History of Credit Acceptance

In 1972, Don Foss founded Credit Acceptance (CACC) to collect payments from car buyers of his dealership chain. Some years later, Credit Acceptance started collecting payments on behalf of the dealers in return for 20% of the total collections as a servicing fee. The remaining 80% of collections was paid back to the dealer, now termed "dealer boldback".

Problems with this offering occurred when customers failed to pay early instalments; without early customer repayments, dealers could lose money on the car. To solve this issue, Credit Acceptance started paying an advance to the dealer at the time of purchase. When added to the customer’s down payment, the total amount received by dealers (down payment from the customer + advance from Credit Acceptance) would cover the cost of the vehicle and protect dealer gross metal profitability This model forms the foundation of CACC's offering today and incentivized dealers to send more deals to Credit Acceptance over the last 50 years.

Market Size and Market Share

“The auto finance market is large and fragmented, with $1.3 trillion in outstanding loan balances as of December 31, 2021… Our potential customer market is large. Approximately 40% of adults in the United States have a credit profile that is considered less than prime. That's roughly 100 million adults.” - FY 2021 Credit Acceptance Letter to Shareholders

In dollar terms, total US subprime auto originations (defined by credit scores less than 620) have amounted to approximately $100 billion per year for the past decade.

This represents 10-15% of total auto originations in any given year.