Company: KMX
Filing Date: 2025-04-11
Form Type: 10-K
Source: 0001170010-25-000024
Chunk: 109

Company: CARMAX INC
Filing Date: 2025-04-11
Form: 10-K
Item: Item 8
Chunk 109
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 sheets.  The majority of the auto loans receivable serve as collateral for the related non-recourse notes payable of $17.12 billion as of February 28, 2025, and $16.87 billion as of February 29, 2024.  See Notes 1(F) and 12 for additional information on securitizations and non-recourse notes payable.Interest income and expenses related to auto loans are included in CAF income.  Interest income on auto loans receivable is recognized when earned based on contractual loan terms.  All loans continue to accrue interest until repayment or charge-off.  When a charge-off occurs, accrued interest is written off by reversing interest income.  Due to the timely write-off of accrued interest, we have made the election to exclude accrued interest from our allowance for loan losses.  Direct costs associated with loan originations are not considered material, and thus, are expensed as incurred.  See Note 3 for additional information on CAF income.

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Auto Loans Receivable, Net As of February 28 or 29(In millions)20252024Asset-backed term funding $12,716.2 $12,638.2 Warehouse facilities3,877.0 3,744.6 Overcollateralization (1)841.0 790.9 Other managed receivables (2)160.4 218.1 Total ending managed receivables17,594.6 17,391.8 Accrued interest and fees96.1 90.9 Other10.8 11.9 Less: allowance for loan losses(458.7)(482.8)Auto loans receivable, net$17,242.8 $17,011.8  (1)Represents receivables restricted as excess collateral for the non-recourse funding vehicles. (2)Other managed receivables includes receivables not funded through the non-recourse funding vehicles.Credit Quality.  When customers apply for financing, CAF’s proprietary scoring models utilize the customers’ credit history and certain application information to evaluate and rank their risk.  We obtain credit histories and other credit data that includes information such as number, age, type of and payment history for prior or existing credit accounts.  The application information that is used includes income, collateral value and down payment.  The scoring models yield credit grades that represent the relative likelihood of repayment