3. Finance Receivables

12 Months Ended

Dec. 31, 2015

Receivables [Abstract]

Finance Receivables

Our portfolio of finance receivables consists of small-balance homogeneous contracts comprising a single segment and class that is collectively evaluated for impairment on a portfolio basis according to delinquency status. Our contract purchase guidelines are designed to produce a homogenous portfolio. We report delinquency on a contractual basis. Once a contract becomes greater than 90 days delinquent, we do not recognize additional interest income until the obligor under the contract makes sufficient payments to be less than 90 days delinquent. Any payments received on a contract that is greater than 90 days delinquent are first applied to accrued interest and then to principal reduction.

The following table presents the components of finance receivables, net of unearned interest:

	December 31,
	2015			2014
	(In thousands)
Finance receivables
Automobile finance receivables, net of unearned interest	$	1,990,913		$	1,612,246
Less: Unearned acquisition fees, discounts and deferred origination costs, net		(5,820	)		(16,290	)
Finance receivables	$	1,985,093		$	1,595,956

We consider an automobile contract delinquent when an obligor fails to make at least 90% of a contractually due payment by the following due date, which date may have been extended within limits specified in the servicing agreements. The period of delinquency is based on the number of days payments are contractually past due, as extended where applicable. Automobile contracts less than 31 days delinquent are not reported as delinquent. In certain circumstances we will grant obligors one-month payment extensions. The only modification of terms is to advance the obligor’s next due date by one month and extend the maturity date of the receivable by one month. In certain limited cases, a two-month extension may be granted. There are no other concessions, such as a reduction in interest rate, forgiveness of principal or of accrued interest. Accordingly, we consider such extensions to be insignificant delays in payments rather than troubled debt restructurings. The following table summarizes the delinquency status of finance receivables as of December 31, 2015 and 2014:

	December 31,
	2015		2014
	(In thousands)
Deliquency Status
Current	$	1,836,267	$	1,523,020
31 - 60 days		70,036		42,730
61 - 90 days		41,136		23,300
91 + days		43,474		23,196
	$	1,990,913	$	1,612,246

Finance receivables totaling $43.5 million and $23.2 million at December 31, 2015 and 2014, respectively, have been placed on non-accrual status as a result of their delinquency status.

The following table presents a summary of the activity for the allowance for finance credit losses, for the years ended December 31, 2015, 2014 and 2013:

	December 31,
	2015			2014			2013
	(In thousands)
Balance at beginning of year	$	61,460		$	39,626		$	19,594
Provision for credit losses		142,618			108,228			76,869
Charge-offs		(156,553	)		(109,914	)		(69,455	)
Recoveries		28,078			23,520			12,618
Balance at end of year	$	75,603		$	61,460		$	39,626

Excluded from finance receivables are contracts that were previously classified as finance receivables but were reclassified as other assets because we have repossessed the vehicle securing the Contract. The following table presents a summary of such repossessed inventory together with the allowance for losses on repossessed inventory:

	December 31,
	2015			2014
	(In thousands)
Gross balance of repossessions in inventory	$	39,728		$	28,234
Allowance for losses on repossessed inventory		(26,954	)		(17,829	)
Net repossessed inventory included in other assets	$	12,774		$	10,405