Loans Receivable (Tables)

6 Months Ended

Jun. 30, 2016

Loans receivable consists of the following:



(In millions)	As of June 30, 2016
	Dealer Loans			Purchased Loans			Total
Loans receivable	$	3,049.2		$	762.8		$	3,812.0
Allowance for credit losses	(268.2		)	(8.7		)	(276.9		)
Loans receivable, net	$	2,781.0		$	754.1		$	3,535.1

(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

Summary of Changes in Loans Receivable

A summary of changes in Loans receivable is as follows:



(In millions)	For the Three Months Ended June 30, 2016
	Dealer Loans			Purchased Loans			Total
Balance, beginning of period	$	2,985.7		$	640.5		$	3,626.2
New Consumer Loan assignments (1)	438.0			189.4			627.4
Principal collected on Loans receivable	(420.5		)	(68.1		)	(488.6		)
Accelerated Dealer Holdback payments	14.9			—			14.9
Dealer Holdback payments	35.9			—			35.9
Transfers (2)	(1.1		)	1.1			—
Write-offs	(4.1		)	(0.1		)	(4.2		)
Recoveries (3)	0.4			—			0.4
Balance, end of period	$	3,049.2		$	762.8		$	3,812.0

(In millions)	For the Three Months Ended June 30, 2015
	Dealer Loans			Purchased Loans			Total
Balance, beginning of period	$	2,564.3		$	379.3		$	2,943.6
New Consumer Loan assignments (1)	410.1			81.6			491.7
Principal collected on Loans receivable	(385.8		)	(46.3		)	(432.1		)
Accelerated Dealer Holdback payments	12.8			—			12.8
Dealer Holdback payments	37.5			—			37.5
Transfers (2)	(3.3		)	3.3			—
Write-offs	(1.3		)	(0.1		)	(1.4		)
Recoveries (3)	0.5			—			0.5
Balance, end of period	$	2,634.8		$	417.8		$	3,052.6



(In millions)	For the Six Months Ended June 30, 2016
	Dealer Loans			Purchased Loans			Total
Balance, beginning of period	$	2,823.4		$	521.7		$	3,345.1
New Consumer Loan assignments (1)	1,000.7			370.8			1,371.5
Principal collected on Loans receivable	(871.3		)	(132.1		)	(1,003.4		)
Accelerated Dealer Holdback payments	29.7			—			29.7
Dealer Holdback payments	75.8			—			75.8
Transfers (2)	(2.5		)	2.5			—
Write-offs	(7.3		)	(0.1		)	(7.4		)
Recoveries (3)	0.7			—			0.7
Balance, end of period	$	3,049.2		$	762.8		$	3,812.0

(In millions)	For the Six Months Ended June 30, 2015
	Dealer Loans			Purchased Loans			Total
Balance, beginning of period	$	2,389.8		$	330.0		$	2,719.8
New Consumer Loan assignments (1)	943.6			174.2			1,117.8
Principal collected on Loans receivable	(793.4		)	(93.2		)	(886.6		)
Accelerated Dealer Holdback payments	26.6			—			26.6
Dealer Holdback payments	78.6			—			78.6
Transfers (2)	(6.9		)	6.9			—
Write-offs	(4.4		)	(0.2		)	(4.6		)
Recoveries (3)	0.9			0.1			1.0
Balance, end of period	$	2,634.8		$	417.8		$	3,052.6


(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.

Summary of Changes in Accretable Yield

A summary of changes in the accretable yield is as follows:



(In millions)	For the Three Months Ended June 30, 2016
	Dealer Loans			Purchased Loans			Total
Balance, beginning of period	$	946.6		$	238.6		$	1,185.2
New Consumer Loan assignments (1)	183.6			70.3			253.9
Accretion (2)	(180.4		)	(37.0		)	(217.4		)
Provision for credit losses	17.9			—			17.9
Forecast changes	(3.9		)	10.4			6.5
Transfers (4)	(0.6		)	1.0			0.4
Balance, end of period	$	963.2		$	283.3		$	1,246.5

(In millions)	For the Three Months Ended June 30, 2015
	Dealer Loans			Purchased Loans			Total
Balance, beginning of period	$	802.4		$	155.1		$	957.5
New Consumer Loan assignments (1)	170.1			30.4			200.5
Accretion (2) (3)	(157.7		)	(24.8		)	(182.5		)
Provision for credit losses (3)	8.6			(0.2		)	8.4
Forecast changes (3)	2.6			5.9			8.5
Transfers (4)	(0.9		)	2.0			1.1
Balance, end of period	$	825.1		$	168.4		$	993.5

(In millions)	For the Six Months Ended June 30, 2016
	Dealer Loans			Purchased Loans			Total
Balance, beginning of period	$	874.2		$	198.6		$	1,072.8
New Consumer Loan assignments (1)	417.7			137.6			555.3
Accretion (2)	(354.1		)	(68.4		)	(422.5		)
Provision for credit losses	39.7			0.3			40.0
Forecast changes	(13.5		)	13.3			(0.2		)
Transfers (4)	(0.8		)	1.9			1.1
Balance, end of period	$	963.2		$	283.3		$	1,246.5

(In millions)	For the Six Months Ended June 30, 2015
	Dealer Loans			Purchased Loans			Total
Balance, beginning of period	$	725.2		$	136.5		$	861.7
New Consumer Loan assignments (1)	386.7			65.2			451.9
Accretion (2) (3)	(307.1		)	(47.7		)	(354.8		)
Provision for credit losses (3)	14.8			(0.2		)	14.6
Forecast changes (3)	7.4			10.5			17.9
Transfers (4)	(1.9		)	4.1			2.2
Balance, end of period	$	825.1		$	168.4		$	993.5


(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.

Summary of Information Related to New Consumer Loan Assignments

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



(In millions)	For the Three Months Ended June 30, 2016
	Dealer Loans		Purchased Loans		Total
Contractual net cash flows at the time of assignment (1)	$	698.6	$	382.9	$	1,081.5
Expected net cash flows at the time of assignment (2)	621.6		259.7		881.3
Fair value at the time of assignment (3)	438.0		189.4		627.4

(In millions)	For the Three Months Ended June 30, 2015
	Dealer Loans		Purchased Loans		Total
Contractual net cash flows at the time of assignment (1)	$	643.8	$	161.7	$	805.5
Expected net cash flows at the time of assignment (2)	580.2		112.0		692.2
Fair value at the time of assignment (3)	410.1		81.6		491.7

(In millions)	For the Six Months Ended June 30, 2016
	Dealer Loans		Purchased Loans		Total
Contractual net cash flows at the time of assignment (1)	$	1,588.7	$	749.5	$	2,338.2
Expected net cash flows at the time of assignment (2)	1,418.4		508.4		1,926.8
Fair value at the time of assignment (3)	1,000.7		370.8		1,371.5

(In millions)	For the Six Months Ended June 30, 2015
	Dealer Loans		Purchased Loans		Total
Contractual net cash flows at the time of assignment (1)	$	1,469.1	$	345.4	$	1,814.5
Expected net cash flows at the time of assignment (2)	1,330.3		239.4		1,569.7
Fair value at the time of assignment (3)	943.6		174.2		1,117.8

(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.

Schedule of Consumer Loans Forecasted Collection Percentage

The following table compares our forecast of Consumer Loan collection rates as of June 30, 2016, with the forecasts as of March 31, 2016, 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 Assignment Year	June 30, 2016		March 31, 2016		December 31, 2015		Initial Forecast		March 31, 2016		December 31, 2015		Initial Forecast
2007	68.1	%	68.1	%	68.1	%	70.7	%	0.0	%	0.0	%	-2.6	%
2008	70.4	%	70.3	%	70.3	%	69.7	%	0.1	%	0.1	%	0.7	%
2009	79.5	%	79.5	%	79.4	%	71.9	%	0.0	%	0.1	%	7.6	%
2010	77.5	%	77.5	%	77.4	%	73.6	%	0.0	%	0.1	%	3.9	%
2011	74.3	%	74.3	%	74.2	%	72.5	%	0.0	%	0.1	%	1.8	%
2012	73.3	%	73.3	%	73.2	%	71.4	%	0.0	%	0.1	%	1.9	%
2013	73.1	%	73.2	%	73.4	%	72.0	%	-0.1	%	-0.3	%	1.1	%
2014	72.0	%	72.2	%	72.6	%	71.8	%	-0.2	%	-0.6	%	0.2	%
2015	67.0	%	67.4	%	67.8	%	67.7	%	-0.4	%	-0.8	%	-0.7	%
2016 (2)	66.5	%	66.1	%	—		66.3	%	0.4	%	—		0.2	%

(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.


(2)	The forecasted collection rate for 2016 Consumer Loans as of June 30, 2016 includes both Consumer Loans that were in our portfolio as of March 31, 2016 and Consumer Loans assigned during the most recent quarter. The following table provides forecasted collection rates for each of these segments:



	Forecasted Collection Percentage as of						Current Forecast Variance from
2016 Consumer Loan Assignment Period	June 30, 2016		March 31, 2016		Initial Forecast		March 31, 2016		Initial Forecast
January 1, 2016 through March 31, 2016	67.1	%	66.1	%	66.5	%	1.0	%	0.6	%
April 1, 2016 through June 30, 2016	65.7	%	—		66.1	%	—		-0.4	%

Schedule of Consumer Loans Performance

The following table segments our Loan portfolio by the performance of the Loan pools:



(In millions)	As of June 30, 2016
	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	$	1,036.0	$	634.0	$	1,670.0	$	2,013.2		$	128.8		$	2,142.0
Allowance for credit losses	—		—		—		(268.2		)	(8.7		)	(276.9		)
Loans receivable, net	$	1,036.0	$	634.0	$	1,670.0	$	1,745.0		$	120.1		$	1,865.1

(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

Summary of Changes in Allowance for Credit Losses

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



(In millions)	For the Three Months Ended June 30, 2016
	Dealer Loans			Purchased Loans			Total
Balance, beginning of period	$	254.0		$	8.8		$	262.8
Provision for credit losses	17.9			—			17.9
Write-offs	(4.1		)	(0.1		)	(4.2		)
Recoveries (1)	0.4			—			0.4
Balance, end of period	$	268.2		$	8.7		$	276.9

(In millions)	For the Three Months Ended June 30, 2015
	Dealer Loans			Purchased Loans			Total
Balance, beginning of period	$	201.6		$	8.8		$	210.4
Provision for credit losses	8.6			(0.2		)	8.4
Write-offs	(1.3		)	(0.1		)	(1.4		)
Recoveries (1)	0.5			—			0.5
Balance, end of period	$	209.4		$	8.5		$	217.9

(In millions)	For the Six Months Ended June 30, 2016
	Dealer Loans			Purchased Loans			Total
Balance, beginning of period	$	235.1		$	8.5		$	243.6
Provision for credit losses	39.7			0.3			40.0
Write-offs	(7.3		)	(0.1		)	(7.4		)
Recoveries (1)	0.7			—			0.7
Balance, end of period	$	268.2		$	8.7		$	276.9

(In millions)	For the Six Months Ended June 30, 2015
	Dealer Loans			Purchased Loans			Total
Balance, beginning of period	$	198.1		$	8.8		$	206.9
Provision for credit losses	14.8			(0.2		)	14.6
Write-offs	(4.4		)	(0.2		)	(4.6		)
Recoveries (1)	0.9			0.1			1.0
Balance, end of period	$	209.4		$	8.5		$	217.9


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