Credit Acceptance reported a 9% year-over-year increase in its average loan size to $20,000 in the third quarter, according to the company’s earnings call on Monday.
Additionally, the average loan term increased one month to 54 months as compared to the same time a year prior.
“The change in the loan size and the term is just primarily a difference in mix,” Ken Booth, chief financial officer for Credit Acceptance, said on the call. “We’ve been writing shorter-term loans [and] longer-term loans for a long time. So, the change in the metrics we see in 2017 are more specifically in the third quarter is really just a function of mix.”
Credit Acceptance’s business model works by having dealers assign retail installment contracts to Credit Acceptance. Then Credit Acceptance uses historical data to predict the loan’s performance and gives dealers an advance or one-time purchase payment.
Credit Acceptance purchased 78,589 contracts in the quarter, down approximately 5% year-over-year. The number of active dealers grew to 7,737 — a 6% boost year over year. However, the average number of loans per active dealer was down to 10.2, a decline from 11.3 in 3Q16.
“If there was a pullback I think we’d see immediately,” Brett Roberts, chief executive of Credit Acceptance, said on the call. “Our sense is that the competitive environment hasn’t changed that much … Our volume per active dealer was down for the quarter versus last year and there were some other factors that play into that,” he said.
Additionally, Credit Acceptance has seen no discernible impact from the recent hurricanes, Roberts said.