What changed in this filing

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Item 1. Business

2026-03-16 compared with 2025-03-12 · 122 added, 143 removed, 671 unchanged (28% of the section changed)

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In this report, we refer to all of such contracts and loans as “automobile contracts.”

We were incorporated and

began our operations in March 1991.

From inception through December 31, 2024, we have purchased a total of approximately $23.0 billion

of automobile contracts from dealers.

In addition, we acquired a total of approximately $822.3 million of automobile contracts in mergers

and acquisitions in 2002, 2003, 2004 and 2011.

Contract purchase volumes and managed portfolio levels for the five years ended December

31, 2024 are shown in the table below.

We were incorporated and began

our operations in March 1991.

From inception through December 31, 2025, we have purchased a total of approximately $24.7 billion of automobile

contracts from dealers.

Contract purchase volumes and managed portfolio levels for the five years ended December 31, 2025, are shown in

the table below.

Managed portfolio comprises both contracts we owned and those we were servicing for third parties.

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relating to automobile contracts.

As of December 31, 2024, we had 122 sales representatives, and in that month, we received applications

from 8,600 dealers in 47 states.

As of December 31, 2024, approximately 72% of our active dealers were franchised new car dealers that

sell both new and used vehicles, and the remainder were independent used car dealers.

As of December 31, 2025, we had 118 sales personnel, and in that month, we received applications from

7,700 dealers in 47 states.

As of December 31, 2025, approximately 73% of our active dealers were franchised new car dealers that sell

both new and used vehicles, and the remainder were independent used car dealers.

We have in the past solicited

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We terminated

our direct lending platform in September 2023 and we do not intend to originate any such loans going forward.

However, we intend to continue

servicing our existing direct loans.

As of December 31, 2024, automobile contracts under the direct lending platform represented 1.6%

of our outstanding managed portfolio.

our direct lending platform in September 2023, however, we intend to continue servicing our existing direct loans.

In December 2025, CPS

began to originate loans directly to consumers for the refinancing of an existing loan from other lenders secured by an automobile.

credit, underwriting, purchase and servicing procedures with respect to such contracts are substantially the same as those purchased from

As of December 31, 2025, automobile contracts under the direct lending and refinance platform represented 0.9% of our outstanding

managed portfolio.

For the year ended December

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As of December

31, 2024, we had two such short-term warehouse facilities with a total maximum borrowing capacity of $535 million.

31, 2025, we had three such short-term warehouse facilities with a total maximum borrowing capacity of $702.5 million.

Sub-Prime Auto Finance Industry

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During the year ended December 31, 2025, no dealer accounted for as much as 1.5% of the total number of automobile contracts we purchased.

Under our direct lending platform,

the applicant submits a credit application directly to us via our website, or in some cases, through a third-party who accepts such applications

and refers them to us for a fee.

In either case, we process the application with the same automated application decisioning process as

described above for applications from dealers.

We then advise the applicant as to whether we would grant them credit and on what terms.

The following table sets forth

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December 31, 2024

(1) Percentages may not total to 100.0% due to rounding.

The following table sets forth the geographic concentrations

of our outstanding managed portfolio as of December 31, 2024 and 2023.

(1) Percentages

may not total to 100.0% due to rounding.

The following table sets forth the geographic

concentrations of our outstanding managed portfolio as of December 31, 2025, and 2024.

Outstanding Managed Portfolio as of

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($ in millions)

(1) Percentages may not total to 100.0% due to rounding.

(1) Percentages

may not total to 100.0% due to rounding.

We purchase automobile contracts

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on the perceived credit risk of and, in some cases, the interest rate on the automobile contract.

The following table summarizes the

average net acquisition fees we charged dealers and the weighted average annual percentage rate on contracts purchased for our own portfolio

for the periods shown:

The following table summarizes the average

net acquisition fees we charged dealers and the weighted average annual percentage rate on contracts purchased for our own portfolio for

the periods shown:

Average net acquisition fee charged (paid) to dealers (1)

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Third Parties

(1) Percentages may not total to 100.0% due to rounding.

(1) Percentages

may not total to 100.0% due to rounding.

We attempt to control misrepresentation

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time to time as circumstances may warrant.

Prior to purchasing an automobile contract, our funding staff verify the customer’s employment,

income, residency, and credit information by contacting various parties noted on the customer’s application, credit information bureaus

and other sources.

In addition, we contact each customer by telephone to confirm that the customer understands and agrees to the terms

of the related automobile contract.

During this " welcome call, "

we also ask the customer a series of open-ended questions about his application and the contract, which may uncover potential misrepresentations.

Prior to purchasing an automobile contract, our funding staff verify a majority of the customer’s

employment, income, residency, and credit information by contacting various parties noted on the customer’s application, credit information

bureaus and other sources.

In addition, we contact most customers by telephone to confirm that the customer understands and agrees to

the terms of the related automobile contract.

During this " welcome

call, " we also ask the customer a series of open-ended questions

about his application and the contract, which may uncover potential misrepresentations.

Credit Scoring .

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risk inherent in the sub-prime market.

Characteristics of Contracts.

the automobile contracts we purchase are fully amortizing and provide for level payments over the term of the automobile contract.

automobile contracts may be prepaid at any time without penalty.

The table below compares certain characteristics, at the time of origination,

of our contract purchases for the years ended December 31, 2024 and 2023:

Characteristics of

All the automobile contracts we purchase are fully amortizing and provide for level payments over the term of the

automobile contract.

All automobile contracts may be prepaid at any time without penalty.

The table below compares certain

characteristics, at the time of origination, of our contract purchases for the years ended December 31, 2025 and 2024:

Contracts Purchased During the Year Ended

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Average Household Annual Income

Dealer Compliance .

dealer agreement and related assignment contain representations and warranties by the dealer that an application for state registration

of each financed vehicle, naming us as secured party with respect to the vehicle, was effected by the time of sale of the related automobile

contract to us, and that all necessary steps have been taken to obtain a perfected first priority security interest in each financed vehicle

in favor of us under the laws of the state in which the financed vehicle is registered.

To the extent that we do not receive such state

registration within three months of purchasing the automobile contract, our dealer compliance group will work with the dealer to rectify

the situation.

If these efforts are unsuccessful, we generally will require the dealer to repurchase the automobile contract.

The dealer agreement and related assignment contain representations and warranties by the dealer that an application

for state registration of each financed vehicle, naming us as secured party with respect to the vehicle, was effected by the time of

sale of the related automobile contract to us, and that all necessary steps have been taken to obtain a perfected first priority

security interest in each financed vehicle in favor of us under the laws of the state in which the financed vehicle is registered.

To the extent that we do not receive such state registration within three months of purchasing the automobile contract, our dealer

compliance group will work with the dealer to rectify the situation.

If these efforts are unsuccessful, we generally will require

the dealer to repurchase the automobile contract.

Servicing and Collections

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For contracts we service

for third parties, we receive a base monthly servicing fee equal to 2.5%, and certain other incentive fees tied to credit performance.

for third parties, we receive a base monthly servicing fee equal to 1% and 2.5%, and certain other incentive fees tied to credit performance.

Collection Procedures.

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or if the payment is made, but the account remains delinquent, the account is returned to a collector’s queue for subsequent contacts.

Contracts originated since January 2018 are accounted for at fair value and the economic impact of late payments is incorporated into

the estimated net yield on those contracts.

If a customer fails to make

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into the estimated net yield on those contracts.

For contracts originated prior to January 2018, which are not accounted for at fair value,

we suspend interest accruals on contracts where the vehicle has been repossessed and reclassify the remaining automobile contract balance

to other assets.

In addition, we apply a specific reserve to such contracts so that the net balance represents the estimated remaining

balance after the proceeds of the sale of the vehicle are applied, net of related costs.

If we elect to repossess the

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in collecting such accounts.

Contracts originated since

January 2018 are accounted for at fair value and the economic impact of late payments is incorporated into the estimated net yield on

those contracts.

For contracts originated prior to January 2018, which are not accounted for at fair value, we suspend interest accruals

on contracts once an automobile contract becomes greater than 90 days delinquent.

We do not recognize additional interest income until

the borrower makes sufficient payments to be less than 90 days delinquent.

Any payments received by a borrower, regardless of their stage

of delinquency are first applied to outstanding accrued interest and then to principal reduction.

We generally charge off the

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Our internal credit performance data consistently show that new receivables have lower levels of delinquency and losses early

in their lives, with delinquencies increasing throughout their lives and incremental losses gradually increasing to a peak around 18

months, after which they gradually decrease.

The weighted average seasoning of our total owned portfolio, represented in the tables below,

was 17 months, 19 months, and 17 months as of December 31, 2024, December 31, 2023, and December 31, 2022, respectively.

Our financial

results are dependent on the performance of the automobile contracts in which we retain an ownership interest.

Broad economic factors

such as recessions and significant changes in unemployment levels influence the credit performance of our portfolio, as does the weighted

average age of the receivables at any given time.

The tables below document the delinquency, repossession, and net credit loss experience

of all such automobile contracts that we own as of the respective dates shown.

in their lives, with delinquencies increasing throughout their lives and incremental losses gradually increasing to a peak around 18 months,

after which they gradually decrease.

The weighted average seasoning of our total owned portfolio, represented in the tables below, was

19 months, 17 months, and 19 months as of December 31, 2025, December 31, 2024, and December 31, 2023, respectively.

Our financial results

are dependent on the performance of the automobile contracts in which we retain an ownership interest.

Broad economic factors such as

recessions and significant changes in unemployment levels influence the credit performance of our portfolio, as does the weighted average

age of the receivables at any given time.

The tables below document the delinquency, repossession, and net credit loss experience of all

such automobile contracts that we own as of the respective dates shown.

Delinquency, Repossession

and Extension Experience

Delinquency and Extension Experience (1)

Total Managed Portfolio (Excludes Third Party Portfolio)

December 31, 2025

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Delinquencies as a percentage of gross servicing portfolio

Total delinquencies and amount in repossession as a percentage of gross servicing portfolio

Total delinquencies and amount in repossession as a percentage

of gross servicing portfolio

Extension Experience

Contracts with one extension, accruing

Contracts with two or more extensions, accruing

Contracts with one extension, non-accrual (4)

Contracts with two or more extensions, non-accrual (4)

Contracts with one extension

Contracts with two or more extensions

Total accounts with extensions

(1) All amounts and percentages

are based on the amount remaining to be repaid on each automobile contract.

The information in the table represents the gross principal

amount of all automobile contracts we purchased, including automobile contracts we subsequently sold in securitization transactions that

we continue to service.

The table does not include certain contracts we have serviced for third parties on which we earn servicing fees

only, and have no credit risk.

(2) We consider an automobile contract delinquent when an obligor fails to make at least 90% of a contractually due payment by the following

due date, which date may have been extended within limits specified in the servicing agreements.

The period of delinquency is based on

the number of days payments are contractually past due.

All amounts and percentages are based on the amount remaining to be repaid on each automobile contract.

The information in the table represents the gross principal amount of all automobile contracts we purchased, including automobile contracts

we subsequently sold in securitization transactions that we continue to service.

The table does not include certain contracts we have

serviced for third parties on which we earn servicing fees only, and have no credit risk.

(2) We consider an automobile contract

delinquent when an obligor fails to make at least 90% of a contractually due payment by the

following due date, which date may have been extended within limits specified in the servicing

The period of delinquency is based on the number of days payments are contractually

Automobile contracts less than 31 days delinquent are not included.

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aging categories shown in the tables reflect the effect of extensions.

(3) Amount in repossession represents the contract balance on financed vehicles that have been repossessed but not yet liquidated.

(4) We do not recognize interest income on accounts past due more than 90 days.

(3) Amount in repossession represents the contract balance

on financed vehicles that have been repossessed but not yet liquidated.

Net Credit Loss Experience (1)

Total Managed Portfolio

(Excludes Third Party Portfolio)

Total Managed Portfolio (Excludes Third Party Portfolio)

Year Ended December 31,

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Net charge-offs as a percentage of average portfolio (2)

(1) All amounts and percentages are based on the principal amount scheduled to be paid on each automobile contract contracts.

The information

in the table represents all automobile contracts we service, excluding certain contracts we have serviced for third parties on which we

earn servicing fees only, and have no credit risk.

(2) Net charge-offs include the remaining principal balance, after the application of the net proceeds from the liquidation of the

vehicle (excluding accrued and unpaid interest) and amounts collected after the date of charge-off, including some recoveries which have

been classified as other income in the accompanying financial statements.

(1) All amounts and percentages

are based on the principal amount scheduled to be paid on each automobile contract contracts.

The information in the table represents all automobile contracts we service, excluding certain

contracts we have serviced for third parties on which we earn servicing fees only, and have

no credit risk.

(2) Net charge-offs include the remaining principal

balance, after the application of the net proceeds from the liquidation of the vehicle (excluding

accrued and unpaid interest) and amounts collected after the date of charge-off, including

some recoveries which have been classified as other income in the accompanying financial

In certain circumstances we

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ultimately charged off, we consider accounts that charged off more than six months after the extension to be at least partially successful.

In such cases, despite the ultimate loss, we received additional payments of principal and interest that otherwise we would not have

In such cases, despite the ultimate loss, we received additional payments of principal and interest that otherwise we would not have received.

Additional information about our extensions is provided in the tables

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Average number of outstanding accounts

Average monthly extensions as % of average outstandings

Average monthly extensions as % of average outstanding accounts

December 31, 2025

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December 31, 2023

Number of Contracts

(Dollars in thousands)

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Contracts with five extensions

Contracts with six extensions

Contracts with six or more extensions

Gross servicing portfolio (Excludes Third Party Portfolio)

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are accounted for at fair value and the economic impact of late payments is incorporated into the estimated net yield on those contracts.

If an obligor exceeds the

90 days past due threshold at the end of one period, and then makes the necessary payments such that it becomes equal to or below 90 days

delinquent at the end of a subsequent period, the related contract would be restored to full accrual status for our financial reporting

At the time a contract is restored to full accrual in this manner, there can be no assurance that full repayment of interest

and principal will ultimately be made.

However, we monitor each obligor’s payment performance and are aware of the severity of his

delinquency at any time.

The fact that the delinquency has been reduced below the 90-day threshold is a positive indicator.

contract again exceed the 90-day delinquency level at the end of any reporting period, it would again be reflected as a non-accrual account.

Our policy for placing a contract

on non-accrual status is independent of our policy to grant an extension.

In practice, it would be an uncommon circumstance where an extension

was granted and the account remained in a non-accrual status, since the goal of the extension is to bring the contract current (or nearly

Securitization of Automobile Contracts

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of each calendar quarter, resulting in four securitizations per calendar year.

However, we completed only three securitizations in 2020.

In April 2020 we postponed our planned securitization due to the onset of the pandemic and the effective closure of the capital markets

in which our securitizations are executed.

Subsequently we successfully completed securitizations in June and September 2020.

Our recent history of term securitizations is summarized

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$ in thousands

Number of Term

Securitizations

Number of Term Securitizations

Amount of Receivables

From time to time we have

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residual interests in the eight CPS securitizations conducted from October 2018 through September 2020.

As of December 31, 2024, the notes

had a principal balance of $50.0 million.

The sold notes (“2021-1

Notes”), issued by CPS Auto Securitization Trust 2021-1, consist of a single class with a coupon of 7.86%.

As of December 31, 2025,

the notes had a principal balance of $31.2 million.

On March 31, 2024, we completed

a new residual interest financing of our residual interests from previously issued securitizations in the amount of $50.0 million.

a residual interest financing of our residual interests from previously issued securitizations in the amount of $50.0 million.

this residual interest financing transaction, qualified institutional buyer purchased $50.0 million of asset-backed notes secured by an

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As of December 31, 2025, the notes had a principal balance of $49.8 million.

On March 20, 2025, we completed

a residual interest financing of our residual interests from previously issued securitizations in the amount of $65.0 million.

this residual interest financing transaction, qualified institutional buyer purchased $65.0 million of asset-backed notes secured by an

80% interest in a CPS affiliate that owns the residual interests in five CPS securitizations issued from October 2023 through September

The sold notes (“2025-1 Notes”), issued by CPS Auto Securitization Trust 2025-1, consist of a single class with a coupon

As of December 31, 2025, the notes had a principal balance of $63.5 million.

Generally, prior to a securitization

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Our current short-term

funding capacity is $535 million, comprising two credit facilities.

funding capacity is $702.5 million, comprising three credit facilities.

The first credit facility was established in May 2012.

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In November 2015, we entered

into another $100 million facility.

In June 2022, we increased the capacity of our credit agreement with Ares Agent Services, L.P.

into a $100 million facility with Ares Agent Services, L.P.

In June 2022, we increased the capacity of our credit agreement from $100

million to $200 million.

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by an amortization period to March 2028.

In October 2025, we entered

into a new $167.5 million facility.

This facility has a two year revolving period to October 2027, with an optional amortization period

through April 2029.

In a securitization and in

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of whether such automobile contracts are treated as having been sold or as having been financed.

Certain of our securitization

transactions and our warehouse credit facilities contain various financial covenants requiring certain minimum financial ratios and results.

Such covenants include maintaining minimum levels of liquidity and net worth and not exceeding maximum leverage levels.

In addition, certain

securitization and non-securitization related debt contain cross-default provisions that would allow certain creditors to declare a default

if a default occurred under a different facility.

Certain of our warehouse credit

facilities and residual interest financings contain various financial covenants requiring certain minimum financial ratios.

Such covenants

include maintaining minimum levels of liquidity and net worth and not exceeding maximum leverage levels.

In addition, certain securitization

and non-securitization related debt contain cross-default provisions that would allow certain creditors to declare a default if a default

occurred under a different facility.

As of December 31, 2025, we were in compliance with all such covenants.

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118 were sales personnel

(98 of whom were sales representatives);

68 were various administrative personnel including human resources, legal, accounting and systems

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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