CACC · Credit Acceptance Corporation

This $450.0 million asset-backed financing represents a strategic refinancing move by Credit Acceptance to replace higher-cost debt while maintaining its core servicing infrastructure and dealer relationships. The transaction is structured as a true-sale securitization through a wholly owned special purpose entity (Funding 2026-1) and trust (Credit Acceptance Auto Loan Trust 2026-1), with explicit non-recourse treatment — meaning the Company’s liability is limited to customary repurchase and indemnification obligations, not the full principal or interest on the notes. Though consolidated for financial reporting, the arrangement isolates the conveyed $562.6 million in consumer loans as collateral, supporting a lower all-in cost of ~5.2% versus prior funding sources. The three-tranche note structure — with Class A ($248.75M, 4.65%), Class B ($91.32M, 4.96%), and Class C ($109.93M, 5.28%) — reflects standard credit enhancement layers, where senior tranches absorb losses first. The 24-month revolving period allows dynamic loan pool replenishment, after which amortization aligns with actual cash flow performance — introducing direct exposure to portfolio credit quality and prepayment behavior. Critically, the Company retains its 4.0% servicing fee and continues to service loans without disruption to dealers, preserving revenue continuity and operational control. The financing also explicitly preserves dealers’ rights to future dealer holdback payments, mitigating counterparty risk. Given the size relative to the Company’s capital structure, the structural permanence of the SPV, and the direct linkage to loan performance metrics (e.g., the three-period collection shortfall trigger), this is a HIGH material event affecting leverage profile, funding stability, and earnings visibility.