Credit Acceptance Corporation Reports $87.4 Million Net Income in Latest Quarter

Credit Acceptance Corporation reported significant financial improvements in its latest quarterly results, with net income reaching $87.4 million, or $7.42 per diluted share, for the three months ended June 30, 2025. This marks a substantial recovery from a net loss of $47.1 million, or $3.83 per diluted share, during the same period in 2024. The increase in profitability was primarily driven by a decrease in provisions for credit losses and a rise in finance charges, which totaled $540.7 million, up 8.6% from $497.7 million a year earlier. For the six months ended June 30, 2025, net income was $193.7 million, or $16.11 per diluted share, compared to $17.2 million, or $1.37 per diluted share, in the prior year.

The company experienced a decline in Consumer Loan assignment volumes, with unit and dollar volumes decreasing by 14.6% and 18.8%, respectively, compared to the second quarter of 2024. This decline was attributed to a reduction in the number of active dealers and a decrease in average loan sizes. Despite this, the average balance of the loan portfolio increased by 6.8% to $8.0 billion, reflecting the company's efforts to maintain a robust financing program for automobile dealers. The total number of active dealers stood at 10,655, with 1,560 new dealers enrolled during the quarter.

Operationally, Credit Acceptance expanded its Purchase Program, allowing dealers to access financing for consumers with higher credit ratings. This strategic move contributed to an increase in the percentage of Purchased Loans in the overall loan assignment volume. The company also repurchased approximately 530,000 shares, representing 4.5% of its outstanding shares at the beginning of the quarter, as part of its ongoing capital management strategy.

Looking ahead, Credit Acceptance anticipates continued challenges in forecasting collection rates, which have been impacted by economic conditions and consumer credit availability. The company has adjusted its methodology for forecasting future net cash flows, resulting in a decrease in forecasted collection rates for certain loan segments. Management remains focused on maintaining financial performance and accessing capital on favorable terms to support growth. The company’s funded debt to equity ratio was reported at 4.2 to 1 as of June 30, 2025, indicating a stable leverage position amidst ongoing market fluctuations.