American Credit Acceptance has increased the number of loans with higher credit scores in the collateral pool backing the sponsor's third subprime securitization of 2015. 

The tier 1 rated loans, which have a lower expected loss than the sponsor's tier 2 auto loans, comprise 64.1% of the pool backing American Credit Acceptance Receivables Trust 2015-3. That is higher than any of the previous transaction issued by the sponsor this year; 56% of the pool backing ACA's last transaction, 2015-2, was comprised of the higher scored loans.

Similar to the ACAR 2015-2, the ACAR 2015-3 transaction includes approximately $30 million of collateral which was called from the ACAR 2012-3 transaction, but the ACAR 2015-3 transaction has a slightly higher proportion of the called collateral (12.0% vs. 11.0% for the ACAR 2015-2).

ACA focuses on lower quality subprime obligors with an average FICO score in the low to mid 500s The company originates loans under two programs: Tier 1 Strategic loans are from CarMax customers who are ineligible for financing through CarMax’s captive finance company, and Tier 2 Strategic loans are purchased from certain large dealer groups. Approximately 14.0% of the loans in the ACAR 2015-3 transaction have no FICO score.

In total, $218.7 million of bonds backed by ACA auto loans will be sold. Kroll has assigned an 'AA' rating to $130 million of class A notes with 50% credit enhancement that mature in September 2019; 'A' to $38.7 million of class B notes with 34.5% credit enhancement maturing in October 2021; 'BBB' to $32.5 million of class C notes with 21.5% credit enhancement maturin in October 2021; and 'BB' to $17.5 million of class D notes with 14.5% credit enhancement maturing July 12, 2022.

The transaction is not fully ramped; the manager can purchase up to 22% of eligible collateral during a three-month prefunding period. This can expose the pool to the risk that the sponsor may purchase lower quality collateral.

ACA has been originating loans since 2007, when George Johnson, the majority owner, acquired Cornerstone Acceptance Corporation from Sonic Automotive Inc. Cornerstone had been in the subprime auto finance business since 1989 and was Sonic’s in-house finance company prior to the acquisition.  

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