Loans Receivable

9 Months Ended

Sep. 30, 2019

Receivables [Abstract]

Loans Receivable

LOANS RECEIVABLE

Loans receivable consists of the following:

(In millions)	As of September 30, 2019
	Dealer Loans			Purchased Loans			Total
Loans receivable	$	4,559.3		$	2,513.5		$	7,072.8
Allowance for credit losses	(409.3		)	(99.8		)	(509.1		)
Loans receivable, net	$	4,150.0		$	2,413.7		$	6,563.7
(In millions)	As of December 31, 2018
	Dealer Loans			Purchased Loans			Total
Loans receivable	$	4,141.0		$	2,084.2		$	6,225.2
Allowance for credit losses	(378.1		)	(83.8		)	(461.9		)
Loans receivable, net	$	3,762.9		$	2,000.4		$	5,763.3

A summary of changes in Loans receivable is as follows:

(In millions)	For the Three Months Ended September 30, 2019
	Dealer Loans			Purchased Loans			Total
Balance, beginning of period	$	4,466.0		$	2,407.6		$	6,873.6
New Consumer Loan assignments (1)	573.3			321.1			894.4
Principal collected on Loans receivable	(510.8		)	(235.5		)	(746.3		)
Accelerated Dealer Holdback payments	16.1			—			16.1
Dealer Holdback payments	34.8			—			34.8
Transfers (2)	(20.3		)	20.3			—
Write-offs	(0.3		)	(0.2		)	(0.5		)
Recoveries (3)	0.5			0.2			0.7
Balance, end of period	$	4,559.3		$	2,513.5		$	7,072.8
(In millions)	For the Three Months Ended September 30, 2018
	Dealer Loans			Purchased Loans			Total
Balance, beginning of period	$	3,918.4		$	1,861.7		$	5,780.1
New Consumer Loan assignments (1)	556.7			274.3			831.0
Principal collected on Loans receivable	(466.0		)	(181.3		)	(647.3		)
Accelerated Dealer Holdback payments	11.6			—			11.6
Dealer Holdback payments	31.9			—			31.9
Transfers (2)	(20.2		)	20.2			—
Write-offs	(2.5		)	(0.2		)	(2.7		)
Recoveries (3)	0.3			0.3			0.6
Balance, end of period	$	4,030.2		$	1,975.0		$	6,005.2

(In millions)	For the Nine Months Ended September 30, 2019
	Dealer Loans			Purchased Loans			Total
Balance, beginning of period	$	4,141.0		$	2,084.2		$	6,225.2
New Consumer Loan assignments (1)	1,901.1			1,053.9			2,955.0
Principal collected on Loans receivable	(1,562.2		)	(692.7		)	(2,254.9		)
Accelerated Dealer Holdback payments	44.1			—			44.1
Dealer Holdback payments	105.4			—			105.4
Transfers (2)	(67.6		)	67.6			—
Write-offs	(3.7		)	(0.4		)	(4.1		)
Recoveries (3)	1.2			0.9			2.1
Balance, end of period	$	4,559.3		$	2,513.5		$	7,072.8
(In millions)	For the Nine Months Ended September 30, 2018
	Dealer Loans			Purchased Loans			Total
Balance, beginning of period	$	3,518.1		$	1,530.9		$	5,049.0
New Consumer Loan assignments (1)	1,870.2			917.0			2,787.2
Principal collected on Loans receivable	(1,425.2		)	(523.8		)	(1,949.0		)
Accelerated Dealer Holdback payments	41.0			—			41.0
Dealer Holdback payments	98.0			—			98.0
Transfers (2)	(53.3		)	53.3			—
Write-offs	(21.3		)	(3.2		)	(24.5		)
Recoveries (3)	2.7			0.8			3.5
Balance, end of period	$	4,030.2		$	1,975.0		$	6,005.2

(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 and the related allowance for credit losses 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 Loans 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 Three Months Ended September 30, 2019
	Dealer Loans			Purchased Loans			Total
Balance, beginning of period	$	1,390.4		$	911.9		$	2,302.3
New Consumer Loan assignments (1)	224.0			134.6			358.6
Accretion (2)	(227.6		)	(124.7		)	(352.3		)
Provision for credit losses	17.9			1.4			19.3
Forecast changes	(4.2		)	6.8			2.6
Transfers (3)	(7.9		)	10.0			2.1
Balance, end of period	$	1,392.6		$	940.0		$	2,332.6
(In millions)	For the Three Months Ended September 30, 2018
	Dealer Loans			Purchased Loans			Total
Balance, beginning of period	$	1,246.6		$	708.4		$	1,955.0
New Consumer Loan assignments (1)	227.8			112.6			340.4
Accretion (2)	(208.6		)	(96.6		)	(305.2		)
Provision for credit losses	12.4			1.6			14.0
Forecast changes	(0.1		)	17.2			17.1
Transfers (3)	(7.8		)	10.2			2.4
Balance, end of period	$	1,270.3		$	753.4		$	2,023.7
(In millions)	For the Nine Months Ended September 30, 2019
	Dealer Loans			Purchased Loans			Total
Balance, beginning of period	$	1,283.0		$	782.5		$	2,065.5
New Consumer Loan assignments (1)	759.9			438.7			1,198.6
Accretion (2)	(668.1		)	(352.0		)	(1,020.1		)
Provision for credit losses	44.0			5.2			49.2
Forecast changes	(0.3		)	32.6			32.3
Transfers (3)	(25.9		)	33.0			7.1
Balance, end of period	$	1,392.6		$	940.0		$	2,332.6
(In millions)	For the Nine Months Ended September 30, 2018
	Dealer Loans			Purchased Loans			Total
Balance, beginning of period	$	1,088.6		$	576.9		$	1,665.5
New Consumer Loan assignments (1)	768.1			380.2			1,148.3
Accretion (2)	(603.5		)	(266.1		)	(869.6		)
Provision for credit losses	34.3			4.9			39.2
Forecast changes	3.5			31.0			34.5
Transfers (3)	(20.7		)	26.5			5.8
Balance, end of period	$	1,270.3		$	753.4		$	2,023.7

(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) 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, the related allowance for credit losses 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 Three Months Ended September 30, 2019
	Dealer Loans		Purchased Loans		Total
Contractual net cash flows at the time of assignment (1)	$	895.1	$	704.4	$	1,599.5
Expected net cash flows at the time of assignment (2)	797.3		455.7		1,253.0
Fair value at the time of assignment (3)	573.3		321.1		894.4
(In millions)	For the Three Months Ended September 30, 2018
	Dealer Loans		Purchased Loans		Total
Contractual net cash flows at the time of assignment (1)	$	883.1	$	606.1	$	1,489.2
Expected net cash flows at the time of assignment (2)	784.5		386.9		1,171.4
Fair value at the time of assignment (3)	556.7		274.3		831.0
(In millions)	For the Nine Months Ended September 30, 2019
	Dealer Loans		Purchased Loans		Total
Contractual net cash flows at the time of assignment (1)	$	2,982.2	$	2,308.0	$	5,290.2
Expected net cash flows at the time of assignment (2)	2,661.0		1,492.6		4,153.6
Fair value at the time of assignment (3)	1,901.1		1,053.9		2,955.0
(In millions)	For the Nine Months Ended September 30, 2018
	Dealer Loans		Purchased Loans		Total
Contractual net cash flows at the time of assignment (1)	$	2,965.7	$	2,028.4	$	4,994.1
Expected net cash flows at the time of assignment (2)	2,638.3		1,297.2		3,935.5
Fair value at the time of assignment (3)	1,870.2		917.0		2,787.2

(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 3 to the consolidated financial statements. The following table compares our forecast of Consumer Loan collection rates as of September 30, 2019 with the forecasts as of June 30, 2019, as of December 31, 2018 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	September 30, 2019		June 30, 2019		December 31, 2018		Initial Forecast		June 30, 2019		December 31, 2018		Initial Forecast
2010	77.7	%	77.7	%	77.7	%	73.6	%	0.0	%	0.0	%	4.1	%
2011	74.8	%	74.8	%	74.7	%	72.5	%	0.0	%	0.1	%	2.3	%
2012	73.9	%	73.9	%	73.8	%	71.4	%	0.0	%	0.1	%	2.5	%
2013	73.5	%	73.5	%	73.5	%	72.0	%	0.0	%	0.0	%	1.5	%
2014	71.8	%	71.8	%	71.7	%	71.8	%	0.0	%	0.1	%	0.0	%
2015	65.5	%	65.5	%	65.4	%	67.7	%	0.0	%	0.1	%	-2.2	%
2016	64.1	%	64.2	%	64.2	%	65.4	%	-0.1	%	-0.1	%	-1.3	%
2017	65.0	%	65.1	%	65.5	%	64.0	%	-0.1	%	-0.5	%	1.0	%
2018	65.4	%	65.5	%	65.0	%	63.6	%	-0.1	%	0.4	%	1.8	%
2019 (2)	64.8	%	64.7	%	—		64.1	%	0.1	%	—		0.7	%

(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 2019 Consumer Loans as of September 30, 2019 includes both Consumer Loans that were in our portfolio as of June 30, 2019 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
2019 Consumer Loan Assignment Period	September 30, 2019		June 30, 2019		Initial Forecast		June 30, 2019		Initial Forecast
January 1, 2019 through June 30, 2019	65.1	%	64.7	%	64.2	%	0.4	%	0.9	%
July 1, 2019 through September 30, 2019	64.1	%	—		64.0	%	—		0.1	%

Consumer Loans assigned in 2010 through 2013, 2017 and 2018 have yielded forecasted collection results materially better than our initial estimates, while Consumer Loans assigned in 2015 and 2016 have yielded forecasted collection results materially worse than our initial estimates. For Consumer Loans assigned in 2014 and 2019, actual results have been close to our initial estimates. For the three months ended September 30, 2019, forecasted collection rates improved for Consumer Loans assigned in 2019 and were generally consistent with expectations at the start of the period for all other assignment years presented. For the nine months ended September 30, 2019, forecasted collection rates improved for Consumer Loans assigned in 2018 and 2019, declined for Consumer Loans assigned in 2017 and were generally consistent with expectations at the start of the period for all other assignment years presented.

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 September 30, 2019
	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	$	1,585.3	$	1,931.1	$	3,516.4	$	2,974.0		$	582.4		$	3,556.4
Allowance for credit losses	—		—		—		(409.3		)	(99.8		)	(509.1		)
Loans receivable, net	$	1,585.3	$	1,931.1	$	3,516.4	$	2,564.7		$	482.6		$	3,047.3
(In millions)	As of December 31, 2018
	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	$	1,355.1	$	1,392.1	$	2,747.2	$	2,785.9		$	692.1		$	3,478.0
Allowance for credit losses	—		—		—		(378.1		)	(83.8		)	(461.9		)
Loans receivable, net	$	1,355.1	$	1,392.1	$	2,747.2	$	2,407.8		$	608.3		$	3,016.1

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

(In millions)	For the Three Months Ended September 30, 2019
	Dealer Loans			Purchased Loans			Total
Balance, beginning of period	$	394.0		$	95.6		$	489.6
Provision for credit losses	17.9			1.4			19.3
Transfers (1)	(2.8		)	2.8			—
Write-offs	(0.3		)	(0.2		)	(0.5		)
Recoveries (2)	0.5			0.2			0.7
Balance, end of period	$	409.3		$	99.8		$	509.1
(In millions)	For the Three Months Ended September 30, 2018
	Dealer Loans			Purchased Loans			Total
Balance, beginning of period	$	365.9		$	69.8		$	435.7
Provision for credit losses	12.4			1.6			14.0
Transfers (1)	(3.1		)	3.1			—
Write-offs	(2.5		)	(0.2		)	(2.7		)
Recoveries (2)	0.3			0.3			0.6
Balance, end of period	$	373.0		$	74.6		$	447.6
(In millions)	For the Nine Months Ended September 30, 2019
	Dealer Loans			Purchased Loans			Total
Balance, beginning of period	$	378.1		$	83.8		$	461.9
Provision for credit losses	44.0			5.2			49.2
Transfers (1)	(10.3		)	10.3			—
Write-offs	(3.7		)	(0.4		)	(4.1		)
Recoveries (2)	1.2			0.9			2.1
Balance, end of period	$	409.3		$	99.8		$	509.1
(In millions)	For the Nine Months Ended September 30, 2018
	Dealer Loans			Purchased Loans			Total
Balance, beginning of period	$	366.0		$	63.4		$	429.4
Provision for credit losses	34.3			4.9			39.2
Transfers (1)	(8.7		)	8.7			—
Write-offs	(21.3		)	(3.2		)	(24.5		)
Recoveries (2)	2.7			0.8			3.5
Balance, end of period	$	373.0		$	74.6		$	447.6

(1) 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 the related allowance for credit losses balance to Purchased Loans in the period this forfeiture occurs.

(2)

Represents collections received on previously written off Loans.