millions) For the Three Months Ended March 31, 2025

Ancillary Product Profit Sharing Interest Remarketing Fees Other Total Other Income

7 unchanged sentences

Total $ 8.7 $ 8.4 $ 3.4 $ 0.4 $ 20.9

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Debt consists of the following:

(In millions) As of September 30, 2024

(In millions) As of March 31, 2025

Principal Outstanding Unamortized Debt Issuance Costs Unamortized Discount Carrying

2 unchanged sentences

Senior notes 1,100.0 ( 14.2 ) — 1,085.8

Mortgage note — — — —

Total debt $ 6,748.1 $ ( 41.9 ) $ ( 1.0 ) $ 6,705.2

4 unchanged sentences

Senior notes 1,000.0 ( 8.7 ) — 991.3

Mortgage note 8.4 — — 8.4

Total debt $ 6,391.9 $ ( 37.7 ) $ ( 1.3 ) $ 6,352.9

(1) Excludes deferred debt issuance costs of $ 4.8 million and $ 4.2 million as of September 30, 2024 and December 31, 2023, respectively, which are included in other assets.

(1) Excludes deferred debt issuance costs of $ 4.0 million and $ 4.4 million as of March 31, 2025 and December 31, 2024, respectively, which are included in other assets.

(2) Warehouse facilities and Term ABS financings.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

General information for each of our financing transactions in place as of September 30, 2024 is as follows:

General information for each of our financing transactions in place as of March 31, 2025 is as follows:

(Dollars in millions)

2 unchanged sentences

Amount Interest Rate Basis as of

September 30, 2024

March 31, 2025

Revolving Secured Line of Credit Facility n/a 06/22/2027 $ 390.0 At our option, either the Secured Overnight Financing Rate (SOFR) plus 197.5 basis points or the prime rate plus 87.5 basis points

9 unchanged sentences

Term ABS 2022-1 (2) Credit Acceptance Funding LLC 2022-1 06/17/2024 (3) 350.0 Fixed rate

Term ABS 2022-2 (2) Credit Acceptance Funding LLC 2022-2 06/15/2027 (5) 300.0 SOFR plus 246.4 basis points

9 unchanged sentences

Term ABS 2024-3 (2) Credit Acceptance Funding LLC 2024-3 09/15/2026 (3) 600.0 Fixed rate

Term ABS 2024-B (2) Credit Acceptance Funding LLC 2024-B 12/15/2027 (5) 300.0 Fixed rate

Term ABS 2025-1 (2) Credit Acceptance Funding LLC 2025-1 03/15/2027 (3) 400.0 Fixed rate

2028 Senior Notes n/a 12/15/2028 600.0 Fixed rate

2030 Senior Notes n/a 03/15/2030 500.0 Fixed rate

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

(1) Borrowings are subject to repayment on demand .

(2) Financing made available only to a specified subsidiary of the Company.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

(3) Represents the revolving maturity date.

The outstanding balance will amortize after the revolving maturity date based on the cash flows of the pledged assets.

(4) Interest rate cap agreements are in place to limit the exposure to increasing interest rates .

(4) Represents the revolving maturity date.

5 unchanged sentences

(In millions) For the Three Months Ended

September 30, For the Nine Months Ended

September 30,

2024 2023 2024 2023

Revolving Secured Lines of Credit

18 unchanged sentences

(Dollars in millions) As of

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Revolving Secured Lines of Credit

44 unchanged sentences

(Dollars in millions) As of

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Term ABS 2021-4

33 unchanged sentences

Interest rate 6.86 % 6.86 %

Term ABS 2023-1

Term ABS 2023-A

Principal balance outstanding $ 200.0 $ 200.0

9 unchanged sentences

(Dollars in millions) As of

September 30, 2024 December 31, 2023

Term ABS 2023-3

Principal balance outstanding $ 400.0 $ 400.0

Loans pledged as collateral 566.7 643.8

Restricted cash and cash equivalents pledged as collateral 39.6 40.3

Interest rate 6.86 % 6.86 %

March 31, 2025 December 31, 2024

Term ABS 2024-A

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Interest rate 6.01 % 6.01 %

Term ABS 2024-A

Term ABS 2024-2

Principal balance outstanding $ 550.0 $ 550.0

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Interest rate 4.91 % 4.91 %

Term ABS 2024-2

Term ABS 2024-B

Principal balance outstanding $ 300.0 $ 300.0

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Interest rate 9.250 % 9.250 %

Mortgage Note

2030 Senior Notes

Principal balance outstanding $ 500.0 $ —

6 unchanged sentences

Borrowings under our revolving secured line of credit facility, including any letters of credit issued under the facility, are subject to a borrowing-base limitation.

This limitation equals 80 % of the value of Loans, as defined in the agreement governing our revolving secured line of credit facility, less a hedging reserve (not exceeding $ 1.0 million), and the amount of other debt secured by the collateral that secures our revolving secured line of credit facility.

This limitation equals 80 % of the Dealer Loans Receivable constituting revolving credit facility collateral and 80% of Purchased Contract Balances constituting revolving credit facility collateral (each as defined in the agreement governing our revolving secured line of credit facility), less a hedging reserve (not exceeding $ 1.0 million), and less the amount of other outstanding debt secured by the collateral that secures our revolving secured line of credit facility.

Borrowings under our revolving secured line of credit facility are secured by a lien on most of our assets that do not secure obligations under our Warehouse facilities or Term ABS financings.

17 unchanged sentences

In connection with each of these transactions, we conveyed Loans on an arms-length basis to a Funding LLC for cash and the sole membership interest in that Funding LLC.

In turn, each Funding LLC, other than the Funding LLCs for the Term ABS 2019-2, 2021-1, 2022-2, and 2023-A financings, conveyed the Loans to the respective trusts that issued notes to qualified institutional investors.

The Funding LLCs for the Term ABS 2019-2, 2021-1, 2022-2, and 2023-A financings pledged the Loans for the benefit of their respective lenders.

The Term ABS 2021-3, 2021-4, 2023-1, 2023-2, 2023-3, 2023-A, 2023-5, 2024-A, 2024-1, 2024-2, and 2024-3 financings each consist of three classes of notes (or, in the case of the Term ABS 2023-A, three classes of loans), while the Term ABS 2022-1 and Term ABS 2022-3 financings consist of four classes of notes.

In turn, each Funding LLC, other than the Funding LLCs for the Term ABS 2019-2, 2021-1, 2022-2, 2023-A, and 2024-B financings, conveyed the Loans to the respective trusts that issued notes to qualified institutional investors.

The Funding LLCs for the Term ABS 2019-2, 2021-1, 2022-2, 2023-A, and 2024-B financings pledged the Loans for the benefit of their respective lenders.

The Term ABS 2021-4, 2023-1, 2023-2, 2023-3, 2023-A, 2023-5, 2024-A, 2024-1, 2024-2, 2024-3, and 2025-1 financings each consist of three classes of notes (or, in the case of the Term ABS 2023-A and Term ABS 2024-B, three classes of loans), while the Term ABS 2022-1 and Term ABS 2022-3 financings consist of four classes of notes.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Each Term ABS financing at the time of issuance has a specified revolving period during which we are likely to convey additional Loans to the applicable Funding LLC.

Each Funding LLC (other than the Funding LLCs of the Term ABS 2019-2, 2021-1, 2022-2, and 2023-A financings) will then convey the Loans to its respective trust.

Each Funding LLC (other than the Funding LLCs of the Term ABS 2019-2, 2021-1, 2022-2, 2023-A, and 2024-B financings) will then convey the Loans to its respective trust.

At the end of the applicable revolving period, the debt outstanding under each financing will begin to amortize.

2 unchanged sentences

Because the trusts and the Funding LLCs are organized as bankruptcy-remote legal entities separate from us, their assets (including the conveyed Loans) are not available to any creditors other than the creditors of the applicable subsidiary.

We receive a monthly servicing fee on each financing equal to either 4 % or 6 %, depending upon the financing, of the collections received with respect to the conveyed Loans.

We receive a monthly servicing fee on each financing equal to 4 % of the collections received with respect to the conveyed Loans.

The fee is paid out of the collections.

4 unchanged sentences

For all Funding LLCs, after the indebtedness is paid in full, any remaining collections will ultimately be available to be distributed to us as the sole member of the respective Funding LLC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

On December 19, 2023, we issued $ 600.0 million aggregate principal amount of 9.250 % senior notes due 2028 (the “2028 senior notes”).

The 2028 senior notes were issued pursuant to an indenture, dated as of December 19, 2023, among the Company, as issuer, the Company’s subsidiaries Buyers Vehicle Protection Plan, Inc.

On February 28, 2025, we issued $ 500.0 million aggregate principal amount of 6.625 % senior notes due 2030 (the “2030 senior notes”).

The 2030 senior notes were issued pursuant to an indenture, dated as of February 28, 2025, among the Company, as issuer, the Company’s subsidiaries Buyers Vehicle Protection Plan, Inc.

and Vehicle Remarketing Services, Inc., as guarantors (collectively, the “Guarantors”), and the trustee under the indenture.

The 2030 senior notes mature on March 15, 2030 and bear interest at a rate of 6.625 % per annum, computed on the basis of a 360-day year composed of twelve 30-day months and payable semi-annually on March 15 and September 15 of each year, beginning on September 15, 2025.

We used a portion of the net proceeds from the 2030 senior notes to redeem all of the $ 400.0 million outstanding principal amount of our 6.625 % senior notes due 2026 (the “2026 senior notes”).

We used the remaining net proceeds from the 2030 senior notes for general corporate purposes.

During the first quarter of 2025, we recognized a pre-tax loss on extinguishment of debt of $ 1.2 million related to the redemption of the 2026 senior notes.

On December 19, 2023, we issued $ 600.0 million aggregate principal amount of 9.250 % senior notes due 2028 (the “2028 senior notes”).

The 2028 senior notes were issued pursuant to an indenture, dated as of December 19, 2023, among the Company, as issuer, the Guarantors, and the trustee under the indenture.

The 2028 senior notes mature on December 15, 2028 and bear interest at a rate of 9.250 % per annum, computed on the basis of a 360-day year composed of twelve 30-day months and payable semi-annually on June 15 and December 15 of each year, beginning on June 15, 2024.

2 unchanged sentences

During the fourth quarter of 2023, we recognized a pre-tax loss on extinguishment of debt of $ 1.8 million related to the repurchase and redemption of the 2024 senior notes.

On March 7, 2019, we issued $ 400.0 million aggregate principal amount of 6.625 % senior notes due 2026 (the “2026 senior notes”).

The 2026 senior notes were issued pursuant to an indenture, dated as of March 7, 2019, among the Company, as issuer, the Guarantors, and the trustee under the indenture.

The 2026 senior notes mature on March 15, 2026 and bear interest at a rate of 6.625 % per annum, computed on the basis of a 360-day year composed of twelve 30-day months and payable semi-annually on March 15 and September 15 of each year, beginning on September 15, 2019.

We used the net proceeds from the offering of the 2026 senior notes for general corporate purposes, including repayment of outstanding borrowings under our revolving secured line of credit facility.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

The 2030 senior notes and 2028 senior notes (the “senior notes”) are guaranteed on a senior basis by the Guarantors, which are also guarantors of obligations under our revolving secured line of credit facility.

1 unchanged sentence

The indentures for the senior notes provide for a guarantor of the senior notes to be released from its obligations under its guarantee of the senior notes under specified circumstances.

Mortgage Note

We had a $ 9.0 million mortgage note with a commercial bank that was secured by a first mortgage lien on a building acquired by us and an assignment of all leases, rents, revenues, and profits under all present and future leases of the building.

The note was paid off in full during the second quarter of 2024 in connection with the sale of the related building.

Debt Covenants

As of September 30, 2024, we were in compliance with our covenants under our revolving secured line of credit facility and our Warehouse facilities, including those that require the maintenance of certain financial ratios and other financial conditions.

As of March 31, 2025, we were in compliance with our covenants under our revolving secured line of credit facility, our Warehouse facilities, our Term ABS financings, the senior notes indentures, and the RTP Facility.

Our revolving secured line of credit facility and our Warehouse facilities include covenants that require the maintenance of certain financial ratios and other financial conditions.

These covenants require a minimum ratio of (1) our net earnings, adjusted for specified items, before income taxes, depreciation, amortization, and fixed charges to (2) our fixed charges, as defined in the agreements.

1 unchanged sentence

Some of these covenants may indirectly limit the repurchase of common stock or payment of dividends on common stock.

Our Warehouse facilities also contain covenants that measure the performance of the conveyed assets.

Our Term ABS financings also contain covenants that measure the performance of the conveyed assets.

As of September 30, 2024, we were in compliance with our covenants under our Term ABS financings, the senior notes indentures, and the RTP facility.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

DERIVATIVE AND HEDGING INSTRUMENTS

Interest Rate Caps.

We utilize interest rate cap agreements to manage the interest rate risk on certain secured financings.

The following tables provide the terms of our interest rate cap agreements that were in effect as of September 30, 2024 and December 31, 2023:

(Dollars in millions)

As of September 30, 2024

Facility Amount Facility Name Purpose Start End Notional Cap Interest Rate (1)

$ 300.0 Warehouse Facility IV Cap Floating Rate 05/2023 11/2024 $ 300.0 7.50 %

200.0 Warehouse Facility V Cap Floating Rate 04/2023 01/2026 59.0 5.44 %

200.0 Warehouse Facility VIII Cap Floating Rate 09/2022 09/2025 183.3 5.42 %

(Dollars in millions)

As of December 31, 2023

Facility Amount Facility Name Purpose Start End Notional Cap Interest Rate (1)

$ 300.0 Warehouse Facility IV Cap Floating Rate 05/2023 11/2024 $ 300.0 7.50 %

200.0 Warehouse Facility V Cap Floating Rate 04/2023 01/2026 94.0 5.44 %

200.0 Warehouse Facility VIII Cap Floating Rate 09/2022 9/2025 200.0 5.42 %

100.0 Term ABS 2021-1 Cap Floating Rate 04/2023 06/2024 37.5 5.46 %

200.0 Term ABS 2022-2 Cap Floating Rate 12/2022 06/2024 200.0 6.50 %

(1) Rate excludes the spread over the corresponding benchmark rate.

The interest rate caps have not been designated as hedging instruments.

As of September 30, 2024 and December 31, 2023, the fair value of the interest rate caps was negligible, as the capped rates were above market rates.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Our Warehouse facilities and Term ABS financings contain covenants that measure the performance of the conveyed assets.

A reconciliation of the U.S.

1 unchanged sentence

For the Three Months Ended

September 30, For the Nine Months Ended

September 30,

2024 2023 2024 2023

federal statutory income tax rate 21.0 % 21.0 %

1 unchanged sentence

Non-deductible executive compensation expense 1.1 % 1.3 %

Excess tax benefits from stock-based compensation 0.0 % 0.0 % - 0.4 % - 2.1 %

Tax deficiency (excess tax benefit) from stock-based compensation 0.1 % - 0.6 %

Other 0.0 % 0.2 %

1 unchanged sentence

State and local income taxes

For the three months ended September 30, 2024, the impact of state and local income taxes on our effective income tax rate decreased from the same period in 2023, primarily due to the settlement of an uncertain tax position during the third quarter of 2024.

For the nine months ended September 30, 2024, the impact of state and local income taxes on our effective income tax rate increased from the same period in 2023, primarily due to:

• An adjustment to an uncertain tax position estimate during the second quarter of 2024, which increased our effective income tax rate by 230 basis points for the nine months ended September 30, 2024.

• Changes in state tax laws that were enacted during the second quarter of 2024, which are expected to increase our long-term effective tax rate by approximately 10 basis points.

The enactment of these tax law changes increased our effective income tax rate by 70 basis points for the nine months ended September 30, 2024.

Non-deductible executive compensation expense

We recognize non-deductible executive compensation expense as an increase of provision for income taxes or a reduction of benefit for income taxes.

For the nine months ended September 30, 2024, the impact of non-deductible executive compensation expense on our effective income tax rate increased from the same period in 2023, primarily due to a decrease in pre-tax income.

Excess tax benefits from stock-based compensation

We recognize an excess tax benefit or tax deficiency when the deduction for the stock-based compensation expense of a stock award for tax purposes differs from the cumulative stock-based compensation expense recognized in the financial statements.

The excess tax benefit or tax deficiency is recognized in provision for income taxes in the period in which the amount of the deduction is determined, which is when restricted stock units are settled in common stock or stock options are exercised.

Excess tax benefits reduce our effective income tax rate, while tax deficiencies increase our effective income tax rate.

The decrease in the impact of excess tax benefits on our effective income tax rate for the nine months ended September 30, 2024 was primarily due to a decrease in the number of restricted stock units that were settled in common stock during the first quarter of 2024 as compared to the first quarter of 2023 due to the timing of long-term stock award grants, partially offset by a decrease in pre-tax income.

For the three months ended March 31, 2025, the impact of state and local income taxes on our effective income tax rate decreased from the same period in 2024, primarily due to having a lower proportion of our consolidated net income reserved for uncertain tax positions.

Tax deficiency or excess tax benefit from stock-based compensation

We recognize a tax deficiency or excess tax benefit when the tax deduction for the stock-based compensation expense of a stock award differs from the cumulative stock-based compensation expense recognized in the financial statements.

The tax deficiency or excess tax benefit is recognized in provision for income taxes in the period in which the amount of the tax deduction is determined, which is when restricted stock units are settled in common stock or stock options are exercised.

Tax deficiencies increase our effective income tax rate, while excess tax benefits reduce our effective income tax rate.

The change in the impact on our effective income tax rate for the three months ended March 31, 2025 was primarily due to the recognition of a tax deficiency in the current quarter compared to an excess tax benefit recognized during the first quarter of 2024.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

4 unchanged sentences

For the Three Months Ended

September 30, For the Nine Months Ended

September 30,

2024 2023 2024 2023

Weighted average shares outstanding:

6 unchanged sentences

For the Three Months Ended

September 30, For the Nine Months Ended

September 30,

2024 2023 2024 2023

Stock options 47,000 51,750

1 unchanged sentence

Total 56,088 54,767

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

STOCK REPURCHASES

The following table summarizes our stock repurchases for the three and nine months ended September 30, 2024 and 2023:

(Dollars in millions) For the Three Months Ended September 30,

Stock Repurchases Number of Shares Repurchased Cost (1) Number of Shares Repurchased Cost (1)

Open Market (2) — $ — 256,232 $ 126.3

Other (3) 86 — — —

Total 86 $ — 256,232 $ 126.3

(Dollars in millions) For the Nine Months Ended September 30,

The following table summarizes our stock repurchases for the three months ended March 31, 2025 and 2024:

(Dollars in millions) For the Three Months Ended March 31,

Stock Repurchases Number of Shares Repurchased Cost (1) Number of Shares Repurchased Cost (1)

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On August 21, 2023, the board of directors authorized the repurchase of up to two million shares of our common stock in addition to the board’s prior authorizations.

As of September 30, 2024, we had authorization to repurchase 1,346,570 shares of our common stock.

(3) Represents shares of common stock released to us by team members as payment of tax withholdings upon the vesting of restricted stock units and the conversion of restricted stock units to common stock.

As of March 31, 2025, we had authorization to repurchase 919,593 shares of our common stock.

(3) Represents shares of common stock released to us by team members as payment of tax withholdings upon the vesting of restricted stock units and the settlement of restricted stock units in common stock.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

STOCK-BASED COMPENSATION PLANS

Restricted Stock Units Number of Restricted Stock Units Weighted Average Grant-Date Fair Value Per Share

Outstanding as of December 31, 2024

533,447 $ 407.15

Granted 82,143 472.13

Settled ( 11,463 ) 527.89

Forfeited ( 497 ) 530.62

Outstanding as of March 31, 2025

603,630 $ 413.59

Stock-based compensation expense consists of the following:

(In millions) For the Three Months Ended

September 30, For the Nine Months Ended

September 30,

2024 2023 2024 2023

Stock options $ 8.3 $ 8.0 $ 24.7 $ 25.1

Restricted stock units $ 10.6 $ 2.7

Stock options 2.3 8.2

Total $ 12.9 $ 10.9

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Instead of a short-term compensation program providing for rolling, annual equity awards to our executive officers and senior leaders, we utilize a multi-year compensation program that grants a one-time equity award at the beginning of the compensation program period that is intended to incentivize recipients over the multi-year compensation period.

Our current compensation program for executive officers and senior leaders covers the 2021 through 2024 compensation period and included a one-time equity award in December 2020 with a vesting period of four years.

Based on the stock-based awards that are currently outstanding, we expect to recognize the future stock-based compensation expense as follows:

Our current compensation program for executive officers and senior leaders covers the 2025 through 2034 compensation period and included a one-time equity award in December 2024 (except in the case of our Chief Executive Officer, who received a one-time equity award in January 2025), with a vesting period of 10 years.

Based on the stock-based awards that are currently outstanding, we expect to recognize future stock-based compensation expense as follows:

(in millions)

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Remainder of 2025 $ 35.9

Thereafter 74.3

Total $ 226.3

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

BUSINESS SEGMENT AND OTHER INFORMATION

Business Segment Overview

We identify operating segments as components of our business for which separate financial information is regularly evaluated by our Chief Executive Officer, who acts as the chief operating decision-maker (“CODM”), in assessing performance and making decisions regarding resource allocation.

We periodically review and redefine our segment reporting as internal management reporting practices evolve and the components of our business change.

Currently, the CODM reviews consolidated financial statements and metrics to assess performance and allocate resources.

Thus, we have determined that we operate in one reportable operating segment that represents our core business of offering Dealers innovative financing solutions and related products and services that enable them to sell vehicles to consumers, regardless of their credit history.

The consolidated financial statements reflect the financial results of our one reportable operating segment.

The accounting policies of this segment are the same as those described in the summary of significant accounting policies in Note 3 .

The CODM assesses performance for our one reportable operating segment and decides how to allocate resources based on net income, as reported on our consolidated statements of income, and total assets, as reported on our consolidated balance sheets.

Geographic Information

For the three months ended March 31, 2025 and 2024, all of our revenues were derived from the United States.

As of March 31, 2025 and 2024, all of our long-lived assets were located in the United States.

Products and Services Information

Our primary product consists of innovative financing solutions that enable Dealers to sell vehicles to consumers, regardless of their credit history.

We also provide Dealers the ability to offer ancillary products on vehicles financed by us.

Major Customer Information

We did not have any Dealers that provided 10% or more of our revenue during the three months ended March 31, 2025 and 2024.

Additionally, no single Dealer’s Loans receivable balance accounted for more than 10% of total Loans receivable as of March 31, 2025 and 2024.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

COMMITMENTS AND CONTINGENCIES

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The following matters include current actions to which we are a party and updates to matters that were disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024.

On April 7, 2025, a putative class action was filed against the Company in the United States District Court for the Eastern District of Michigan alleging that the Company violated the Telephone Consumer Protection Act (“TCPA”) by allegedly calling the cellular phones of members of the putative class without prior express consent and with the use of an artificial or prerecorded voice.

The plaintiff seeks to represent a nationwide class and requests damages, injunctive relief, and attorneys’ fees.

The Company is unable to estimate the reasonably possible loss or range of reasonably possible loss arising from this litigation.

The Company intends to vigorously defend itself in this matter.

On December 1, 2021, we received a subpoena from the Office of the Attorney General for the State of California seeking documents and information regarding GAP products, GAP product administration, and refunds.

We are cooperating with this inquiry and cannot predict the eventual scope, duration, or outcome at this time.

We have cooperated with this inquiry and cannot predict the eventual scope, duration, or outcome at this time.

As a result, we are unable to estimate the reasonably possible loss or range of reasonably possible loss arising from this investigation.

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Supreme Court’s decision in Consumer Financial Protection Bureau v.

Community Financial Services Association of America, Ltd.

Community Financial Services Association of America, Ltd., No.

22-448 (“CFSA”).

1 unchanged sentence

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

On April 24, 2025 , the Bureau filed an unopposed motion to withdraw as plaintiff, and on April 29, 2025, the court granted that motion and ordered that the Bureau is no longer a plaintiff in the litigation.

We are unable to estimate the reasonably possible loss or range of reasonably possible loss arising from this litigation.

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As a result, we are unable to estimate the reasonably possible loss or range of reasonably possible loss arising from these investigations.

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.

We have cooperated with the inquiry, but cannot predict the eventual scope, duration, or outcome at this time.

As a result, we are unable to estimate the reasonably possible loss or range of reasonably possible loss arising from this investigation.

An adverse ultimate disposition in any action to which we are a party or otherwise subject could have a material adverse impact on our financial position, liquidity, and results of operations.

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-Q

Item 1. Financial Statements