Credit Acceptance Corp. has announced the completion of a $500.0 million asset-backed nonrecourse secured financing.
The company contributed loans with a net book value of about $625.1 million to a wholly owned special purpose entity, which will transfer the loans to a trust and issue three classes of notes.
The class A notes amounting to $323.0 million have an average life of 2.58 years and bear an interest rate of 3.01%. The class B notes amounting to $101.6 million have an average life of 3.45 years and bear interest at the rate of 3.60%. The class C notes amounting to $75.4 million have an average life of 3.80 years and carry interest at the rate of 3.77%.
The financing is expected to have an annualized cost of about 3.6%. It will revolve for 24 months then amortize based upon the cash flows on the contributed loans.
The company plans to use the financing to pay its outstanding debts.
Credit Acceptance will receive 6.0% of the cash flows related to the underlying consumer loans to cover servicing options. The rest, less amounts due to dealers for payments, will be used to pay principal and interest on the notes and the costs of financing.