Company: CPSS
Filing Date: 2025-03-12
Form Type: 10-K
Source: 0001683168-25-001548
Chunk: 35

Company: CONSUMER PORTFOLIO SERVICES, INC.
Filing Date: 2025-03-12
Form: 10-K
Item: Item 1
Chunk 35
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 that we will receive excess spread
cash flows only if the amount of overcollateralization and spread account balances have reached specified levels and/or the delinquency,
defaults or net losses related to the automobile contracts in the automobile contract pools are below certain predetermined levels. In
the event delinquencies, defaults or net losses on automobile contracts exceed these levels, the terms of the securitization or warehouse
credit facility:

·may require increased credit enhancement, including an increase in the amount required to be on deposit in the spread account to be
accumulated for the particular pool; and

·in certain circumstances, may permit affected parties to require the transfer of servicing on some or all of the securitized or warehoused
contracts from us to an unaffiliated servicer.

We typically retain residual
interests or use them as collateral to borrow cash. In any case, the future excess spread cash flow received in respect of the residual
interests is integral to the financing of our operations. The amount of cash received from residual interests depends in large part on
how well our portfolio of securitized and warehoused automobile contracts performs. If our portfolio of securitized and warehoused automobile
contracts has higher delinquency and loss ratios than expected, then the amount of money realized from our retained residual interests,
or the amount of money we could obtain from the sale or other financing of our residual interests, would be reduced. Such a reduction,
if it should occur, could have material adverse effects on our future results of operations, financial condition and cash flows.

Our Results of Operations May be Affected by Changing Economic
Conditions

We are subject to changes
in general economic conditions that are beyond our control. During periods of economic slowdown or recession, delinquencies, defaults,
repossessions and losses generally increase. These periods also may be accompanied by increased unemployment rates, inflation, decreased
demand for automobiles and declining values of automobiles securing outstanding receivables, which weakens collateral values and increases
the amount of a loss in the event of default. Additionally, higher gasoline prices, the introductions of trade tariffs, declining stock
market values, unstable real estate values, increasing unemployment levels, general availability of consumer credit, changes in vehicle
ownership trends and other factors that impact consumer confidence or disposable income could increase loss frequency and decrease demand
for automobiles as well as weaken collateral values on certain types of automobiles. In addition, during an economic slowdown or recession,
our servicing costs may increase without a corresponding increase