CREDIT ACCEPTANCE CORPCACC
CREDIT ACCEPTANCE CORP Fair Value Disclosure
FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate their value.
Cash and Cash Equivalents and Restricted Cash and Cash Equivalents. The carrying amounts approximate their fair value due to the short maturity of these instruments.
Restricted Securities Available for Sale. The fair value of U.S. Government and agency securities, corporate bonds, and municipal bonds is based on quoted market values in active markets. For asset-backed securities, mortgage-backed securities, and commercial paper we use model-based valuation techniques for which all significant assumptions are observable in the market.
Loans Receivable, net. The fair value is determined by calculating the present value of expected future net cash flows estimated by us by utilizing the discount rate used to calculate the value of our Loans under our non-GAAP floating yield methodology.
Revolving Secured Lines of Credit. The fair value is determined by calculating the present value of the debt instrument based on current rates for debt with a similar risk profile and maturity.
Secured Financing. The fair value of certain Term ABS financings is determined using quoted market prices in an active market. For our warehouse facilities and certain other Term ABS financings, the fair values are determined by calculating the present value of each debt instrument based on current rates for debt with similar risk profiles and maturities.
Senior Notes. The fair value is determined using quoted market prices in an active market.
A comparison of the carrying amount and estimated fair value of these financial instruments is as follows:
| (In millions) | As of December 31, | ||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Carrying Amount | Estimated Fair Value | Carrying Amount | Estimated Fair Value | ||||||||||||||||||||
| Assets | |||||||||||||||||||||||
| Cash and cash equivalents | $ | 22.8 | $ | 22.8 | $ | 343.7 | $ | 343.7 | |||||||||||||||
| Restricted cash and cash equivalents | 477.9 | 477.9 | 501.3 | 501.3 | |||||||||||||||||||
| Restricted securities available for sale | 106.2 | 106.2 | 106.4 | 106.4 | |||||||||||||||||||
| Loans receivable, net | 7,909.2 | 8,974.1 | 7,850.3 | 8,922.7 | |||||||||||||||||||
| Liabilities | |||||||||||||||||||||||
| Revolving secured lines of credit | $ | 107.3 | $ | 107.3 | $ | 0.1 | $ | 0.1 | |||||||||||||||
| Secured financing | 5,158.8 | 5,225.3 | 5,361.5 | 5,431.9 | |||||||||||||||||||
| Senior notes | 1,087.8 | 1,131.4 | 991.3 | 1,035.3 | |||||||||||||||||||
Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. We group assets and liabilities at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are:
Level 1 Valuation is based upon quoted prices for identical instruments traded in active markets.
Level 2 Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.
Level 3 Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates or assumptions that market participants would use in pricing the asset or liability.
The following table provides the level of measurement used to determine the fair value for each of our financial instruments measured or disclosed at fair value:
| (In millions) | As of December 31, 2025 | ||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total Fair Value | ||||||||||||||||||||
| Assets | |||||||||||||||||||||||
| Cash and cash equivalents (1) | $ | 22.8 | $ | — | $ | — | $ | 22.8 | |||||||||||||||
| Restricted cash and cash equivalents (1) | 477.9 | — | — | 477.9 | |||||||||||||||||||
Restricted securities available for sale (2) | 84.7 | 21.5 | — | 106.2 | |||||||||||||||||||
| Loans receivable, net (1) | — | — | 8,974.1 | 8,974.1 | |||||||||||||||||||
| Liabilities | |||||||||||||||||||||||
| Revolving secured lines of credit (1) | $ | — | $ | 107.3 | $ | — | $ | 107.3 | |||||||||||||||
| Secured financing (1) | 3,825.1 | 1,400.2 | — | 5,225.3 | |||||||||||||||||||
| Senior notes (1) | 1,131.4 | — | — | 1,131.4 | |||||||||||||||||||
| (In millions) | As of December 31, 2024 | ||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total Fair Value | ||||||||||||||||||||
| Assets | |||||||||||||||||||||||
| Cash and cash equivalents (1) | $ | 343.7 | $ | — | $ | — | $ | 343.7 | |||||||||||||||
| Restricted cash and cash equivalents (1) | 501.3 | — | — | 501.3 | |||||||||||||||||||
Restricted securities available for sale (2) | 84.5 | 21.9 | — | 106.4 | |||||||||||||||||||
| Loans receivable, net (1) | — | — | 8,922.7 | 8,922.7 | |||||||||||||||||||
| Liabilities | |||||||||||||||||||||||
| Revolving secured lines of credit (1) | $ | — | $ | 0.1 | $ | — | $ | 0.1 | |||||||||||||||
| Secured financing (1) | 3,831.7 | 1,600.2 | — | 5,431.9 | |||||||||||||||||||
| Senior notes (1) | 1,035.3 | — | — | 1,035.3 | |||||||||||||||||||
(1) Measured at amortized cost with fair value disclosed.
(2) Measured at fair value on a recurring basis.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 13, 2026 | Showing above |
| 2024 | Feb 12, 2025 | |
| 2023 | Feb 12, 2024 | |
| 2022 | Feb 10, 2023 | |
| 2021 | Feb 11, 2022 | |
| 2020 | Feb 12, 2021 | |
| 2019 | Feb 11, 2020 | |
| 2018 | Feb 8, 2019 | |
| 2017 | Feb 9, 2018 | |
| 2016 | Feb 10, 2017 | |
| 2015 | Feb 12, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.