What changed in this filing

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Item 1A. Risk Factors

2026-03-16 compared with 2025-03-12 · 74 added, 45 removed, 645 unchanged (16% of the section changed)

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of this report, and also under the caption “Cautionary Note Regarding Forward-Looking Statements.” One reason for our expectation

is that we have had positive net income in each of the thirteen fiscal years ended December 31, 2024, although not in every quarter within

is that we have had positive net income in each of the fourteen fiscal years ended December 31, 2025, although not in every quarter within

Our Results of Operations Will Depend on Our Ability

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Our current short-term funding capacity is $702.5 million, comprising

two credit facilities.

Both warehouse credit facilities have a revolving period during which we may receive advances secured by contributed

three credit facilities.

All warehouse credit facilities have a revolving period during which we may receive advances secured by contributed

automobile contracts, followed by an amortization period during which no further advances may be made, but prior to which outstanding

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lines of credit, $143.0 million of residual interest financing debt and $29.0 million in subordinated renewable notes.

Our ability to make

payments of principal or interest on, or to refinance, our indebtedness will depend on our future operating performance, and our ability

to enter into additional credit facilities and securitization transactions as well as other debt financings, which, to a certain extent,

are subject to economic, financial, competitive, regulatory, capital markets and other factors beyond our control.

Our ability to

make payments of principal or interest on, or to refinance, our indebtedness will depend on our future operating performance, and our

ability to enter into additional credit facilities and securitization transactions as well as other debt financings, which, to a certain

extent, are subject to economic, financial, competitive, regulatory, capital markets and other factors beyond our control.

If we are unable to generate

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mechanics vary among transactions, our securitization and warehousing agreements generally provide that we will receive excess spread

cash flows only if the amount of overcollateralization and spread account balances have reached specified levels and/or the delinquency,

defaults or net losses related to the automobile contracts in the automobile contract pools are below certain predetermined levels.

the event delinquencies, defaults or net losses on automobile contracts exceed these levels, the terms of the securitization or warehouse

cash flows only if the amount of overcollateralization and spread account balances have reached specified levels and/or the net losses related to the automobile contracts in the automobile contract pools are below certain predetermined levels.

the event net losses on automobile contracts exceed these levels, the terms of the securitization or warehouse

credit facility:

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such as terrorist events, civil unrest, cyber-attacks, public health emergencies, extreme weather conditions or significant changes in

the geopolitical environment (such as the ongoing military conflict between Ukraine and Russia and the conflict in Israel) and/or public

policy, including increased state, local or federal taxation, could adversely affect the ability and willingness of obligors to meet their

payment obligations under the receivables we originate.

Our operating results could be adversely affected if obligors are unable to make

timely payments on their receivables.

the geopolitical environment (such as the ongoing military conflict between Ukraine and Russia and the conflicts in the Middle East, and

action taken in Venezuela) and/or public policy, including increased state, local or federal taxation, could adversely affect

the ability and willingness of obligors to meet their payment obligations under the receivables we originate.

Our operating results could

be adversely affected if obligors are unable to make timely payments on their receivables.

The above described negative

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As a result, we experienced increased interest expense in 2023.

Federal Reserve lowered short term interest rates.

2025, the Federal Reserve lowered short term interest rates.

The pace and direction of additional interest rate changes remain uncertain.

rates on risk-free debt increase, or if our spread above risk-free rates increase, or both, we would expect an increase in interest expense.

If interest rates in general should rise, our expenses would likewise rise, which could have a material adverse effect on our financial

position, liquidity, results of operation and our ability to enter into future financing transactions.

If interest rates on risk-free debt increase, or if our spread above risk-free rates increase, or both, we would expect an increase in

interest expense.

If interest rates in general should rise, our expenses would likewise rise, which could have a material adverse effect

on our financial position, liquidity, results of operation and our ability to enter into future financing transactions.

If We Are Unable to Compete Successfully with our Competitors,

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years ended December 31, 2025, and 2024, no single dealer accounted for as much as 1.5% of the automobile contracts we purchased.

The agreements

we have with dealers to purchase automobile contracts do not require dealers to submit a minimum number of automobile contracts for purchase.

The failure of dealers to submit automobile contracts that meet our underwriting criteria could result in reductions in our revenues or

the cash flows available to us, and, therefore, could have an adverse effect on our results of operations.

agreements we have with dealers to purchase automobile contracts do not require dealers to submit a minimum number of automobile contracts

for purchase.

The failure of dealers to submit automobile contracts that meet our underwriting criteria could result in reductions in

our revenues or the cash flows available to us, and, therefore, could have an adverse effect on our results of operations.

If a Significant Number of Our Automobile Contracts Experience

Defaults, Our Results of Operations May Be Impaired.

We specialize in the purchase

and servicing of automobile contracts to finance automobile purchases by sub-prime customers, those who have limited credit history, low

income, or past credit problems.

Such automobile contracts entail a higher risk of non-performance, higher delinquencies and higher losses

than automobile contracts with more creditworthy customers.

While we believe that our pricing of the automobile contracts and the underwriting

criteria and collection methods we employ enable us to control, to a degree, the higher risks inherent in automobile contracts with sub-prime

customers, no assurance can be given that such pricing, criteria and methods will afford adequate protection against such risks.

We specialize in the

purchase and servicing of automobile contracts to finance automobile purchases by sub-prime customers, those who have limited credit

histories or past credit problems.

Such automobile contracts entail a higher risk of non-performance, higher delinquencies and

higher losses than automobile contracts with more creditworthy customers.

While we believe that our pricing of the automobile

contracts and the underwriting criteria and collection methods we employ enable us to control, to a degree, the higher risks

inherent in automobile contracts with sub-prime customers, no assurance can be given that such pricing, criteria and methods will

afford adequate protection against such risks.

If automobile contracts that

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results of operations, financial condition, cash flows and liquidity.

Our results of operations, financial condition, cash flows and liquidity,

depend, to a material extent, on the performance of automobile contracts that we purchase, warehouse and securitize.

A portion of the

automobile contracts that we acquire will default or prepay.

In the event of payment default, the collateral value of the vehicle securing

an automobile contract realized by us in a repossession will generally not cover the outstanding principal balance on that automobile

Our results of operations, financial condition, cash flows and

liquidity, depend, to a material extent, on the performance of automobile contracts that we purchase, warehouse and securitize.

of the automobile contracts that we acquire will default or prepay.

In the event of payment default, the collateral value of the vehicle

securing an automobile contract realized by us in a repossession will generally not cover the outstanding principal balance on that automobile

contract and the related costs of recovery.

For our receivables originated

prior to January 2018, we maintain an allowance for credit losses on automobile contracts held on our balance sheet, which reflects our

estimates of probable credit losses that can be reasonably estimated.

If the allowance is inadequate, then we would recognize the losses

in excess of the allowance as an expense and our results of operations could be adversely affected.

Receivables originated since

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all of which could have a material adverse effect on us.

Because We Are Subject to Many Restrictions in Our Existing Credit

Facilities and Securitization Transactions, Our Ability to Pay Dividends or Engage in Specified Transactions May Be Impaired.

Our Use of Artificial Intelligence May Expose

Us to Risks That Could Impact our Business, Financial Conditions, and Results of Operations.

use artificial intelligence (“AI”) in certain aspects of our business operations, and we or our third-party service providers

may expand the use of these technologies in the future.

AI may be used to support functions such as customer service, servicing operations,

data analysis, compliance monitoring, and other processes related to our auto finance activities.

Implementing and maintaining these

technologies may require significant investments in infrastructure, personnel, data management, and training.

There can be no assurance

that these investments will deliver the anticipated benefits or that AI technologies can be successfully integrated into our existing

systems and processes without disruption.

If we are unable to effectively implement or adapt to evolving technologies, including AI,

as quickly or successfully as our competitors, our operational efficiency, relationships with automobile dealers, and ability to compete

in the auto finance market could be adversely affected.

In addition, the legal and regulatory environment relating to AI is evolving

and uncertain.

New or changing laws, regulations, or supervisory expectations could limit how we use AI technologies, require modifications

to our systems or processes, or increase compliance costs.

Failure to comply with applicable requirements could expose us to regulatory

scrutiny or enforcement actions.

We may also rely on AI technologies developed or supported by third-party vendors.

As a result, we may

be dependent on those vendors’ development practices, training data, and risk controls, over which we may have limited visibility

Although we seek to manage and oversee our third-party vendors through our vendor risk management and oversight processes,

we may not be able to fully mitigate risks arising from their technologies, practices, or controls, and certain risks may remain outside

of our control.

The limited transparency of certain AI models may make it more difficult to monitor model performance, identify errors

or bias, and demonstrate compliance with regulatory requirements.

AI systems may produce inaccurate or unintended results, reflect biases

in the data used to train them, or otherwise operate in ways that are inconsistent with our policies, regulatory obligations, or customer

expectations.

If we are unable to effectively manage the risks associated with the use of AI, including operational, regulatory, data

security, or reputational risks, our business, financial condition, and results of operations could be adversely affected.

Because We Are Subject

to Many Restrictions in Our Existing Credit Facilities and Securitization Transactions, Our Ability to Pay Dividends or Engage in Specified

Transactions May Be Impaired.

The terms of our existing

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If such estimated value were to be materially different from our recorded

value, we might be required to adjust the recorded value of our receivables.

value, an adjustment to the recorded value of our receivables will be required.

A downward readjustment in recorded value would correspondingly

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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 1A. Risk Factors