DEBT

Debt consists of the following:



(In millions)	As of September 30, 2018
	Principal Outstanding		Unamortized Debt Issuance Costs			Unamortized Discount			Carrying Amount
Revolving secured line of credit (1)	$	—	$	—		$	—		$	—
Secured financing (2)	3,339.7		(18.8		)	—			3,320.9
Senior notes	550.0		(4.8		)	(1.2		)	544.0
Mortgage note	12.0		—			—			12.0
Total debt	$	3,901.7	$	(23.6	)	$	(1.2	)	$	3,876.9

(In millions)	As of December 31, 2017
	Principal Outstanding		Unamortized Debt Issuance Costs			Unamortized Discount			Carrying Amount
Revolving secured line of credit (1)	$	13.9	$	—		$	—		$	13.9
Secured financing (2)	2,529.1		(15.0		)	—			2,514.1
Senior notes	550.0		(5.9		)	(1.3		)	542.8
Total debt	$	3,093.0	$	(20.9	)	$	(1.3	)	$	3,070.8


(1)	Excludes deferred debt issuance costs of $3.2 million and $2.8 million as of September 30, 2018 and December 31, 2017, respectively, which are included in other assets.


(2)	Warehouse facilities and Term ABS.

General information for each of our financing transactions in place as of September 30, 2018 is as follows:

(Dollars in millions)

Financings

Wholly-owned

Subsidiary

Maturity Date

Financing

Amount

Interest Rate as of
September 30, 2018

Revolving Secured Line of Credit

n/a

06/22/2021

350.0

(1)

At our option, either LIBOR plus 187.5 basis points or the prime rate plus 87.5 basis points

Warehouse Facility II (2)

CAC Warehouse Funding Corp. II

12/20/2020

(3)

400.0

LIBOR plus 175 basis points (4)

Warehouse Facility IV (2)

CAC Warehouse Funding LLC IV

04/30/2020

(3)

250.0

LIBOR plus 225 basis points (4)

Warehouse Facility V (2)

CAC Warehouse Funding LLC V

08/17/2021

(5)

100.0

LIBOR plus 190 basis points (4)

Warehouse Facility VI (2)

CAC Warehouse Funding LLC VI

09/30/2020

(3)

75.0

LIBOR plus 200 basis points

Warehouse Facility VII (2)

CAC Warehouse Funding LLC VII

12/01/2019

(6)

150.0

Commercial paper rate plus 190 basis points for class A and plus 220 basis points for class B (4)

Term ABS 2015-2 (2)

Credit Acceptance Funding LLC 2015-2

08/15/2017

(3)

300.2

Fixed rate

Term ABS 2016-1 (2)

Credit Acceptance Funding LLC 2016-1

02/15/2018

(3)

385.0

LIBOR plus 195 basis points (4)

Term ABS 2016-2 (2)

Credit Acceptance Funding LLC 2016-2

05/15/2018

(3)

350.2

Fixed rate

Term ABS 2016-3 (2)

Credit Acceptance Funding LLC 2016-3

10/15/2018

(3)

350.0

Fixed rate

Term ABS 2017-1 (2)

Credit Acceptance Funding LLC 2017-1

02/15/2019

(3)

350.0

Fixed rate

Term ABS 2017-2 (2)

Credit Acceptance Funding LLC 2017-2

06/17/2019

(3)

450.0

Fixed rate

Term ABS 2017-3 (2)

Credit Acceptance Funding LLC 2017-3

10/15/2019

(3)

350.0

Fixed rate

Term ABS 2018-1 (2)

Credit Acceptance Funding LLC 2018-1

02/17/2020

(3)

500.0

Fixed rate

Term ABS 2018-2 (2)

Credit Acceptance Funding LLC 2018-2

05/15/2020

(3)

450.0

Fixed rate

Term ABS 2018-3 (2)

Credit Acceptance Funding LLC 2018-3

08/17/2020

(3)

398.3

Fixed rate

2021 Senior Notes

n/a

02/15/2021

300.0

Fixed rate

2023 Senior Notes

n/a

03/15/2023

250.0

Fixed rate

Mortgage Note

Chapter 4

Properties, LLC

08/06/2023

12.0

LIBOR plus 150 basis points


(1)	The amount of the facility will decrease to $315.0 million on June 22, 2019.


(2)	Financing made available only to a specified subsidiary of the Company.


(3)	Represents the revolving maturity date. The outstanding balance will amortize after the revolving maturity date based on the cash flows of the pledged assets.


(4)	Interest rate cap agreements are in place to limit the exposure to increasing interest rates.


(5)	Represents the revolving maturity date. The outstanding balance will amortize after the revolving maturity date and any amounts remaining on August 17, 2023 will be due on that date.


(6)	Represents the revolving maturity date. The outstanding balance will amortize after the revolving maturity date and any amounts remaining on November 30, 2021 will be due on that date.

Additional information related to the amounts outstanding on each facility is as follows:



(In millions)	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2018		2017		2018		2017
Revolving Secured Line of Credit
Maximum outstanding principal balance	$	153.9	$	130.5	$	265.4	$	276.7
Average outstanding principal balance	22.2		35.7		44.8		92.2
Warehouse Facility II
Maximum outstanding principal balance	201.0		—		201.0		263.4
Average outstanding principal balance	4.4		—		4.4		3.4
Warehouse Facility IV
Maximum outstanding principal balance	—		—		99.0		12.0
Average outstanding principal balance	—		—		0.7		7.8
Warehouse Facility V
Maximum outstanding principal balance	97.3		—		99.0		100.0
Average outstanding principal balance	2.1		—		1.4		10.4
Warehouse Facility VI
Maximum outstanding principal balance	—		—		75.0		75.0
Average outstanding principal balance	—		—		0.5		9.8
Warehouse Facility VII
Maximum outstanding principal balance	100.0		—		150.0		—
Average outstanding principal balance	2.2		—		10.4		—



(Dollars in millions)	As of
	September 30, 2018			December 31, 2017
Revolving Secured Line of Credit
Principal balance outstanding	$	—		$	13.9
Amount available for borrowing (1)	350.0			336.1
Interest rate	—		%	3.44		%
Warehouse Facility II
Principal balance outstanding	$	—		$	—
Amount available for borrowing (1)	400.0			400.0
Loans pledged as collateral	—			—
Restricted cash and cash equivalents pledged as collateral	1.4			1.0
Interest rate	—		%	—		%
Warehouse Facility IV
Principal balance outstanding	$	—		$	—
Amount available for borrowing (1)	250.0			100.0
Loans pledged as collateral	—			—
Restricted cash and cash equivalents pledged as collateral	1.3			1.0
Interest rate	—		%	—		%
Warehouse Facility V
Principal balance outstanding	$	—		$	—
Amount available for borrowing (1)	100.0			100.0
Loans pledged as collateral	—			—
Restricted cash and cash equivalents pledged as collateral	1.2			1.0
Interest rate	—		%	—		%
Warehouse Facility VI
Principal balance outstanding	$	—		$	—
Amount available for borrowing (1)	75.0			75.0
Loans pledged as collateral	—			—
Restricted cash and cash equivalents pledged as collateral	0.1			—
Interest rate	—		%	—		%
Warehouse Facility VII
Principal balance outstanding	$	—		$	—
Amount available for borrowing (1)	150.0			150.0
Loans pledged as collateral	—			—
Restricted cash and cash equivalents pledged as collateral	1.4			1.0
Interest rate	—		%	—		%
Term ABS 2015-1
Principal balance outstanding	$	—		$	78.0
Loans pledged as collateral	—			238.4
Restricted cash and cash equivalents pledged as collateral	—			23.3
Interest rate	—		%	2.88		%
Term ABS 2015-2
Principal balance outstanding	$	50.4		$	215.9
Loans pledged as collateral	210.7			313.3
Restricted cash and cash equivalents pledged as collateral	22.4			26.4
Interest rate	3.31		%	2.72		%



Term ABS 2016-1
Principal balance outstanding	$	190.8		$	385.0
Loans pledged as collateral	363.0			467.2
Restricted cash and cash equivalents pledged as collateral	32.8			36.6
Interest rate	4.11		%	3.18		%
Term ABS 2016-2
Principal balance outstanding	$	250.2		$	350.2
Loans pledged as collateral	372.5			428.0
Restricted cash and cash equivalents pledged as collateral	31.6			33.2
Interest rate	2.99		%	2.83		%
Term ABS 2016-3
Principal balance outstanding	$	350.0		$	350.0
Loans pledged as collateral	425.8			425.7
Restricted cash and cash equivalents pledged as collateral	33.2			31.1
Interest rate	2.53		%	2.53		%
Term ABS 2017-1
Principal balance outstanding	$	350.0		$	350.0
Loans pledged as collateral	431.2			425.9
Restricted cash and cash equivalents pledged as collateral	33.1			30.8
Interest rate	2.78		%	2.78		%
Term ABS 2017-2
Principal balance outstanding	$	450.0		$	450.0
Loans pledged as collateral	549.5			545.8
Restricted cash and cash equivalents pledged as collateral	41.4			39.8
Interest rate	2.72		%	2.72		%
Term ABS 2017-3
Principal balance outstanding	$	350.0		$	350.0
Loans pledged as collateral	425.8			482.6
Restricted cash and cash equivalents pledged as collateral	30.9			29.6
Interest rate	2.88		%	2.88		%
Term ABS 2018-1
Principal balance outstanding	$	500.0		$	—
Loans pledged as collateral	610.1			—
Restricted cash and cash equivalents pledged as collateral	44.0			—
Interest rate	3.24		%	—		%
Term ABS 2018-2
Principal balance outstanding	$	450.0		$	—
Loans pledged as collateral	571.0			—
Restricted cash and cash equivalents pledged as collateral	39.4			—
Interest rate	3.68		%	—		%
Term ABS 2018-3
Principal balance outstanding	$	398.3		$	—
Loans pledged as collateral	570.0			—
Restricted cash and cash equivalents pledged as collateral	32.7			—
Interest rate	3.72		%	—		%
2021 Senior Notes
Principal balance outstanding	$	300.0		$	300.0
Interest rate	6.125		%	6.125		%



2023 Senior Notes
Principal balance outstanding	$	250.0		$	250.0
Interest rate	7.375		%	7.375		%
Mortgage Note
Principal balance outstanding	$	12.0		$	—
Interest rate	3.61		%	—		%


(1)	Availability may be limited by the amount of assets pledged as collateral.

Revolving Secured Line of Credit Facility

We have a $350.0 million revolving secured line of credit facility with a commercial bank syndicate. The amount of the facility will decrease to $315.0 million on June 22, 2019. Borrowings under the revolving secured line of credit facility, including any letters of credit issued under the facility, are subject to a borrowing-base limitation. This limitation equals 80% of the net book value of Loans, less a hedging reserve (not exceeding $1.0 million), and the amount of other debt secured by the collateral which secures the revolving secured line of credit facility. Borrowings under the revolving secured line of credit facility agreement are secured by a lien on most of our assets.

Warehouse Facilities

We have five Warehouse facilities with total borrowing capacity of $975.0 million. Each of the facilities is with a different lender or group of lenders. Under each Warehouse facility, we can contribute Loans to our wholly-owned subsidiaries in return for cash and equity in each subsidiary. In turn, each subsidiary pledges the Loans as collateral to lenders to secure financing that will fund the cash portion of the purchase price of the Loans. The financing provided to each subsidiary under the applicable facility is generally limited to the lesser of 80% of the net book value of the contributed Loans plus the restricted cash and cash equivalents pledged as collateral on such Loans or the facility limit.

The financings create indebtedness for which the subsidiaries are liable and which is secured by all the assets of each subsidiary. Such indebtedness is non-recourse to us, even though we are consolidated for financial reporting purposes with the subsidiaries. Because the subsidiaries are organized as legal entities separate from us, their assets (including the contributed Loans) are not available to our creditors.

The subsidiaries pay us a monthly servicing fee equal to 6% of the collections received with respect to the contributed Loans. The servicing fee is paid out of the collections. Except for the servicing fee and holdback payments due to Dealers, if a facility is amortizing, we do not have any rights in any portion of such collections until all outstanding principal, accrued and unpaid interest, fees and other related costs have been paid in full. If a facility is not amortizing, the applicable subsidiary may be entitled to retain a portion of such collections provided that the borrowing base requirements of the facility are satisfied.

Term ABS Financings

We have wholly-owned subsidiaries (the “Funding LLCs”) that have completed secured financing transactions with qualified institutional investors or lenders. In connection with these transactions, we contributed Loans on an arms-length basis to each Funding LLC for cash and the sole membership interest in that Funding LLC. In turn, each Funding LLC, other than that of Term ABS 2016-1, contributed the Loans to a respective trust that issued notes to qualified institutional investors. The Funding LLC for the Term ABS 2016-1 transaction pledged the Loans to lenders. The Term ABS 2015-2, 2016-2, 2016-3, 2017-1, 2017-2, 2017-3, 2018-1, 2018-2 and 2018-3 transactions each consist of three classes of notes.

Each financing at the time of issuance has a specified revolving period during which we are likely to contribute additional Loans to each Funding LLC. Each Funding LLC (other than that of Term ABS 2016-1) will then contribute the Loans to its respective trust. At the end of the revolving period, the debt outstanding under each financing will begin to amortize.

The financings create indebtedness for which the trusts or Funding LLC are liable and which is secured by all the assets of each trust or Funding LLC. Such indebtedness is non-recourse to us, even though we are consolidated for financial reporting purposes with the trusts and the Funding LLCs. Because the Funding LLCs are organized as legal entities separate from us, their assets (including the contributed Loans) are not available to our creditors. We receive a monthly servicing fee on each financing equal to 6% of the collections received with respect to the contributed Loans. The fee is paid out of the collections. Except for the servicing fee and Dealer Holdback payments due to Dealers, if a facility is amortizing, we do not have any rights in any portion of such collections until all outstanding principal, accrued and unpaid interest, fees and other related costs have been paid in full. If a facility is not amortizing, the applicable subsidiary may be entitled to retain a portion of such collections provided that the borrowing base requirements of the facility are satisfied. However, in our capacity as servicer of the Loans, we do have a limited right to exercise a “clean-up call” option to purchase Loans from the Funding LLCs and/or the trusts under certain specified circumstances. For those Funding LLCs with a trust, when the trust’s underlying indebtedness is paid in full, either through collections or through a prepayment of the indebtedness, the trust is to pay any remaining collections over to its Funding LLC as the sole beneficiary of the trust. For all Funding LLCs, after the indebtedness is paid in full, any remaining collections will ultimately be available to be distributed to us as the sole member of the respective Funding LLC.

The table below sets forth certain additional details regarding the outstanding Term ABS financings:



(Dollars in millions)
Term ABS Financings	Close Date	Net Book Value of Loans Contributed at Closing		24 month Revolving Period
Term ABS 2015-2	August 20, 2015	$	375.5	Through August 15, 2017
Term ABS 2016-1	February 26, 2016	481.4		Through February 15, 2018
Term ABS 2016-2	May 12, 2016	437.8		Through May 15, 2018
Term ABS 2016-3	October 27, 2016	437.8		Through October 15, 2018
Term ABS 2017-1	February 23, 2017	437.8		Through February 15, 2019
Term ABS 2017-2	June 29, 2017	563.2		Through June 17, 2019
Term ABS 2017-3	October 26, 2017	437.6		Through October 15, 2019
Term ABS 2018-1	February 22, 2018	625.1		Through February 17, 2020
Term ABS 2018-2	May 24, 2018	562.6		Through May 15, 2020
Term ABS 2018-3	August 23, 2018	500.1		Through August 17, 2020

Senior Notes

On March 30, 2015, we issued $250.0 million aggregate principal amount of 7.375% senior notes due 2023 (the “2023 senior notes”). The 2023 senior notes were issued pursuant to an indenture, dated as of March 30, 2015, among the Company, as issuer, the Company’s subsidiaries Buyers Vehicle Protection Plan, Inc. and Vehicle Remarketing Services, Inc., as guarantors (collectively, the “Guarantors”), and U.S. Bank National Association, as trustee.

The 2023 senior notes mature on March 15, 2023 and bear interest at a rate of 7.375% per annum, computed on the basis of a 360-day year composed of twelve 30-day months and payable semi-annually on March 15 and September 15 of each year, beginning on September 15, 2015. The 2023 senior notes were issued at a price of 99.266% of their aggregate principal amount, resulting in gross proceeds of $248.2 million, and a yield to maturity of 7.5% per annum. We used the net proceeds from the offering of the notes for general corporate purposes, including repayment of outstanding borrowings under our revolving secured line of credit facility.

On January 22, 2014, we issued $300.0 million aggregate principal amount of 6.125% senior notes due 2021 (the “2021 senior notes”). The 2021 senior notes were issued pursuant to an indenture, dated as of January 22, 2014, among the Company, the Guarantors, and U.S. Bank National Association, as trustee.

The 2021 senior notes mature on February 15, 2021 and bear interest at a rate of 6.125% per annum, computed on the basis of a 360-day year composed of twelve 30-day months and payable semi-annually on February 15 and August 15 of each year, beginning on August 15, 2014. We used the net proceeds from the 2021 senior notes, together with borrowings under our revolving credit facilities, to redeem in full the $350.0 million aggregate principal amount of our 9.125% first priority senior secured notes due 2017 on February 21, 2014.

Both the 2021 and the 2023 senior notes (the "senior notes") are guaranteed on a senior basis by the Guarantors, which are also guarantors of obligations under our revolving secured line of credit facility. Other existing and future subsidiaries of ours may become guarantors of the senior notes in the future. The indentures for the senior notes provide for a guarantor of the senior notes to be released from its obligations under its guarantee of the senior notes under specified circumstances.

Mortgage Note

On August 6, 2018, we entered into a $12.0 million mortgage note with a commercial bank that is secured by a first mortgage lien on a building acquired by us and an assignment of all leases, rents, revenues and profits under all present and future leases of the building. As of September 30, 2018, there was $12.0 million outstanding on this note. The note matures on August 6, 2023, and bears interest at LIBOR plus 150 basis points.

Debt Covenants

As of September 30, 2018, we were in compliance with our covenants under the revolving secured line of credit facility, including those that require the maintenance of certain financial ratios and other financial conditions. These covenants require a minimum ratio of (1) our net earnings, adjusted for specified items, before income taxes, depreciation, amortization and fixed charges to (2) our fixed charges. These covenants also limit the maximum ratio of our funded debt less unrestricted cash and cash equivalents to tangible net worth. Additionally, we must maintain consolidated net income of not less than $1 for the two most recently ended fiscal quarters. Some of these covenants may indirectly limit the repurchase of common stock or payment of dividends on common stock.

Our Warehouse facilities and Term ABS financings also contain covenants that measure the performance of the contributed assets. As of September 30, 2018, we were in compliance with all such covenants. As of the end of the quarter, we were also in compliance with our covenants under the senior notes indentures.