Company: CPSS
Filing Date: 2025-03-12
Form Type: 10-K
Source: 0001683168-25-001548
Chunk: 191

Company: CONSUMER PORTFOLIO SERVICES, INC.
Filing Date: 2025-03-12
Form: 10-K
Item: Item 1A
Chunk 191
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 automobile contracts are
geographically concentrated in the states of California, Florida, and Texas. Such states may be particularly susceptible to natural disasters:
earthquake in the case of California, and hurricanes and flooding in Florida and Texas. Natural disasters, in those states or others,
could cause a material number of our vehicle purchasers to lose their jobs, or could damage or destroy vehicles that secure our automobile
contracts. In either case, such events could result in our receiving reduced collections on our automobile contracts, and could thus result
in reductions in our revenues or the cash flows available to us.

Effect of Social, Economic and Other Factors on Losses.

The ability of our customers to make payments
on automobile contracts will be affected by a variety of social and economic factors, most notably the extent to which our customers remain
gainfully employed. Other economic factors include interest rates, general unemployment levels, the rate of inflation, adjustments in
monthly mortgage payments and consumer perceptions of economic conditions generally and the effect of any government stimulus programs
and consumer protection/payment relief efforts. Social factors include changes in consumer confidence levels, consumer attitudes toward
bankruptcy and the repayment of indebtedness and consumer perceptions of political events and shifts, which may be affected by the pandemic.
We are generally unable to determine whether or to what extent economic or social factors will affect the performance of our portfolio
of automobile contracts, but caution that a recession or depression in local, regional or national economies would be expected to increase
delinquencies and losses, which would adversely affect our financial condition and results of operations.

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If an Increase in Interest Rates Results in a Decrease in Our
Cash Flows from Excess Spread, Our Results of Operations May Be Impaired.

Our profitability is largely
determined by the difference, or "spread," between the effective interest rate we receive on the automobile contracts that we
acquire and the interest rates payable under warehouse credit facilities and on the asset-backed securities issued in our securitizations.
In the past, disruptions in the market for asset-backed securities resulted in an increase in the interest rates we paid on asset-backed
securities. Should similar disruptions take place in the future, we may pay higher interest rates on asset-backed securities issued in
the future. Although we have the ability to partially offset increases in our cost of funds by increasing fees we charge to dealers when
purchasing automobile contracts, or by demanding higher interest rates on automobile contracts we purchase, there is no assurance that
such actions will materially offset increases in