Credit Acceptance Q3 Loan Volume Rises 51%; Cash-Flow Forecast Cut

Credit Acceptance Corp. (NASDAQ: CACC) reported sharply higher consumer-loan originations and double-digit growth in adjusted profit for the third quarter of 2026, while an updated forecasting methodology reduced expected net cash flows from its loan portfolio by $291.2 million, or 2.5% from the beginning-of-period forecast.

For the three months ended September 30, consumer-loan dollar volume rose 51% year over year to $1.4 billion, while unit volume increased 38% to 110,010 loans. The lender attributed the broad-based growth to stronger execution across multiple initiatives, including an expanded dealer network.

Active dealers increased 19% to a record 12,093, and the average number of consumer loans per active dealer rose 15% to 9.1. The combination of more participating dealers and higher activity per dealer supported the quarter’s origination growth.

Adjusted profit rises despite GAAP loss

Adjusted net income, a non-GAAP measure, increased 15% to $135.5 million from $117.9 million a year earlier. Adjusted net income per diluted share rose 27% to $13.01, aided by a 9% reduction in the diluted weighted-average share count to about 10.4 million.

Credit Acceptance recorded a GAAP net loss of $56.6 million, compared with GAAP net income of $108.2 million in the prior-year quarter. The reconciliation to adjusted net income included an after-tax floating yield adjustment of negative $117.5 million and a $308.2 million after-tax adjustment for the GAAP provision for credit losses.

Economic profit increased 18% to $50.7 million, while economic profit per diluted share advanced 30% to $4.87. The company said the increase reflected a higher adjusted return on capital, driven by higher expected yields on more recent consumer-loan assignments. Adjusted return on capital was 9.9%, compared with a 7.6% cost of capital and a 9.4% adjusted return on capital a year earlier.

Forecasting change lowers expected collections

During the quarter, Credit Acceptance enhanced its methodology for forecasting future portfolio net cash flows, citing additional loan seasoning, performance history and more granular segmentation. The change lowered forecasted collection rates for consumer loans assigned from 2022 through 2026.

The forecasted collection rate for the 2026 vintage was 65.3% at September 30, down from 67.1% at June 30 and below the initial forecast of 67.1%. The 2025 vintage declined to 64.9% from 66.9% in June, while the 2024 vintage fell to 63.6% from 65.1%.

Total forecasted future net cash flows stood at $12.07 billion. Loans assigned in 2025 and 2026 accounted for 62.3% of that total, with forecasted future net cash flows of $3.74 billion and $3.78 billion, respectively.

Capital deployment and operating priorities

Credit Acceptance repurchased 269,150 shares for $161.6 million during the quarter, equal to 2.6% of its beginning-of-quarter shares. The company reported average adjusted leverage of 2.8 times and $1.2 billion of available liquidity as of September 30, consisting of borrowing capacity under revolving credit lines and unrestricted cash and cash equivalents.

Its adjusted loan portfolio increased 4% year over year to $9.4 billion. The company reported $6.7 billion of diversified funding sources, including a revolving secured credit facility, warehouse facilities, term asset-backed securitizations and senior notes.

Management said its strategy remains focused on maximizing long-term economic profit per share. Operating priorities include improving customer experiences, expanding segmentation across borrower, dealer, geographic, vehicle and deal characteristics, developing a centralized data platform, and using data and artificial intelligence to improve forecasting and inventory matching. Credit Acceptance also said it is seeking to strengthen accountability and make operating decisions faster.

The company cautioned that forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially. The quarter’s revision to forecasted cash flows also underscores the sensitivity of portfolio estimates to loan seasoning, performance data and forecasting methodology.