SOUTHFIELD, Mich. — Strong gains in both loan unit volume and the amount financed pushed Credit Acceptance Corp. to third-quarter jumps in both consolidated net income and adjusted net income.

The company recently revealed its third-quarter consolidated net income came in at $50.0 million or $1.91 per diluted share for the three months that ended Sept. 30. A year earlier, the company posted consolidated net income of $42.0 million or $1.48 per diluted share.

Through the first nine months of 2011, Credit Acceptance's consolidated net income was $138.0 million or $5.19 per diluted share. Again, it's higher than the same span last year when the company generated $123.1 million or $4.03 per diluted share.

Turning over to third-quarter adjusted net income, a non-GAAP financial measure, Credit Acceptance said this total was $49.1 million or $1.88 per diluted share, up from $39.6 million or $1.39 per diluted share a year earlier.

For the first nine months, the company's adjusted net income settled at $142.7 million or $5.37 per diluted share, higher than the same time frame last year when Credit Acceptance reported $116.8 million or $3.83 per diluted share of adjusted net income.

How did Credit Acceptance achieve these improvements? The company's third-quarter consumer loan unit volume was 28.6 percent higher than a year earlier. Its dollar volume also was 40.5 percent higher.

"Consumer loan assignment volumes depend on a number of factors including the overall demand for our product, the amount of capital available to fund new loans, and our assessment of the volume that our infrastructure can support," Credit Acceptance officials explained.

"Our pricing strategy is intended to maximize the amount of economic profit we generate within the confines of capital and infrastructure constraints," they continued.

"Unit and dollar volumes were positively impacted by an increase in active dealer partners and advance rate increases made during the first and fourth quarters of 2010 and the second and third quarters of 2011," Credit Acceptance went on to highlight. "Dollar volumes were also positively impacted by an increase in the size of the average consumer loan assignment.

"While the advance rate increases reduced the return on capital we expect to earn on new assignments, we believe it is very likely the advance increases had a positive impact on economic profit. Unit volume for the one month ended Oct. 31 increased by 31.0 percent as compared to the same period in 2010," company officials added.

Beyond strengthening loan volume, Credit Acceptance also highlighted two other reasons why its third-quarter performance showed gains, including:

—An increase in adjusted average capital of 30.6 percent due to growth in its loan portfolio primarily as a result of an increase in active dealer-partners and the advance rate increases we made during the fourth quarter of 2010 and the second and third quarters of 2011.

—A decrease in the cost of capital of 50 basis points due to a decline in the average cost of debt resulting from a change in the mix of outstanding debt, a decrease in available and unused credit capacity and more favorable pricing on revolving credit facilities.

The company also mentioned its decrease in adjusted return on capital of 100 basis points occurred primarily as a result of two reasons:

—Finance charges decreased as a percentage of adjusted average capital primarily as a result of a decrease in the yield on its loan portfolio due to higher advance rates on consumer loans assigned in 2010 and 2011. The decrease in finance charges negatively impacted the adjusted return on capital by 250 basis points.

—Operating expenses decreased as a percentage of adjusted average capital primarily as a result of decreased support expenses mainly due to lower expenses related to information technology activities. The decrease in operating expenses positively impacted the adjusted return on capital by 170 basis points.

In explaining why the first nine months of this year turned out better than a year earlier, Credit Acceptance delved into several similar factors, including:

—An increase in adjusted average capital of 25.4 percent due to growth in loan portfolio primarily as a result of an increase in active dealer-partners and the advance rate increases the company made during the first and fourth quarters of 2010 and the second and third quarters of this year.

—A decrease in its cost of capital of 80 basis points due to a decline in the average cost of debt resulting from a change in the mix of our outstanding debt, a decrease in available and unused credit capacity, and more favorable pricing on our revolving credit facilities.

The company went on to mention its decrease in adjusted return on capital of 50 basis points came primarily as a result of:

—Finance charges decreased as a percentage of adjusted average capital primarily as a result of a decrease in the yield on its loan portfolio due to higher advance rates on consumer loans assigned in 2010 and 2011. The decrease in finance charges negatively impacted the adjusted return on capital by 140 basis points.

—Operating expenses decreased as a percentage of adjusted average capital primarily as a result of decreased support expenses mainly due to lower expenses related to information technology and finance activities. The decrease in operating expenses positively impacted the adjusted return on capital by 110 basis points.

Furthermore, Credit Acceptance shared how its older loans are performing.

"Consumer loans assigned in 2002, 2003, 2009 and 2010 have yielded forecasted collection results materially better than our initial estimates, while consumer loans assigned in 2006 and 2007 have yielded forecasted collection results materially worse than our initial estimates," company officials indicated.

"For 2004, 2005, 2008, and 2011, actual results have been very close to our initial estimates. For the three months ended Sept. 30, forecasted collection rates improved for consumer loans assigned during 2009, 2010, and 2011 and were generally consistent with expectations at the start of the period for the other assignment years," they continued.

"For the nine months that ended Sept. 30, forecasted collection rates improved for consumer loans assigned during 2007, 2009, 2010, and 2011 and were generally consistent with expectations at the start of the period for the other assignment years," Credit Acceptance noted.

"Forecasting collection rates precisely at loan inception is difficult. With this in mind, we establish advance rates that are intended to allow us to achieve acceptable levels of profitability, even if collection rates are less than we currently forecast," company officials concluded.