LOANS RECEIVABLE

Loans receivable consists of the following:



(In millions)	As of December 31, 2015
	Dealer Loans			Purchased Loans			Total
Loans receivable	$	2,823.4		$	521.7		$	3,345.1
Allowance for credit losses	(235.1		)	(8.5		)	(243.6		)
Loans receivable, net	$	2,588.3		$	513.2		$	3,101.5

(In millions)	As of December 31, 2014
	Dealer Loans			Purchased Loans			Total
Loans receivable	$	2,389.8		$	330.0		$	2,719.8
Allowance for credit losses	(198.1		)	(8.8		)	(206.9		)
Loans receivable, net	$	2,191.7		$	321.2		$	2,512.9

A summary of changes in Loans receivable is as follows:



(In millions)	For the Year Ended December 31, 2015
	Dealer Loans			Purchased Loans			Total
Balance, beginning of period	$	2,389.8		$	330.0		$	2,719.8
New Consumer Loan assignments (1)	1,795.1			371.9			2,167.0
Principal collected on Loans receivable	(1,548.8		)	(190.8		)	(1,739.6		)
Accelerated Dealer Holdback payments	52.6			—			52.6
Dealer Holdback payments	150.1			—			150.1
Transfers (2)	(10.6		)	10.6			—
Write-offs	(6.4		)	(0.2		)	(6.6		)
Recoveries (3)	1.6			0.2			1.8
Balance, end of period	$	2,823.4		$	521.7		$	3,345.1

(In millions)	For the Year Ended December 31, 2014
	Dealer Loans			Purchased Loans			Total
Balance, beginning of period	$	2,155.5		$	252.7		$	2,408.2
New Consumer Loan assignments (1)	1,471.4			204.3			1,675.7
Principal collected on Loans receivable	(1,392.5		)	(147.5		)	(1,540.0		)
Accelerated Dealer Holdback payments	41.7			—			41.7
Dealer Holdback payments	135.5			—			135.5
Transfers (2)	(20.5		)	20.5			—
Write-offs	(3.1		)	(0.1		)	(3.2		)
Recoveries (3)	1.8			0.1			1.9
Balance, end of period	$	2,389.8		$	330.0		$	2,719.8

(In millions)	For the Year Ended December 31, 2013
	Dealer Loans			Purchased Loans			Total
Balance, beginning of period	$	1,869.4		$	240.5		$	2,109.9
New Consumer Loan assignments (1)	1,356.6			124.0			1,480.6
Principal collected on Loans receivable	(1,204.2		)	(129.8		)	(1,334.0		)
Accelerated Dealer Holdback payments	40.4			—			40.4
Dealer Holdback payments	114.2			—			114.2
Transfers (2)	(17.9		)	17.9			—
Write-offs	(5.2		)	(0.1		)	(5.3		)
Recoveries (3)	2.2			0.2			2.4
Balance, end of period	$	2,155.5		$	252.7		$	2,408.2


(1)	The Dealer Loans amount represents advances paid to Dealers on Consumer Loans assigned under our Portfolio Program. The Purchased Loans amount represents one-time payments made to Dealers to purchase Consumer Loans assigned under our Purchase Program.


(2)	Under our Portfolio Program, certain events may result in Dealers forfeiting their rights to Dealer Holdback. We transfer the Dealer’s outstanding Dealer Loan balance to Purchased Loans in the period this forfeiture occurs.


(3)	Represents collections received on previously written off Loans.

Contractual net cash flows are comprised of the contractual repayments of the underlying Consumer Loans for Dealer and Purchased Loans, less the related Dealer Holdback payments for Dealer Loans. The difference between the contractual net cash flows and the expected net cash flows is referred to as the nonaccretable difference. This difference is neither accreted into income nor recorded in our balance sheets. We do not believe that the contractual net cash flows of our Loan portfolio are relevant in assessing our financial position. We are contractually owed repayments on many Consumer Loans, primarily those older than 120 months, where we are not forecasting any future net cash flows.

The excess of expected net cash flows over the outstanding balance of Loans receivable, net is referred to as the accretable yield and is recognized on a level-yield basis as finance charge income over the remaining lives of the Loans. A summary of changes in the accretable yield is as follows:



(In millions)	For the Year Ended December 31, 2015
	Dealer Loans			Purchased Loans			Total
Balance, beginning of period	$	725.2		$	136.5		$	861.7
New Consumer Loan assignments (1)	743.7			138.4			882.1
Accretion (2)	(637.2		)	(102.7		)	(739.9		)
Provision for credit losses	41.8			(0.3		)	41.5
Forecast changes	3.6			20.3			23.9
Transfers (4)	(2.9		)	6.4			3.5
Balance, end of period	$	874.2		$	198.6		$	1,072.8

(In millions)	For the Year Ended December 31, 2014
	Dealer Loans			Purchased Loans			Total
Balance, beginning of period	$	667.5		$	112.8		$	780.3
New Consumer Loan assignments (1)	593.8			77.2			671.0
Accretion (2) (3)	(562.8		)	(77.6		)	(640.4		)
Provision for credit losses (3)	13.7			(0.9		)	12.8
Forecast changes (3)	19.4			13.6			33.0
Transfers (4)	(6.4		)	11.4			5.0
Balance, end of period	$	725.2		$	136.5		$	861.7

(In millions)	For the Year Ended December 31, 2013
	Dealer Loans			Purchased Loans			Total
Balance, beginning of period	$	602.9		$	115.2		$	718.1
New Consumer Loan assignments (1)	564.9			50.3			615.2
Accretion (2) (3)	(527.7		)	(72.7		)	(600.4		)
Provision for credit losses (3)	21.3			0.6			21.9
Forecast changes (3)	13.6			7.0			20.6
Transfers (4)	(7.5		)	12.4			4.9
Balance, end of period	$	667.5		$	112.8		$	780.3


(1)	The Dealer Loans amount represents the net cash flows expected at the time of assignment on Consumer Loans assigned under our Portfolio Program, less the related advances paid to Dealers. The Purchased Loans amount represents the net cash flows expected at the time of assignment on Consumer Loans assigned under our Purchase Program, less the related one-time payments made to Dealers.


(2)	Represents finance charges excluding the amortization of deferred direct origination costs for Dealer Loans.

(3)

We have changed the presentation from prior periods to: (i) exclude the amortization of deferred direct origination costs for Dealer Loans from accretion (finance charge income under our previous presentation) and forecast changes and (ii) present provision for credit losses and forecast changes as separate activities. Under our previous presentation, we presented: (i) finance charges as reported in our consolidated statements of income and (ii) provision for credit losses and forecast changes as a combined activity.


(4)	Under our Portfolio Program, certain events may result in Dealers forfeiting their rights to Dealer Holdback. We transfer the Dealer’s outstanding Dealer Loan balance and related expected future net cash flows to Purchased Loans in the period this forfeiture occurs.

Additional information related to new Consumer Loan assignments is as follows:



(In millions)	For the Year Ended December 31, 2015
	Dealer Loans		Purchased Loans		Total
Contractual net cash flows at the time of assignment (1)	$	2,821.4	$	741.1	$	3,562.5
Expected net cash flows at the time of assignment (2)	2,538.8		510.3		3,049.1
Fair value at the time of assignment (3)	1,795.1		371.9		2,167.0

(In millions)	For the Year Ended December 31, 2014
	Dealer Loans		Purchased Loans		Total
Contractual net cash flows at the time of assignment (1)	$	2,251.4	$	394.7	$	2,646.1
Expected net cash flows at the time of assignment (2)	2,065.2		281.5		2,346.7
Fair value at the time of assignment (3)	1,471.4		204.3		1,675.7

(In millions)	For the Year Ended December 31, 2013
	Dealer Loans		Purchased Loans		Total
Contractual net cash flows at the time of assignment (1)	$	2,079.8	$	241.6	$	2,321.4
Expected net cash flows at the time of assignment (2)	1,921.5		174.3		2,095.8
Fair value at the time of assignment (3)	1,356.6		124.0		1,480.6

(1)

The Dealer Loans amount represents the repayments that we were contractually owed at the time of assignment on Consumer Loans assigned under our Portfolio Program, less the related Dealer Holdback payments that we would be required to make if we collected all of the contractual repayments. The Purchased Loans amount represents the repayments that we were contractually owed at the time of assignment on Consumer Loans assigned under our Purchase Program.


(2)	The Dealer Loans amount represents the repayments that we expected to collect at the time of assignment on Consumer Loans assigned under our Portfolio Program, less the related Dealer Holdback payments that we expected to make. The Purchased Loans amount represents the repayments that we expected to collect at the time of assignment on Consumer Loans assigned under our Purchase Program.


(3)	The Dealer Loans amount represents advances paid to Dealers on Consumer Loans assigned under our Portfolio Program. The Purchased Loans amount represents one-time payments made to Dealers to purchase Consumer Loans assigned under our Purchase Program.

Credit Quality

We monitor and evaluate the credit quality of Consumer Loans assigned under our Portfolio and Purchase Programs on a monthly basis by comparing our current forecasted collection rates to our initial expectations. For additional information regarding credit quality, see Note 2 to the consolidated financial statements. The following table compares our forecast of Consumer Loan collection rates as of December 31, 2015, with the forecasts as of December 31, 2014, as of December 31, 2013, and at the time of assignment, segmented by year of assignment:



	Forecasted Collection Percentage as of (1)								Current Forecast Variance from
Consumer Loan Assignment Year	December 31, 2015		December 31, 2014		December 31, 2013		Initial Forecast		December 31, 2014		December 31, 2013		Initial Forecast
2006	70.1	%	70.0	%	70.0	%	71.4	%	0.1	%	0.1	%	-1.3	%
2007	68.1	%	68.0	%	67.9	%	70.7	%	0.1	%	0.2	%	-2.6	%
2008	70.3	%	70.3	%	70.1	%	69.7	%	0.0	%	0.2	%	0.6	%
2009	79.4	%	79.4	%	79.2	%	71.9	%	0.0	%	0.2	%	7.5	%
2010	77.4	%	77.2	%	77.0	%	73.6	%	0.2	%	0.4	%	3.8	%
2011	74.2	%	74.0	%	74.1	%	72.5	%	0.2	%	0.1	%	1.7	%
2012	73.2	%	73.4	%	73.5	%	71.4	%	-0.2	%	-0.3	%	1.8	%
2013	73.4	%	73.7	%	73.3	%	72.0	%	-0.3	%	0.1	%	1.4	%
2014	72.6	%	72.6	%	—		71.8	%	0.0	%	—		0.8	%
2015	67.8	%	—		—		67.7	%	—		—		0.1	%

(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 have yielded forecasted collection results materially better than our initial estimates, while Consumer Loans assigned in 2006 and 2007 have yielded forecasted collection results materially worse than our initial estimates. For Consumer Loans assigned in 2008, 2014 and 2015, actual results have been very close to our initial estimates.

For the year ended December 31, 2015, forecasted collection rates improved for Consumer Loans assigned in 2010 and 2011, declined for Consumer Loans assigned in 2012 and 2013 and were generally consistent with expectations at the start of the period for all other assignment years presented.

For the year ended December 31, 2014, forecasted collection rates improved for Consumer Loans assigned in 2008, 2009, 2010, 2013 and 2014, and were generally consistent with expectations at the start of the period for all other assignment years presented.

The initial forecast for Consumer Loans assigned in 2015 was lower than the initial forecast for Consumer Loans assigned in 2014. The lower initial forecast reflects a change in the mix of Consumer Loan assignments received during 2015, including a longer average initial loan term. The average initial term for Consumer Loans assigned in 2015 was 49.8 months as compared to 46.9 months for Consumer Loans assigned in 2014.

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 are aggregated into pools for purposes of recognizing revenue and evaluating impairment. As a result of this aggregation, we are not able to segment the carrying amounts of the majority of our Loan portfolio by year of assignment. We are able to segment our Loan portfolio by the performance of the Loan pools. Performance considers both the amount and timing of expected net cash flows and is measured by comparing the balance of the Loan pool to the discounted value of the expected future net cash flows of each Loan pool using the yield established at the time of assignment. The following table segments our Loan portfolio by the performance of the Loan pools:



(In millions)	As of December 31, 2015
	Loan Pool Performance Meets or Exceeds Initial Estimates						Loan Pool Performance Less than Initial Estimates
	Dealer Loans		Purchased Loans		Total		Dealer Loans			Purchased Loans			Total
Loans receivable	$	1,066.8	$	478.1	$	1,544.9	$	1,756.6		$	43.6		$	1,800.2
Allowance for credit losses	—		—		—		(235.1		)	(8.5		)	(243.6		)
Loans receivable, net	$	1,066.8	$	478.1	$	1,544.9	$	1,521.5		$	35.1		$	1,556.6

(In millions)	As of December 31, 2014
	Loan Pool Performance Meets or Exceeds Initial Estimates						Loan Pool Performance Less than Initial Estimates
	Dealer Loans		Purchased Loans		Total		Dealer Loans			Purchased Loans			Total
Loans receivable	$	945.1	$	317.7	$	1,262.8	$	1,444.7		$	12.3		$	1,457.0
Allowance for credit losses	—		—		—		(198.1		)	(8.8		)	(206.9		)
Loans receivable, net	$	945.1	$	317.7	$	1,262.8	$	1,246.6		$	3.5		$	1,250.1

A summary of changes in the allowance for credit losses is as follows:



(In millions)	For the Year Ended December 31, 2015
	Dealer Loans			Purchased Loans			Total
Balance, beginning of period	$	198.1		$	8.8		$	206.9
Provision for credit losses	41.8			(0.3		)	41.5
Write-offs	(6.4		)	(0.2		)	(6.6		)
Recoveries (1)	1.6			0.2			1.8
Balance, end of period	$	235.1		$	8.5		$	243.6

(In millions)	For the Year Ended December 31, 2014
	Dealer Loans			Purchased Loans			Total
Balance, beginning of period	$	185.7		$	9.7		$	195.4
Provision for credit losses	13.7			(0.9		)	12.8
Write-offs	(3.1		)	(0.1		)	(3.2		)
Recoveries (1)	1.8			0.1			1.9
Balance, end of period	$	198.1		$	8.8		$	206.9

(In millions)	For the Year Ended December 31, 2013
	Dealer Loans			Purchased Loans			Total
Balance, beginning of period	$	167.4		$	9.0		$	176.4
Provision for credit losses	21.3			0.6			21.9
Write-offs	(5.2		)	(0.1		)	(5.3		)
Recoveries (1)	2.2			0.2			2.4
Balance, end of period	$	185.7		$	9.7		$	195.4


(1)	Represents collections received on previously written off Loans.

During the fourth quarter of 2014, we enhanced our methodologies for forecasting the timing of future collections on Loans and the timing of future Dealer Holdback payments on Dealer Loans through the utilization of more recent data, different segmentations and new forecast variables. Implementation of the enhanced forecasting methodologies decreased the provision for credit losses by $2.9 million for the fourth quarter of 2014, of which all related to Dealer Loans.

During the second quarter of 2013, we enhanced our methodology for forecasting future collections on Loans through the utilization of more recent data, different segmentations and new forecast variables. Implementation of the enhanced forecasting methodology increased the provision for credit losses by $3.0 million for the second quarter of 2013, of which $1.2 million related to Dealer Loans and $1.8 million related to Purchased Loans.