SOUTHFIELD, Mich. — Credit Acceptance Corp. recently announced the completion of a $200.5 million asset-backed non-recourse secured financing deal.

Per this transaction, the company contributed loans having a net book value of approximately $250.8 million to a wholly-owned special purpose entity, which will transfer loans to a trust. The trust will then offer three classes of notes, as shown in the below chart:

Note Class

  

 Amount

  

 Average Life

  

 Price

  

 Interest Rate

  
 

 A

  

 $

 157,500,000

  

  

 2.42

  

  

 99.97758

  

  

 2.61 percent
 

 B

  

 $

 43,000,000

  

  

 3.04

  

  

 99.98000

  

  

 3.96 percent
 

 C

  

 $

 161,704

  

  

 3.13

  

  

 —

  

  

 —

  

Officials also highlighted that the class C note does not bear interest and is being retained by the company.

The financing will have an expected annualized cost of approximately 3.5 percent, including the initial purchaser’s fee and other costs. 

The company also noted the financing will revolve for 24 months after which it will amoritize based upon the cash flows on the contributed loans and will be used by the company to repay any outstanding indebtedness.

Lastly, the company explained it will receive 6 percent of the cash flows related to the underlying consumer loans to cover servicing expenses.

The remaining 94 percent, less amounts due to dealer-partners for payments of dealer holdback, will be used to pay principal and interest on the notes as well as the ongoing costs of the financing. 

“The financing is structured so as not to affect our contractual relationships with our dealer-partners and to preserve the dealer-partners' rights to future payments of dealer holdback,” officials stressed.