Credit Acceptance’s Provision for Credit Losses Jumps to $281.9 Million
Key Facts
Credit Acceptance reported third-quarter results on October 29, recording a $281.9 million provision for credit losses related to changes in expectations, compared with $88.1 million in the same period last year. Total provisions for credit losses rose to $410.9 million from $152.0 million. Adjusted net income, meanwhile, was $135.5 million, or $13.01 per diluted share, compared with $117.9 million and $10.28 per share a year earlier. Economic profit also rose to $50.7 million from $43.0 million. The results show two divergent trends: growth in adjusted earnings alongside a significant increase in provisions that the company linked to loan performance expectations.
The company said the $193.8 million increase in the provision for credit losses related to changes in expectations reflected weaker performance in consumer loans and a change in the timing of expected future cash flows. It added that part of the increase was related to an adjustment to its forecasting methodology during the quarter. Revenue was $594.6 million, up from $582.4 million in the third quarter of 2025. That places revenue growth alongside higher provisions as the company reassesses expected cash flows from its loans. The portfolio’s expected net cash flows had declined by $58.6 million, or 0.5%, in the third quarter of 2025.
On the operating front, the number of loans assigned to the company rose to 110,010 units, up 37.7% from the third quarter of 2025. Active dealers increased to 12,093 from 10,180, a gain of 18.8%. Average loan size per active dealer also rose 15.2% year over year. The company said dollar growth in loan volume exceeded unit growth, alongside an increase in the average down payment associated with a higher average loan size. Chief Executive Vinayak Hegde said the number of active dealers reached a record, attributing the momentum to a strategy focused on customers, segmentation, the use of data and artificial intelligence, and operational discipline.
The increase in assignments follows a weaker comparison period; in the third quarter of 2025, assigned loan volume fell 16.5% by units and 19.4% by value compared with the same period in 2024. In August 2026, the company completed a $600 million asset-backed financing at an expected annual cost of approximately 5.5%, with a 24-month revolving period before amortization begins. The company said the financing would be used to repay higher-cost outstanding debt and for general purposes, and that investor demand enabled it to achieve its tightest credit spreads since late 2021. The company’s shares, listed under the ticker CACC, closed at $544.9 on October 28. A call to discuss third-quarter results was scheduled for October 29 at 5 p.m. Eastern time.