Credit Acceptance recently completed a $75 million revolving secured warehouse facility with an institutional investor. 

Under this facility, the company explained it will contribute loans to a wholly owned special purpose entity (SPE) and the SPE may borrow up to the lesser of 80 percent of the net book value of the contributed loans or $75.0 million during the facility's revolving period. 

Officials indicated the facility will cease to revolve on Sept. 30, 2018.

“If the facility is not renewed prior to this date, and we and the SPE are in compliance with the terms and conditions of the agreement, any amounts outstanding will be repaid over time as the collections on the loans securing the facility are received,” Credit Acceptance officials said. “No borrowings were initially made on the facility.”

The company noted borrowings under the facility will bear interest at a rate equal to LIBOR plus 200 basis points.

Credit Acceptance said it receive a servicing fee of 6.0 percent of the cash flows related to the underlying consumer loans.  The company added the remaining 94.0 percent, less amounts due to dealers 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. 

“Using a unique financing structure, our contractual relationships with our dealers remain unaffected with the dealers’ rights to future payments of dealer holdback preserved,” company officials said.