Credit Acceptance Corp.’s net income fell to $22.2 million, down 79 percent from a year earlier as the major non-prime auto lender collected less than it expected from borrowers and saw “below-average” loan prepayment rates cut into its cash flow.
Net income also was impacted by Credit Acceptance revamping its forecasting to take into account more recent loans with weaker performance, the lender said in announcing earnings Aug. 1. The revised projections were among the factors leading Credit Acceptance to increase the amount it set aside for possible credit losses by 70 percent to $250.5 million.
However, the second quarter also saw Credit Acceptance grow its volume 13 percent to 82,727 loans and increase the initial spread — the difference between what it pays dealerships sending it loans and what it expects to earn on the debt — by 1.2 percentage points from a year earlier to 21.2 percent. The lender worked with 9,860 dealerships, up 16 percent.
