Driveway Finance is sponsoring a securitization of payments from a pool of loan contracts primarily on used vehicles, selling $462.5 million to investors through the LAD Select Auto Receivables Trust.
It is the company's first securitization backed by receivables from obligors with a credit score of 700 or less, say analysts at Morningstar DBRS. As of the deal's May 31, 2026 cutoff date, the receivables had a weighted average (WA) credit score of 661.
The deal, structured as a Rule 144A deal, will be issued through seven tranches of notes, classes A through E, DBRS said.
Notes are expected to pay coupons of 4.05% on the notes rated R-1 (high) (sf) and 4.59% and 4.79% on the A1 and A2 notes, respectively, the rating agency said.
LAD Select Auto Receivables Trust, series 2026-A, or LASAR 2026-A, is expected to close on July 29. Beginning August 17, the transaction will repay noteholders on a monthly basis. Final scheduled distribution dates ranging from July 15, 2027 on the A1 notes, rated R-1 (high) (sf) through June 15, 2034 on the class E notes rated BB (sf).
Initial credit support on the class A notes, amounting to 33.65%, is composed of subordination, a non-declining reserve account and overcollateralization, representing 33.65%, 25.15% and 1.00% of the note balances, respectively, the rating agency said.
After its initial floor, overcollateralization has a target of 11.75% of the current pool balance, the rating agency said.
