Company’s background: Credit Acceptance Corp (CACC) provide financing services for sub-prime auto purchaser. In simple term, this is how they make money: auto dealers purchase used cars, refurbish them, mark it up at a high margin and sell it to subprime buyers on a loan, and CACC would purchase the loan at a discount price. Since CACC purchase a large amount of loans, they are able to diversified the risk. This business model benefits all parties involved. The dealer benefit through extra revenues from customer who otherwise would not qualify for financing. The car buyer, who given their credit score would not be able to receive financing from other financial institutions, benefit by being able to afford a car. Finally, CACC benefits from interest on these loans. The company was founded in 1972. The company offers two programs to dealers: Portfolio Program and Purchase Program. The Portfolio Program, which is the more complicated one between the two, will be better explained with ...
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