Switching to your role as a customer, you mentioned that a large number of your loans are done with Credit Acceptance, why is that?

The biggest reason is the ease of selling that car. Customers who can buy a car for $25,000 won't go to an average independent dealer to get approved. There is a stigma of not wanting to buy a car from a lesser independent dealer, which is one of the struggles I had as an employee of Credit Acceptance. Dealers have a mental block that Credit Acceptance is less than. Today, being an owner, I see that pay plan process issues are the reason they don't reach their BHAG 600,000 loan goal. Franchise dealers pay a finance manager on back end products, but due to the way Credit Acceptance sets their portfolio profit up, there was no incentive for me as a finance manager because everything was front loaded. I do all the work because a customer needs special stipulations to put the loan together, so it will get moved aside.

Are you referring to the dealer hold back that the finance manager feels like there's no benefit to them?

Yes. When Credit Acceptance pays a deal, they have the initial profit which the dealer gets today, potential profit which is what their algorithm says you will get down the road. They also have profit potential which is an over-inflated number, if the customer makes every payment on time. Unfortunately, we already know the customer probably won't satisfy that loan 100%.