Company: CPSS
Filing Date: 2025-03-12
Form Type: 10-K
Source: 0001683168-25-001548
Chunk: 513

Company: CONSUMER PORTFOLIO SERVICES, INC.
Filing Date: 2025-03-12
Form: 10-K
Item: Item 1C
Chunk 513
---
 was $11.7 million, which exceeded
the minimum amounts required by our financial covenants.

Finance Receivables

Finance receivables, which
we have the intent and ability to hold for the foreseeable future or until maturity or payoff, are presented at cost. All finance receivable
contracts are held for investment. Interest income is accrued on the unpaid principal balance. Origination fees, net of certain direct
origination costs, are deferred and recognized in interest income using the interest method without anticipating prepayments. Generally,
payments received on finance receivables are restricted to certain securitized pools, and the related contracts cannot be resold. Finance
receivables are charged off pursuant to the controlling documents of certain securitized pools, generally as described below under Charge
Off Policy. Management may authorize an extension of payment terms if collection appears likely during the next calendar month.

     F-9 

CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Our portfolio of finance receivables
consists of small-balance homogeneous contracts that are collectively evaluated for impairment on a portfolio basis. 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.

Finance Receivables Measured at Fair Value

Effective January 1, 2018,
we adopted the fair value method of accounting for finance receivables acquired on or after that date. For each finance receivable acquired
after 2017, we consider the price paid on the purchase date as the fair value for such receivable. We estimate the cash to be received
in the future with respect to such receivables, based on our experience with similar receivables acquired in the past. We then compute
the internal rate of return that results in the present value of those estimated cash receipts being equal to the purchase date fair value.
Thereafter, we recognize interest income on such receivables on a level yield basis using that internal rate of return as the applicable
interest rate. Cash received with respect to such receivables is applied first against such interest income, and then to reduce the recorded