SOUTHFIELD, Mich. -

On Thursday, Credit Acceptance Corp. announced the completion of a $398.3 million asset-backed non-recourse secured financing.

Pursuant to this transaction, the subprime auto finance company said it contributed installment contracts of a net book value of approximately $500.1 million to a wholly-owned special purpose entity that will transfer the paper to a trust, which will issue three classes of notes.

The following chart contains more details.

Note Class Amount  Average Life Price Interest Rate
 A  $235,500,000  2.57 years  99.98166%  3.55%
 B  $80,100,000  3.39 years   99.97726%  3.89%
 C  $82,700,000  3.88 years  99.96582%  4.04%

Credit Acceptance highlighted the financing will accomplish three goals, including:

— Have an expected annualized cost of approximately 4.0 percent, including the initial purchaser’s fees and other costs

— Revolve for 24 months, after which it will amortize based upon the cash flows on the contributed contracts

— Be used by the company to repay outstanding indebtedness.

Credit Acceptance indicated that it will receive 6.0 percent of the cash flows related to the underlying consumer contracts to cover servicing expenses. 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. 

“The financing is structured so as not to affect our contractual relationships with our dealers and to preserve the dealers’ rights to future payments of dealer holdback,” the company said.