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CREDIT ACCEPTANCE CORP. (CACC)
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CREDIT ACCEPTANCE : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-K)

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02/09/2018 | 10:14pm CET
The following discussion and analysis should be read in conjunction with the
consolidated financial statements and related notes contained in Item 8 of this
Form 10-K, which is incorporated herein by reference.

Overview

We offer financing programs that enable automobile dealers to sell vehicles to
consumers regardless of their credit history. Our financing programs are offered
through a nationwide network of automobile dealers who benefit from sales of
vehicles to consumers who otherwise could not obtain financing; from repeat and
referral sales generated by these same customers; and from sales to customers
responding to advertisements for our financing programs, but who actually end up
qualifying for traditional financing.

For the year ended December 31, 2017, consolidated net income was $470.2
million, or $24.04 per diluted share, compared to $332.8 million, or $16.31 per
diluted share, for the same period in 2016 and $299.7 million, or $14.28 per
diluted share, for the same period in 2015. The growth in 2017 consolidated net
income was primarily due to the enactment of the Tax Cuts and Jobs Act in
December 2017, which increased consolidated net income by $99.8 million, and an
increase in the average balance of our Loan portfolio, partially offset by a
revision to our Loan net cash flow timing forecast during the fourth quarter of
2017, which decreased consolidated net income by $30.8 million. The growth in
2016 consolidated net income was primarily due to an increase in the average
balance of our Loan portfolio, partially offset by a decline in Consumer Loan
performance.

Critical Success Factors

Critical success factors include our ability to accurately forecast Consumer
Loan performance, access capital on acceptable terms, and maintain or grow
Consumer Loan volume at the level and on the terms that we anticipate, with an
objective to maximize economic profit. Economic profit is a non-GAAP financial
measure we use to evaluate our financial results and determine incentive
compensation. Economic profit measures how efficiently we utilize our total
capital, both debt and equity, and is a function of the return on capital in
excess of the cost of capital and the amount of capital invested in the
business.


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Consumer Loan Metrics

At the time a Consumer Loan is submitted to us for assignment, we forecast
future expected cash flows from the Consumer Loan. Based on the amount and
timing of these forecasts and expected expense levels, an advance or one-time
purchase payment is made to the related Dealer at a price designed to maximize
economic profit.

We use a statistical model to estimate the expected collection rate for each
Consumer Loan at the time of assignment. We continue to evaluate the expected
collection rate of each Consumer Loan subsequent to assignment. Our evaluation
becomes more accurate as the Consumer Loans age, as we use actual performance
data in our forecast. By comparing our current expected collection rate for each
Consumer Loan with the rate we projected at the time of assignment, we are able
to assess the accuracy of our initial forecast. The following table compares our
forecast of Consumer Loan collection rates as of December 31, 2017, with the
forecasts as of December 31, 2016, as of December 31, 2015, and at the time of
assignment, segmented by year of assignment:
                                     Forecasted Collection Percentage as of (1)                                    Current Forecast Variance from
 Consumer Loan                                                                           Initial                                                     Initial
Assignment Year    December 31, 2017      December 31, 2016      December 31, 2015      Forecast      December 31, 2016      December 31, 2015       Forecast
     2008                   70.5 %                 70.4 %                 70.3 %            69.7 %            0.1  %                 0.2  %              0.8  %
     2009                   79.5 %                 79.4 %                 79.4 %            71.9 %            0.1  %                 0.1  %              7.6  %
     2010                   77.6 %                 77.6 %                 77.4 %            73.6 %            0.0  %                 0.2  %              4.0  %
     2011                   74.7 %                 74.7 %                 74.2 %            72.5 %            0.0  %                 0.5  %              2.2  %
     2012                   73.8 %                 73.7 %                 73.2 %            71.4 %            0.1  %                 0.6  %              2.4  %
     2013                   73.5 %                 73.4 %                 73.4 %            72.0 %            0.1  %                 0.1  %              1.5  %
     2014                   71.7 %                 71.8 %                 72.6 %            71.8 %           -0.1  %                -0.9  %             -0.1  %
     2015                   65.5 %                 66.1 %                 67.8 %            67.7 %           -0.6  %                -2.3  %             -2.2  %
     2016                   64.8 %                 65.1 %                    -              65.4 %           -0.3  %                   -                -0.6  %
     2017                   65.6 %                    -                      -              64.0 %              -                      -                 1.6  %


(1) Represents the total forecasted collections we expect to collect on the

Consumer Loans as a percentage of the repayments that we were contractually

owed on the Consumer Loans at the time of assignment. Contractual repayments

include both principal and interest. Forecasted collection rates are

negatively impacted by canceled Consumer Loans as the contractual amount

     owed is not removed from the denominator for purposes of computing
     forecasted collection rates in the table.



Consumer Loans assigned in 2009 through 2013 and 2017 have yielded forecasted
collection results materially better than our initial estimates, while Consumer
Loans assigned in 2015 have yielded forecasted collection results materially
worse than our initial estimates. For Consumer Loans assigned in 2008, 2014 and
2016, actual results have been close to our initial estimates.

For the year ended December 31, 2017, forecasted collection rates improved for
Consumer Loans assigned in 2017, declined for Consumer Loans assigned in 2015
and 2016 and were generally consistent with expectations at the start of the
period for all other assignment years presented.

For the year ended December 31, 2016, forecasted collection rates improved for
Consumer Loans assigned in 2010 through 2012, declined for Consumer Loans
assigned in 2014 through 2016 and were generally consistent with expectations at
the start of the period for all other assignment years presented.

The changes in forecasted collection rates impacted forecasted net cash flows
(forecasted collections less forecasted Dealer Holdback payments) as follows:
(In millions)                                          For the years ended December 31,
Increase (decrease) in forecasted net
cash flows                                        2017                2016               2015
Dealer Loans                                $        (5.6 )$       (35.4 )$        3.6
Purchased Loans                                      41.7                15.3               20.3
Total Loans                                 $        36.1$       (20.1 )$       23.9





                                       24
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In addition to the statistical model used to forecast collection rates, we use a
model to forecast the timing of future net cash flows. During the fourth quarter
of 2017, we updated our net cash flow timing model to incorporate more recent
data. The revised forecast resulted in an expected cash flow stream with a lower
net present value as compared to the prior forecast, as less cash flows are
expected in earlier periods and more cash flows are expected in later periods.

The reduction in net present value was primarily the result of a change in the
expected timing of cash flows from longer-term Consumer Loans. Due to our
limited historical experience with longer-term Consumer Loans, our prior model
relied on extrapolations from the historical performance of shorter-term
Consumer Loans to predict the timing of future net cash flows on longer-term
Consumer Loans. We now have additional historical experience on these
longer-term loans which we used to refine our estimate.

The revision to our net cash flow timing forecast does not impact the amount of
undiscounted net cash flows we expect to receive. As a result, the dollar amount
of future net portfolio revenue (finance charges less provision for credit
losses) is not impacted by the revision. However, the revision does impact the
period in which those net revenues will be recorded as a portion of the impact
of the revised timing estimate was recorded as a current period expense and a
portion was recorded as a yield adjustment. For the fourth quarter of 2017, the
revision increased provision for credit losses by $41.6 million, reduced finance
charge revenue by $7.3 million and reduced net income by $30.8 million. The
revision reduced the yield on our loan portfolio by 90 basis points, which will
impact the timing of revenue recognition in future periods.

During the fourth quarter of 2016, we enhanced our methodology for forecasting
the amount and timing of future collections on Consumer Loans through the
utilization of more recent data and new forecast variables. Implementation of
the enhanced forecasting methodology as of October 31, 2016 did not have a
material impact on provision for credit losses or net income; however, it did
reduce forecasted net cash flows by $1.8 million, all of which related to Dealer
Loans. The implementation also decreased the forecasted collection rates for
Consumer Loans assigned in 2015 and 2016 and increased the forecasted collection
rates for Consumer Loans assigned in 2011 through 2013.

The following table presents information on the average Consumer Loan assignment for each of the last ten years:

                                                                  Average
                                                                                       Average
                                                                                     Initial Term
     Consumer Loan Assignment Year          Consumer Loan (1)       Advance (2)      (in months)
                 2008                     $            14,518     $        6,479               42
                 2009                                  12,689              5,565               38
                 2010                                  14,480              6,473               41
                 2011                                  15,686              7,137               46
                 2012                                  15,468              7,165               47
                 2013                                  15,445              7,344               47
                 2014                                  15,692              7,492               47
                 2015                                  16,354              7,272               50
                 2016                                  18,218                7,976             53
                 2017                                  20,230                8,746             55


(1) Represents the repayments that we were contractually owed on Consumer Loans

     at the time of assignment, which include both principal and interest.


(2)  Represents advances paid to Dealers on Consumer Loans assigned under our

Portfolio Program and one-time payments made to Dealers to purchase Consumer

     Loans assigned under our Purchase Program. Payments of Dealer Holdback and
     accelerated Dealer Holdback are not included.



Forecasting collection rates accurately at Loan inception is difficult. With
this in mind, we establish advance rates that are intended to allow us to
achieve acceptable levels of profitability, even if collection rates are less
than we initially forecast.


                                       25
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The following table presents forecasted Consumer Loan collection rates, advance
rates, the spread (the forecasted collection rate less the advance rate), and
the percentage of the forecasted collections that had been realized as of
December 31, 2017. All amounts, unless otherwise noted, are presented as a
percentage of the initial balance of the Consumer Loan (principal +
interest). The table includes both Dealer Loans and Purchased Loans.
                                                        As of December 31, 

2017

                                   Forecasted                                           % of Forecast
Consumer Loan Assignment Year     Collection %      Advance % (1)        Spread %        Realized (2)
            2008                        70.5 %             44.6 %             25.9 %           99.8 %
            2009                        79.5 %             43.9 %             35.6 %           99.8 %
            2010                        77.6 %             44.7 %             32.9 %           99.5 %
            2011                        74.7 %             45.5 %             29.2 %           98.9 %
            2012                        73.8 %             46.3 %             27.5 %           98.2 %
            2013                        73.5 %             47.6 %             25.9 %           96.0 %
            2014                        71.7 %             47.7 %             24.0 %           88.9 %
            2015                        65.5 %             44.5 %             21.0 %           72.7 %
            2016                        64.8 %             43.8 %             21.0 %           47.5 %
            2017                        65.6 %             43.2 %             22.4 %           15.3 %



(1)  Represents advances paid to Dealers on Consumer Loans assigned under our

Portfolio Program and one-time payments made to Dealers to purchase Consumer

Loans assigned under our Purchase Program as a percentage of the initial

balance of the Consumer Loans. Payments of Dealer Holdback and accelerated

Dealer Holdback are not included.

(2) Presented as a percentage of total forecasted collections.



The risk of a material change in our forecasted collection rate declines as the
Consumer Loans age. For 2013 and prior Consumer Loan assignments, the risk of a
material forecast variance is modest, as we have currently realized in excess of
90% of the expected collections. Conversely, the forecasted collection rates for
more recent Consumer Loan assignments are less certain as a significant portion
of our forecast has not been realized.

The spread between the forecasted collection rate and the advance rate has
ranged from 21.0% to 35.6% over the last 10 years. The spread was at the high
end of this range in 2009 and 2010, when the competitive environment was
unusually favorable, and much lower during other years (2014 through 2017) when
competition was more intense. The decline in the advance rate from 2016 to 2017
reflects the lower initial forecast on Consumer Loan assignments received in
2017, partially offset by an increase in Purchased Loans as a percentage of
total unit volume. The increase in the spread from 2016 to 2017 was the result
of the performance of 2017 Consumer Loans, which has materially exceeded our
initial estimates, partially offset by a change in the mix of Consumer Loan
assignments received during 2017, including an increase in Purchased Loans as a
percentage of total unit volume.


                                       26
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The following table compares our forecast of Consumer Loan collection rates as
of December 31, 2017 with the forecasts at the time of assignment, for Dealer
Loans and Purchased Loans separately.
                                          Dealer Loans                                     Purchased Loans
                         Forecasted Collection Percentage                   

Forecasted Collection Percentage

                                    as of (1)                                          as of (1)
    Consumer Loan        December 31,           Initial                     December 31,           Initial
   Assignment Year           2017              Forecast       Variance          2017              Forecast       Variance
        2008                  70.8 %             70.2 %           0.6  %         69.8 %             68.8 %           1.0 %
        2009                  79.2 %             72.1 %           7.1  %         80.8 %             70.5 %          10.3 %
        2010                  77.5 %             73.6 %           3.9  %         78.7 %             73.1 %           5.6 %
        2011                  74.6 %             72.4 %           2.2  %         76.3 %             72.7 %           3.6 %
        2012                  73.6 %             71.3 %           2.3  %         75.9 %             71.4 %           4.5 %
        2013                  73.4 %             72.1 %           1.3  %         74.3 %             71.6 %           2.7 %
        2014                  71.6 %             71.9 %          -0.3  %         72.7 %             70.9 %           1.8 %
        2015                  64.8 %             67.5 %          -2.7  %         69.8 %             68.5 %           1.3 %
        2016                  63.9 %             65.1 %          -1.2  %         67.5 %             66.5 %           1.0 %
        2017                  65.0 %             63.8 %           1.2  %         67.1 %             64.6 %           2.5 %


(1) The forecasted collection rates presented for Dealer Loans and Purchased

Loans reflect the Consumer Loan classification at the time of assignment.

Under our Portfolio Program, certain events may result in Dealers forfeiting

their rights to Dealer Holdback. We transfer the Dealer's Consumer Loans

from the Dealer Loan portfolio to the Purchased Loan portfolio in the period

this forfeiture occurs. During 2017, we changed the presentation of current

forecasted collection rates for each Consumer Loan assignment year to

exclude the impact of transfers. Prior to 2017, the presentation of current

forecasted collection rates for each Consumer Loan assignment year reflected

the current Consumer Loan classification.



The following table presents forecasted Consumer Loan collection rates, advance
rates, and the spread (the forecasted collection rate less the advance rate) as
of December 31, 2017 for Dealer Loans and Purchased Loans separately. All
amounts are presented as a percentage of the initial balance of the Consumer
Loan (principal + interest).
                                          Dealer Loans                                       Purchased Loans
                          Forecasted                                          Forecasted
    Consumer Loan        Collection %                                        Collection %
   Assignment Year            (1)          Advance % (1)(2)     Spread %          (1)          Advance % (1)(2)     Spread %
        2008                70.8 %                 43.3 %          27.5 %       69.8 %                 47.1 %          22.7 %
        2009                79.2 %                 43.4 %          35.8 %       80.8 %                 46.0 %          34.8 %
        2010                77.5 %                 44.4 %          33.1 %       78.7 %                 47.3 %          31.4 %
        2011                74.6 %                 45.1 %          29.5 %       76.3 %                 49.3 %          27.0 %
        2012                73.6 %                 46.0 %          27.6 %       75.9 %                 50.0 %          25.9 %
        2013                73.4 %                 47.2 %          26.2 %       74.3 %                 51.5 %          22.8 %
        2014                71.6 %                 47.2 %          24.4 %       72.7 %                 51.8 %          20.9 %
        2015                64.8 %                 43.4 %          21.4 %       69.8 %                 50.2 %          19.6 %
        2016                63.9 %                 42.1 %          21.8 %       67.5 %                 48.6 %          18.9 %
        2017                65.0 %                 42.1 %          22.9 %       67.1 %                 45.8 %          21.3 %


(1) The forecasted collection rates and advance rates presented for Dealer Loans

and Purchased Loans reflect the Consumer Loan classification at the time of

assignment. Under our Portfolio Program, certain events may result in

Dealers forfeiting their rights to Dealer Holdback. We transfer the Dealer's

Consumer Loans from the Dealer Loan portfolio to the Purchased Loan

portfolio in the period this forfeiture occurs. During 2017, we changed the

presentation of forecasted collection rates and advance rates for each

Consumer Loan assignment year to exclude the impact of transfers. Prior to

2017, the presentation of forecasted collection rates and advance rates for

     each Consumer Loan assignment year reflected the current Consumer Loan
     classification.


(2)  Represents advances paid to Dealers on Consumer Loans assigned under our

Portfolio Program and one-time payments made to Dealers to purchase Consumer

Loans assigned under our Purchase Program as a percentage of the initial

balance of the Consumer Loans. Payments of Dealer Holdback and accelerated

Dealer Holdback are not included.



During the fourth quarter of 2017, we transferred $89.0 million of Dealer Loans
along with the related allowance for credit losses balance of $31.8 million to
Purchased Loans. Under our Portfolio Program, certain events may result in
Dealers forfeiting their rights to Dealer Holdback. Substantially all of these
transfers relate to Dealers where events had occurred in prior periods that met
our criteria for forfeiture. However, while we intended to exercise our rights
to Dealer Holdback in the period the forfeiture event occurred, we did not
exercise our rights for these Dealers until the fourth quarter of 2017.

                                       27
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Although the advance rate on Purchased Loans is higher as compared to the advance rate on Dealer Loans, Purchased Loans do not require us to pay Dealer Holdback.

The spread on Dealer Loans increased from 21.8% in 2016 to 22.9% in 2017 as a
result of the performance of 2017 Consumer Loans in our Dealer Loan portfolio,
which has exceeded our initial estimates, while those assigned to us in 2016
have declined from our initial estimates, partially offset by a change in the
mix of Consumer Loan assignments.

The spread on Purchased Loans increased from 18.9% in 2016 to 21.3% in 2017 as a
result of the performance of 2017 Consumer Loans in our Purchased Loan
portfolio, which exceeded our initial estimates by a greater margin than those
assigned to us in 2016, partially offset by a change in the mix of Consumer Loan
assignments.

Access to Capital

Our strategy for accessing capital on acceptable terms needed to maintain and
grow the business is to: (1) maintain consistent financial performance; (2)
maintain modest financial leverage; and (3) maintain multiple funding
sources. Our funded debt to equity ratio was 2.0 to 1 as of December 31,
2017. We currently utilize the following primary forms of debt financing: (1) a
revolving secured line of credit; (2) Warehouse facilities; (3) Term ABS
financings; and (4) senior notes.

Consumer Loan Volume

The following table summarizes changes in Consumer Loan assignment volume in each of the last three years as compared to the same period in the previous year:

                                       Year over Year Percent Change
For the Year Ended December 31,     Unit Volume        Dollar Volume (1)
2015                                    33.2  %                    29.3 %
2016                                    10.9  %                    21.6 %
2017                                    -0.7  %                     9.0 %


(1) Represents advances paid to Dealers on Consumer Loans assigned under our

Portfolio Program and one-time payments made to Dealers to purchase Consumer

     Loans assigned under our Purchase Program. Payments of Dealer Holdback and
     accelerated Dealer Holdback are not included.



Consumer Loan assignment volumes depend on a number of factors including (1) the
overall demand for our financing programs, (2) the amount of capital available
to fund new Loans, and (3) our assessment of the volume that our infrastructure
can support. Our pricing strategy is intended to maximize the amount of economic
profit we generate, within the confines of capital and infrastructure
constraints.

Unit volume declined 0.7% while dollar volume grew 9.0% during 2017 as the
number of active Dealers grew 9.6% while average volume per active Dealer
declined 9.6%. Dollar volume grew while unit volume declined during 2017 due to
an increase in the average advance paid per unit. This increase was the result
of an increase in the average size of the Consumer Loans assigned primarily due
to increases in the average initial loan term and average vehicle selling price
and an increase in Purchased Loans as a percentage of total unit volume,
partially offset by a decrease in the average advance rate due to a decrease in
the average initial forecast of the Consumer Loans assigned.

Unit and dollar volumes grew 10.9% and 21.6%, respectively, during 2016 as the
number of active Dealers grew 16.2% while average volume per active Dealer
declined 4.6%. Dollar volume grew faster than unit volume during 2016 due to an
increase in the average advance paid per unit. This increase was the result of
an increase in the average size of the Consumer Loans assigned primarily due to
an increase in the average initial loan term and an increase in Purchased Loans
as a percentage of total unit volume, partially offset by a decrease in the
average advance rate due to a decrease in the average initial forecast of the
Consumer Loans assigned.






                                       28
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The following table summarizes the changes in Consumer Loan unit volume and active Dealers:

                           For the Years Ended December 31,           For 

the Years Ended December 31,

                           2017           2016       % Change         2016           2015       % Change
Consumer Loan unit
volume                     328,507      330,710         -0.7  %       330,710      298,288         10.9  %
Active Dealers (1)          11,551       10,536          9.6  %        10,536        9,064         16.2  %
Average volume per
active Dealer                 28.4         31.4         -9.6  %          31.4         32.9         -4.6  %

Consumer Loan unit
volume from Dealers
active both periods        278,497      295,444         -5.7  %       282,129      273,839          3.0  %
Dealers active both
periods                      7,524        7,524            -            6,925        6,925            -
Average volume per
Dealer active both
periods                       37.0         39.3         -5.7  %          40.7         39.5          3.0  %

Consumer Loan unit
volume from Dealers
not active both
periods                     50,010       35,266         41.8  %        48,581       24,449         98.7  %
Dealers not active
both periods                 4,027        3,012         33.7  %         3,611        2,139         68.8  %
Average volume per
Dealer not active both
periods                       12.4         11.7          6.0  %          13.5         11.4         18.4  %


(1) Active Dealers are Dealers who have received funding for at least one

Consumer Loan during the period.

The following table provides additional information on the changes in Consumer Loan unit volume and active Dealers:

                            For the Years Ended December 31,              

For the Years Ended December 31,

                           2017            2016         % Change         2016            2015        % Change
Consumer Loan unit
volume from new
Dealers                  46,985          46,232             1.6  %     46,232          52,577          -12.1  %
New active Dealers (1)    3,740           3,406             9.8  %      3,406           3,404            0.1  %
Average volume per new
active Dealer              12.6            13.6            -7.4  %       13.6            15.4          -11.7  %

Attrition (2)             -10.7  %         -8.2  %                       -8.2  %         -6.9  %


(1) New active Dealers are Dealers who enrolled in our program and have received

     funding for their first Loan from us during the period.


(2)  Attrition is measured according to the following formula: decrease in
     Consumer Loan unit volume from Dealers who have received funding for at
     least one Loan during the comparable period of the prior year but did not

receive funding for any Loans during the current period divided by prior

year comparable period Consumer Loan unit volume.



Consumer Loans are assigned to us as either Dealer Loans through our Portfolio
Program or Purchased Loans through our Purchase Program. The following table
shows the percentage of Consumer Loans assigned to us under each of the programs
for each of the last three years:
                                                 Unit Volume                             Dollar Volume (1)

For the Years Ended December 31, Portfolio Program Purchase Program

   Portfolio Program     Purchase Program
2015                                         87.4 %               12.6 %                82.8 %                 17.2 %
2016                                         78.6 %               21.4 %                71.4 %                 28.6 %
2017                                         72.5 %               27.5 %                68.5 %                 31.5 %


(1) Represents advances paid to Dealers on Consumer Loans assigned under our

Portfolio Program and one-time payments made to Dealers to purchase Consumer

     Loans assigned under our Purchase Program. Payments of Dealer Holdback and
     accelerated Dealer Holdback are not included.


As of December 31, 2017 and 2016, the net Dealer Loans receivable balance was 68.2% and 74.6%, respectively, of the total net Loans receivable balance.

                                       29
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Results of Operations

The following is a discussion of our results of operations and income statement data on a consolidated basis.

Year Ended December 31, 2017 Compared to Year Ended December 31, 2016

(Dollars in millions, except per share data)                For the Years Ended December 31,
                                                  2017              2016           $ Change       % Change
Revenue:
Finance charges                              $     1,011.5$      874.3$      137.2         15.7  %
Premiums earned                                       41.1             43.0             (1.9 )       -4.4  %
Other income                                          57.4             51.9              5.5         10.6  %
Total revenue                                      1,110.0            969.2            140.8         14.5  %
Costs and expenses:
Salaries and wages (1)                               140.1            126.5             13.6         10.8  %
General and administrative (1)                        55.5             48.2              7.3         15.1  %
Sales and marketing (1)                               58.4             49.4              9.0         18.2  %
Provision for credit losses                          129.3             90.2             39.1         43.3  %
Interest                                             120.2             97.7             22.5         23.0  %
Provision for claims                                  22.7             26.0             (3.3 )      -12.7  %
Total costs and expenses                             526.2            438.0             88.2         20.1  %
Income before provision for income taxes             583.8            531.2             52.6          9.9  %
Provision for income taxes                           113.6            198.4            (84.8 )      -42.7  %
Net income                                   $       470.2$      332.8$      137.4         41.3  %
Net income per share:
Basic                                        $       24.12$      16.37$       7.75         47.3  %
Diluted                                      $       24.04$      16.31$       7.73         47.4  %
Weighted average shares outstanding:
Basic                                           19,497,719       20,331,769         (834,050 )       -4.1  %
Diluted                                         19,558,936       20,410,116         (851,180 )       -4.2  %

(1) Operating expenses                       $       254.0$      224.1

$ 29.9 13.3 %



Finance Charges. The increase of $137.2 million, or 15.7%, was primarily the
result of an increase in the average net Loans receivable balance partially
offset by a decrease in the average yield on our Loan portfolio, as follows:
(Dollars in millions)                     For the Years Ended December 31,
                                          2017            2016         

Change

Average net Loans receivable balance $ 4,276.4$ 3,534.0$ 742.4 Average yield on our Loan portfolio 23.7 % 24.7 % -1.0 %




                                       30
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The following table summarizes the impact each component had on the overall
increase in finance charges for the year ended December 31, 2017:
(In millions)
                                                                        For the Year Ended
Impact on finance charges:                                              December 31, 2017
Due to an increase in the average net Loans receivable balance       $      

183.7

Due to a decrease in the average yield                                           (46.5 )
Total increase in finance charges                                    $      

137.2



The increase in the average net Loans receivable balance was primarily due to
the dollar volume of new Consumer Loan assignments exceeding the principal
collected on Loans receivable. The average yield on our Loan portfolio for the
year ended December 31, 2017 decreased as compared to the same period in 2016
due to lower yields on new Consumer Loan assignments.

Other Income. The increase of $5.5 million, or 10.6%, was primarily due to an
increase in ancillary product profit sharing income due to growth in our Loan
portfolio, partially offset by a decrease in GPS Starter Interrupt Device fee
income due to a decrease in the number of units purchased by Dealers from our
third party provider in the current year.

Operating Expenses. The increase of $29.9 million, or 13.3%, was primarily due to the following:

•         An increase in salaries and wages expense of $13.6 million, or 10.8%,
          comprised of the following:


•               An increase of $7.9 million in stock-based compensation expense
                primarily due to 2017 stock awards.


•               A decrease of $4.8 million in cash-based incentive

compensation

                expense primarily due to a decline in Company performance
                measures.


•               Excluding the changes in stock-based and cash-based incentive
                compensation expenses, salaries and wages expense increased $10.5
                million primarily related to an increase of $6.2 million for our
                servicing function and $3.9 million for our support

function as a

                result of an increase in the number of team members.


•         An increase in sales and marketing expense of $9.0 million, or 18.2%,
          primarily due to an increase in the size of our sales force.

• An increase in general and administrative expense of $7.3 million, or

15.1%, primarily as a result of an increase in legal fees.



Provision for Credit Losses. Under accounting principles generally accepted in
the United States of America ("GAAP"), when the present value of forecasted
future cash flows declines relative to our expectations at the time of
assignment, a provision for credit losses is recorded immediately as a current
period expense and a corresponding allowance for credit losses is
established. For purposes of calculating the required allowance, Dealer Loans
are grouped by Dealer and Purchased Loans are grouped by month of purchase. As a
result, regardless of the overall performance of the portfolio of Consumer
Loans, a provision can be required if any individual Loan pool performs worse
than expected. Conversely, a previously recorded provision can be reversed if
any previously impaired individual Loan pool experiences an improvement in
performance.

During the year ended December 31, 2017, overall Consumer Loan performance was
generally consistent with our expectations at the start of the year. However,
the performance of certain Loan pools declined from our expectations during the
year, resulting in a provision for credit losses of $129.3 million for the year
ended December 31, 2017, of which $103.4 million related to Dealer Loans and
$25.9 million related to Purchased Loans. Provision for credit losses included
an additional expense of $41.6 million related to the revision of our net cash
flow timing forecast during the fourth quarter of 2017, of which $31.9 million
related to Dealer Loans and $9.7 million related to Purchased Loans. For
additional information, see Note 5 to the consolidated financial statements
contained in Item 8 of this Form 10-K, which is incorporated herein by
reference.

During the year ended December 31, 2016, overall Consumer Loan performance
declined from our expectations at the start of the year, resulting in a
provision for credit losses of $90.2 million for the year ended December 31,
2016, of which $87.3 million related to Dealer Loans and $2.9 million related to
Purchased Loans.






                                       31
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Interest.  The increase of $22.5 million, or 23.0%, was due to increases in the
average outstanding debt balance and our average cost of debt, as follows:
(Dollars in millions)                               For the Years Ended December 31,
                                                    2017             2016         Change
Interest expense                               $     120.2$     97.7$ 22.5
Average outstanding debt principal balance (1)     2,944.8          2,459.5       485.3
Average cost of debt                                   4.1 %            4.0 %       0.1 %


(1) Includes the unamortized debt discount and excludes deferred debt issuance costs.

The average outstanding debt balance increased primarily due to debt proceeds
used to fund growth in new Consumer Loan assignments and stock repurchases. The
increase in our average cost of debt was primarily a result of a change in the
mix of our outstanding debt.

Provision for Income Taxes. For the year ended December 31, 2017, the effective
income tax rate decreased to 19.5% from 37.3% for the year ended December 31,
2016. The decrease was primarily due to the enactment of the Tax Cuts and Jobs
Act in December 2017, which resulted in the reversal of $99.8 million of
provision for income taxes. While the new federal statutory income tax rate was
not effective until January 1, 2018, we were required to revalue deferred taxes
and uncertain tax positions as of December 31, 2017 at the new federal statutory
income tax rate. Based on currently enacted federal and state statutory income
tax rates, we believe our long-term effective income tax rate will decrease from
37% in past years to approximately 23% in 2018 and future years. For additional
information, see Note 11 to the consolidated financial statements contained in
Item 8 of this Form 10-K, which is incorporated herein by reference.


                                       32
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Year Ended December 31, 2016 Compared to Year Ended December 31, 2015

(Dollars in millions, except per share data)                 For the Years Ended December 31,
                                                   2016               2015           $ Change       % Change
Revenue:
Finance charges                              $       874.3$      730.5$      143.8         19.7  %
Premiums earned                                       43.0               48.2             (5.2 )      -10.8  %
Other income                                          51.9               46.6              5.3         11.4  %
Total revenue                                        969.2              825.3            143.9         17.4  %
Costs and expenses:
Salaries and wages (1)                               126.5              116.4             10.1          8.7  %
General and administrative (1)                        48.2               37.8             10.4         27.5  %
Sales and marketing (1)                               49.4               45.9              3.5          7.6  %
Provision for credit losses                           90.2               41.5             48.7        117.3  %
Interest                                              97.7               76.0             21.7         28.6  %
Provision for claims                                  26.0               33.2             (7.2 )      -21.7  %
Total costs and expenses                             438.0              350.8             87.2         24.9  %
Income before provision for income taxes             531.2              474.5             56.7         11.9  %
Provision for income taxes                           198.4              174.8             23.6         13.5  %
Net income                                   $       332.8$      299.7$       33.1         11.0  %
Net income per share:
Basic                                        $       16.37$      14.35$       2.02         14.1  %
Diluted                                      $       16.31$      14.28$       2.03         14.2  %
Weighted average shares outstanding:
Basic                                           20,331,769         20,891,695         (559,926 )       -2.7  %
Diluted                                         20,410,116         20,980,753         (570,637 )       -2.7  %
(1) Operating expenses                       $       224.1$      200.1$       24.0         12.0  %



Finance Charges. The increase of $143.8 million, or 19.7%, was primarily the
result of an increase in the average net Loans receivable balance partially
offset by a decrease in the average yield on our Loan portfolio, as follows:
(Dollars in millions)                     For the Years Ended December 31,
                                          2016            2015         

Change

Average net Loans receivable balance $ 3,534.0$ 2,829.9$ 704.1 Average yield on our Loan portfolio 24.7 % 25.8 % -1.1 %




                                       33
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The following table summarizes the impact each component had on the overall
increase in finance charges for the year ended December 31, 2016:
(In millions)
                                                                        For the Year Ended
Impact on finance charges:                                              December 31, 2016
Due to an increase in the average net Loans receivable balance       $      

181.8

Due to a decrease in the average yield                                           (38.0 )
Total increase in finance charges                                    $      

143.8



The increase in the average net Loans receivable balance was primarily due to
the dollar volume of new Consumer Loan assignments exceeding the principal
collected on Loans receivable. The average yield on our Loan portfolio for the
year ended December 31, 2016 decreased as compared to the same period in 2015
due to lower yields on new Consumer Loan assignments.

Premiums Earned. The decrease of $5.2 million, or 10.8%, was primarily due to a
decrease in the size of our reinsurance portfolio, which was the result of a
decline in premiums written on vehicle service contracts. While we have
experienced growth in our Loan portfolio, the percentage of Consumer Loan
assignments with reinsured vehicle service contracts has declined.

Other Income. The increase of $5.3 million, or 11.4%, was primarily due to
growth in our Loan portfolio, resulting in increases of $3.7 million in
ancillary product profit sharing and $2.3 million in remarketing fees, partially
offset by a decrease in GPS-SID fees of $2.9 million due to a decrease in the
number of units purchased by Dealers from our third party provider in the
current year.

Operating Expenses.  The increase of $24.0 million, or 12.0%, was primarily due
to the following:

• An increase in general and administrative expense of $10.4 million, or

27.5%, primarily as a result of increases in legal fees and information

          technology expenses.


•         An increase in salaries and wages expense of $10.1 million, or 8.7%,
          comprised of the following:


•            An increase of $15.1 million in salaries and wages expense,
             excluding stock-based compensation expense, primarily related to an
             increase in the number of team members, including increases of $8.3
             million for our support function, $4.6 million for our servicing
             function and $2.2 million for our originations function.


•            A decrease of $5.0 million in stock-based compensation expense
             primarily due to declining expense recognition related to long-term
             stock awards granted in prior years and amounts recorded in the
             prior year related to a change in the expected vesting period of
             performance-based stock awards.



Provision for Credit Losses. During the year ended December 31, 2016, overall
Consumer Loan performance declined from our expectations at the start of the
year, resulting in a provision for credit losses of $90.2 million for the year
ended December 31, 2016, of which $87.3 million related to Dealer Loans and $2.9
million related to Purchased Loans.

During the year ended December 31, 2015, overall Consumer Loan performance was
generally consistent with our expectations at the start of the year. However,
the performance of certain Loan pools declined from our expectations during the
year, resulting in a provision for credit losses of $41.5 million for the year
ended December 31, 2015, of which $41.8 million related to Dealer Loans
partially offset by a reversal of provision of $0.3 million related to Purchased
Loans.


                                       34
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Interest.  The increase of $21.7 million, or 28.6%, was due to increases in the
average outstanding debt balance and our average cost of debt, as follows:
(Dollars in millions)                               For the Years Ended December 31,
                                                   2016             2015          Change
Interest expense                               $     97.7$     76.0$ 21.7
Average outstanding debt principal balance (1)    2,459.5          1,964.4        495.1
Average cost of debt                                  4.0 %            3.9 %        0.1 %


(1) Includes the unamortized debt discount and excludes deferred debt issuance costs.

The average outstanding debt balance increased primarily due to debt proceeds
used to fund growth in new Consumer Loan assignments and stock repurchases. The
increase in our average cost of debt was primarily a result of a change in the
mix of our outstanding debt.

Provision for Claims. The decrease of $7.2 million, or 21.7%, was due to a decrease in claims paid per reinsured vehicle service contract and a decrease in the size of our reinsurance portfolio.

Provision for Income Taxes. For the year ended December 31, 2016, the effective
income tax rate increased to 37.3% from 36.8% for the year ended December 31,
2015. The increase was primarily due to higher effective income tax rates in
certain state tax jurisdictions.



                                       35
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Critical Accounting Estimates

Our consolidated financial statements are prepared in accordance with GAAP. The
preparation of these financial statements requires management to make estimates
and judgments that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. On an ongoing basis, we review our accounting policies,
assumptions, estimates and judgments to ensure that our financial statements are
presented fairly and in accordance with GAAP.

Our significant accounting policies are discussed in Note 2 to the consolidated
financial statements contained in Item 8 of this Form 10-K, which is
incorporated herein by reference. We believe that the following accounting
estimates are the most critical to aid in fully understanding and evaluating our
reported financial results, and involve a high degree of subjective or complex
judgment, and the use of different estimates or assumptions could produce
materially different financial results.

Finance Charge Revenue & Allowance for Credit Losses

Nature of Estimates Required. We estimate the amount and timing of future collections and Dealer Holdback payments. These estimates impact Loans receivable and allowance for credit losses on our balance sheet and finance charges and provision for credit losses on our income statement.

Assumptions and Approaches Used. For accounting purposes, we are not considered
to be an originator of Consumer Loans, but instead are considered to be a lender
to our Dealers for Consumer Loans assigned under our Portfolio Program, and a
purchaser of Consumer Loans assigned under our Purchase Program. As a result of
this classification, our accounting policies for recognizing finance charge
revenue and determining our allowance for credit losses may be different from
other lenders in our market, who, based on their different business models, may
be considered to be a direct lender to consumers for accounting purposes. For
additional information regarding our classification as a lender to our Dealers
for accounting purposes, see Note 1 to the consolidated financial statements
contained in Item 8 of this Form 10-K, which is incorporated herein by
reference.

We recognize finance charges under the interest method such that revenue is
recognized on a level-yield basis based upon forecasted cash flows. For Dealer
Loans, finance charge revenue and the allowance for credit losses are calculated
after first aggregating Dealer Loans outstanding for each Dealer. For the same
purpose, Purchased Loans are aggregated according to the month the Loan was
purchased. An allowance for credit losses is maintained at an amount that
reduces the net asset value (Loan balance less the allowance) to the value of
forecasted future cash flows discounted at the yield established at the time of
assignment. Future cash flows are comprised of estimated future collections on
the Loans, less any estimated Dealer Holdback payments related to Dealer
Loans. We write off Loans once there are no forecasted future collections on any
of the associated Consumer Loans.

Actual cash flows from any individual Dealer Loan or pool of Purchased Loans are
often different than estimated cash flows at the time of assignment. If such
difference is favorable, the difference is recognized prospectively into income
over the remaining life of the Dealer Loan or pool of Purchased Loans through a
yield adjustment. If such difference is unfavorable, a provision for credit
losses is recorded immediately as a current period expense and a corresponding
allowance for credit losses is established. Because differences between
estimated cash flows at the time of assignment and actual cash flows occur
often, an allowance is required for a significant portion of our Loan
portfolio. An allowance for credit losses does not necessarily indicate that a
Dealer Loan or pool of Purchased Loans is unprofitable, and in recent years,
seldom are cash flows from a Dealer Loan or pool of Purchased Loans insufficient
to repay the initial amounts advanced or paid to the Dealer.

Future collections are forecasted for each individual Dealer Loan or pool of
Purchased Loans based on the historical performance of Consumer Loans with
similar characteristics, adjusted for recent trends in payment patterns. Dealer
Holdback is forecasted for each individual Dealer Loan based on the expected
future collections and current advance balance of each Dealer Loan.

During the fourth quarter of 2017, we updated our net cash flow timing model to
incorporate more recent data. The revised forecast resulted in an expected cash
flow stream with a lower net present value as compared to the prior forecast, as
less cash flows are expected in earlier periods and more cash flows are expected
in later periods.


                                       36
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The reduction in net present value was primarily the result of a change in the
expected timing of cash flows from longer-term Consumer Loans. Due to our
limited historical experience with longer-term Consumer Loans, our prior model
relied on extrapolations from the historical performance of shorter-term
Consumer Loans to predict the timing of future net cash flows on longer-term
Consumer Loans. We now have additional historical experience on these
longer-term loans which we used to refine our estimate.

The revision to our net cash flow timing forecast does not impact the amount of
undiscounted net cash flows we expect to receive. As a result, the dollar amount
of future net portfolio revenue (finance charges less provision for credit
losses) is not impacted by the revision. However, the revision does impact the
period in which those net revenues will be recorded as a portion of the impact
of the revised timing estimate was recorded as a current period expense and a
portion was recorded as a yield adjustment. For the fourth quarter of 2017, the
revision increased provision for credit losses by $41.6 million, reduced finance
charge revenue by $7.3 million and reduced net income by $30.8 million. The
revision reduced the yield on our loan portfolio by 90 basis points, which will
impact the timing of revenue recognition in future periods.

During the fourth quarter of 2016, we enhanced our methodology for forecasting
the amount and timing of future collections on Consumer Loans through the
utilization of more recent data and new forecast variables. Implementation of
the enhanced forecasting methodology as of October 31, 2016 did not have a
material impact on provision for credit losses or net income; however, it did
reduce forecasted net cash flows by $1.8 million, all of which related to Dealer
Loans. The implementation also decreased the forecasted collection rates for
Consumer Loans assigned in 2015 and 2016 and increased the forecasted collection
rates for Consumer Loans assigned in 2011 through 2013.

Key Factors. Variances in the amount and timing of future net cash flows from
current estimates could materially impact earnings in future periods. A 1%
decline in the forecasted future net cash flows on Loans as of December 31, 2017
would have reduced 2017 net income by approximately $22.2 million.

Premiums Earned

Nature of Estimates Required. We estimate the pattern of future claims on vehicle service contracts. These estimates impact accounts payable and accrued liabilities on our balance sheet and premiums earned on our income statement.

Assumptions and Approaches Used. Premiums from the reinsurance of vehicle
service contracts are recognized over the life of the policy in proportion to
the expected costs of servicing those contracts. Expected costs are determined
based on our historical claims experience. In developing our cost expectations,
we stratify our historical claims experience into groupings based on contractual
term, as this characteristic has led to different patterns of cost incurrence in
the past. We will continue to update our analysis of historical costs under the
vehicle service contract program as appropriate, including the consideration of
other characteristics that may have led to different patterns of cost
incurrence, and revise our revenue recognition timing for any changes in the
pattern of our expected costs as they are identified.

Key Factors. Variances in the pattern of future claims from our current
estimates would impact the timing of premiums recognized in future periods. A
10% change in premiums earned for the year ended December 31, 2017 would have
affected 2017 net income by approximately $2.6 million.

Stock-Based Compensation Expense

Nature of Estimates Required. Stock-based compensation expense is based on the
fair value on the date the equity instrument is granted or awarded by us, and is
recognized over the expected vesting period of the equity instrument. We also
estimate expected forfeiture rates of restricted stock awards. These estimates
impact paid in capital on our balance sheet and salaries and wages on our income
statement.

Assumptions and Approaches Used. In recognizing restricted stock-based compensation expense, we make assumptions regarding the expected forfeiture rates of the restricted stock awards. We also make assumptions regarding the expected vesting dates of performance-based restricted stock awards.

The fair value of restricted stock awards are estimated as if they were vested
and issued on the grant date and are recognized over the expected vesting period
of the restricted stock award. For additional information, see Notes 2 and 14 to
the consolidated financial statements contained in Item 8 of this Form 10-K,
which are incorporated herein by reference.


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Key Factors. Changes in the expected vesting dates of performance-based
restricted stock awards and expected forfeiture rates would impact the amount
and timing of stock-based compensation expense recognized in future periods. A
10% change in stock-based compensation expense for the year ended December 31,
2017 would have affected 2017 net income by approximately $1.0 million.

Contingencies

Nature of Estimates Required. We estimate the likelihood of adverse judgments
against us and any resulting damages, fines or statutory penalties owed. These
estimates impact accounts payable and accrued liabilities on our balance sheet
and are general and administrative expenses on our income statement.

Assumptions and Approaches Used. With assistance from our legal counsel, we
determine if the likelihood of an adverse judgment for various claims,
litigation and regulatory investigations is remote, reasonably possible, or
probable. To the extent we believe an adverse judgment is probable and the
amount of the judgment is estimable, we recognize a liability. For information
regarding current actions to which we are a party, see Note 16 to the
consolidated financial statements contained in Item 8 of this Form 10-K, which
is incorporated herein by reference.

Key Factors. Negative variances in the ultimate disposition of claims and litigation outstanding from current estimates could result in additional expense in future periods.

Uncertain Tax Positions

Nature of Estimates Required. We estimate the impact of an uncertain income tax
position on the income tax return. These estimates impact income taxes
receivable and accounts payable and accrued liabilities on our balance sheet and
provision for income taxes on our income statement.

Assumptions and Approaches Used. We follow a two-step approach for recognizing
uncertain tax positions. First, we evaluate the tax position for recognition by
determining if the weight of available evidence indicates it is
more-likely-than-not that the position will be sustained upon examination,
including resolution of related appeals or litigation processes, if any. Second,
for positions that we determine are more-likely-than-not to be sustained, we
recognize the tax benefit as the largest benefit that has a greater than 50%
likelihood of being sustained. We establish a reserve for uncertain tax
positions liability that is comprised of unrecognized tax benefits and related
interest. We adjust this liability in the period in which an uncertain tax
position is effectively settled, the statute of limitations expires for the
relevant taxing authority to examine the tax position, or more information
becomes available.

In December 2017, the Tax Cuts and Jobs Act was enacted, which decreased the
federal statutory income tax rate. While the new federal statutory income tax
rate was not effective until January 1, 2018, we were required to revalue
uncertain tax positions as of December 31, 2017 at the new federal statutory
income tax rate, which resulted in the reversal of $5.1 million of provision for
income taxes. On December 23, 2017, the Securities and Exchange Commission
issued Staff Accounting Bulletin No. 118, which provides for a one-year
measurement period from a registrant's reporting period that includes the Tax
Cuts and Jobs Act's enactment date to allow the registrant sufficient time to
obtain, prepare and analyze information to complete the accounting required
under Accounting Standards Codification Topic 740. For information regarding the
impact of the enactment of the Tax Cuts and Jobs Act, see Note 11 to the
consolidated financial statements contained in Item 8 of this Form 10-K, which
is incorporated herein by reference.

Key Factors. To the extent we prevail in matters for which a liability has been
established or are required to pay amounts in excess of our established
liability, our effective income tax rate in future periods could be materially
affected.

Liquidity and Capital Resources

We need capital to maintain and grow our business. Our primary sources of
capital are cash flows from operating activities, collections of Consumer Loans
and borrowings under: (1) a revolving secured line of credit; (2) Warehouse
facilities; (3) Term ABS financings; and (4) senior notes. There are various
restrictive covenants to which we are subject under each financing arrangement
and we were in compliance with those covenants as of December 31, 2017. For
information regarding these financings and the covenants included in the related
documents, see Note 8 to the consolidated financial statements contained in Item
8 of this Form 10-K, which is incorporated herein by reference.


                                       38
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On February 23, 2017, we completed a $350.0 million Term ABS financing, which
was used to repay outstanding indebtedness. The financing has an expected
annualized cost of approximately 3.1% (including the initial purchaser's fees
and other costs), and it will revolve for 24 months, after which it will
amortize based upon the cash flows on the contributed Loans.

On April 28, 2017, we increased the financing amount on Warehouse Facility IV
from $75.0 million to $100.0 million and extended the date on which the facility
will cease to revolve from April 30, 2018 to April 30, 2020. The interest rate
on borrowings under the facility increased from LIBOR plus 200 basis points to
LIBOR plus 225 basis points. There were no other material changes to the terms
of the facility.

On June 28, 2017, we extended the maturity of our revolving secured line of
credit facility with a commercial bank syndicate from June 22, 2019 to June 22,
2020. We also increased the amount of the facility from $310.0 million to $345.0
million until June 22, 2019, when the amount of the facility would decrease to
$300.0 million. There were no other material changes to the terms of the
facility. On October 19, 2017, we further increased the amount of the facility
to $350.0 million until June 22, 2019 and changed the amount to which the
facility will decrease on that date from $300.0 million to $315.0 million. There
were no material changes to the terms of the facility.

On June 29, 2017, we completed a $450.0 million Term ABS financing, which was
used to repay outstanding indebtedness. The financing has an expected annualized
cost of approximately 3.0% (including the initial purchaser's fees and other
costs), and it will revolve for 24 months, after which it will amortize based
upon the cash flows on the contributed Loans.

On July 18, 2017, we extended the date on which Warehouse Facility VI will cease
to revolve from September 30, 2018 to September 30, 2020. There were no other
material changes to the terms of the facility.

On October 26, 2017, we completed a $350.0 million Term ABS financing, which was
used to repay outstanding indebtedness. The financing has an expected annualized
cost of approximately 3.2% (including the initial purchaser's fees and other
costs), and it will revolve for 24 months, after which it will amortize based
upon the cash flows on the contributed Loans.

On December 1, 2017, we entered into Warehouse Facility VII, a $150.0 million
revolving secured warehouse facility. The facility will cease to revolve on
December 1, 2019, and must be repaid by November 30, 2021. Borrowings under the
facility will generally bear interest at a rate equal to the commercial paper
rate plus 190 basis points to class A lenders and the commercial paper rate plus
220 basis points to class B lenders.

On December 20, 2017, we extended the date on which Warehouse Facility II will
cease to revolve from June 23, 2019 to December 20, 2020. The interest rate on
borrowings under the facility decreased from LIBOR plus 225 basis points to
LIBOR plus 175 basis points. There were no other material changes to the terms
of the facility.

Cash and cash equivalents decreased to $8.2 million as of December 31, 2017 from
$14.6 million as of December 31, 2016. As of December 31, 2017 and December 31,
2016 we had $1,161.1 million and $948.0 million in unused and available lines of
credit, respectively. Our total balance sheet indebtedness increased to $3,070.8
million as of December 31, 2017 from $2,603.7 million as of December 31, 2016
primarily due to the growth in new Consumer Loan assignments and stock
repurchases.


                                       39
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Contractual Obligations

A summary of the total future contractual obligations requiring repayments as of
December 31, 2017 is as follows:
(In millions)                                           Payments Due by Period
                                       Less than                                      More than
                          Total         1 Year        1-3 Years       3-5 Years        5 Years         Other
Long-term debt,
including current
maturities (1)         $ 3,093.0$     800.1$  1,719.5$     323.4$     250.0     $       -
Dealer Holdback (2)        805.1           136.2          246.4           254.7           167.8             -
Operating lease
obligations                  6.6             1.7            3.1             1.8               -             -
Purchase obligations
(3)                          4.2             1.2            2.4             0.6               -             -
Other future
obligations (4)             31.9               -              -               -               -          31.9
Total contractual
obligations            $ 3,940.8$     939.2$  1,971.4$     580.5$     417.8$    31.9

(1) Long-term debt obligations included in the above table consist solely of

principal repayments. The amounts are presented on a principal basis to

exclude deferred debt issuance costs of $20.9 million and the unamortized

debt discount of $1.3 million. We are also obligated to make interest

       payments at the applicable interest rates, as discussed in Note 8 to the
       consolidated financial statements contained in Item 8 of this Form 10-K,

which is incorporated herein by reference. Based on the actual amounts

outstanding under our revolving secured line of credit, our Warehouse

facilities, and our senior notes as of December 31, 2017, the forecasted

amounts outstanding on all other debt and the actual interest rates in

effect as of December 31, 2017, interest is expected to be approximately

$99.5 million during 2018; $74.0 million during 2019; and $106.2 million

       during 2020 and thereafter.


(2)    We have contractual obligations to pay Dealer Holdback to our
       Dealers. Payments of Dealer Holdback are contingent upon the receipt of

consumer payments and the repayment of advances. The amounts presented

represent our forecast as of December 31, 2017.

(3) Purchase obligations consist primarily of contractual obligations related

       to our information system and facility needs.


(4)    Other future obligations included in the above table consist solely of
       reserves for uncertain tax positions. Payments are contingent upon
       examination and would occur in the periods in which the uncertain tax
       positions are settled.



Based upon anticipated cash flows, management believes that cash flows from
operations and its various financing alternatives will provide sufficient
financing for debt maturities and for future operations. Our ability to borrow
funds may be impacted by economic and financial market conditions. If the
various financing alternatives were to become limited or unavailable to us, our
operations and liquidity could be materially and adversely affected.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably
likely to have a material current or future effect on our financial condition,
revenues or expenses, results of operations, liquidity, capital expenditures or
capital resources.

Market Risk

We are exposed primarily to market risks associated with movements in interest
rates. Our policies and procedures prohibit the use of financial instruments for
speculative purposes. A discussion of our accounting policies for derivative
instruments is included in Note 2 to the consolidated financial statements
contained in Item 8 of this Form 10-K, which is incorporated herein by
reference.

Interest Rate Risk. We rely on various sources of financing, some of which contain floating rates of interest and expose us to risks associated with increases in interest rates. We manage such risk primarily by entering into interest rate cap agreements.

As of December 31, 2017, we had $13.9 million of floating rate debt outstanding
on our revolving secured line of credit, without interest rate protection. For
every 1.0% increase in interest rates on our revolving secured line of credit,
annual after-tax earnings would decrease by approximately $0.1 million, assuming
we maintain a level amount of floating rate debt.

As of December 31, 2017, we had interest rate cap agreements outstanding to
manage the interest rate risk on Warehouse Facility II, Warehouse Facility IV,
Warehouse Facility V and Warehouse Facility VII. However, as of December 31,
2017, there was no floating rate debt outstanding under these facilities.

As of December 31, 2017, we did not have a balance outstanding under Warehouse Facility VI, which does not have interest rate protection.

                                       40
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As of December 31, 2017, we had $385.0 million in floating rate debt outstanding
under Term ABS 2016-1 covered by an interest rate cap with a cap rate of 5.00%
on the underlying benchmark rate. Based on the difference between the underlying
benchmark rate on Term ABS 2016-1 as of December 31, 2017 and the interest rate
cap rate, the interest rate on Term ABS 2016-1 could increase by a maximum of
3.44%. This maximum interest rate increase would reduce annual after-tax
earnings by approximately $10.2 million, assuming we maintain a level amount of
floating rate debt.

New Accounting Updates

See Note 2 to the consolidated financial statements contained in Item 8 of this
Form 10-K, which is incorporated herein by reference, for information concerning
the following new accounting updates and the impact of the implementation of
these updates on our financial statements:

• Restricted Cash

• Measurement of Credit Losses on Financial Instruments

• Leases

• Revenue from Contracts with Customers

• Improvements to Employee Share-Based Payment Accounting

Forward-Looking Statements

We make forward-looking statements in this report and may make such statements
in future filings with the SEC. We may also make forward-looking statements in
our press releases or other public or shareholder communications. Our
forward-looking statements are subject to risks and uncertainties and include
information about our expectations and possible or assumed future results of
operations. When we use any of the words "may," "will," "should," "believe,"
"expect," "anticipate," "assume," "forecast," "estimate," "intend," "plan,"
"target" or similar expressions, we are making forward-looking statements.

We claim the protection of the safe harbor for forward-looking statements
contained in the Private Securities Litigation Reform Act of 1995 for all of our
forward-looking statements. These forward-looking statements represent our
outlook only as of the date of this report. While we believe that our
forward-looking statements are reasonable, actual results could differ
materially since the statements are based on our current expectations, which are
subject to risks and uncertainties. Factors that might cause such a difference
include, but are not limited to, the factors set forth under Item 1A of this
Form 10-K, which is incorporated herein by reference, elsewhere in this report
and the risks and uncertainties discussed in our other reports filed or
furnished from time to time with the SEC.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information called for by Item 7A is incorporated herein by reference from the information in Item 7 under the caption "Market Risk" in this Form 10-K.

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