Company: CPSS
Filing Date: 2025-03-12
Form Type: 10-K
Source: 0001683168-25-001548
Chunk: 180

Company: CONSUMER PORTFOLIO SERVICES, INC.
Filing Date: 2025-03-12
Form: 10-K
Item: Item 1A
Chunk 180
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in an increase in the inventory of used motor vehicles and depress the price at which repossessed motor vehicles may be sold or delay
the timing of those sales. If the default rate on our receivables increases and the price at which the vehicles may be sold at auction
declines, our financial position, liquidity, results of operation and our ability to enter into future financing transactions may be adversely
affected.

If Interest Rates Rise, Our Results of Operations May Be Impaired.

Our principal means of financing
our portfolio of automobile contracts is to issue asset-backed notes in securitizations. The interest payable on such notes is our largest
expense. Although such expense is fixed with respect to issued securitization trust debt, the terms of future securitizations may vary.

The credit spread between
the interest rates payable on our securitization trust debt and the rates payable on risk-free investments has varied. The Federal Reserve
increased interest rates multiple times in 2022 and 2023. As a result, we experienced increased interest expense in 2023. In 2024, the
Federal Reserve lowered short term interest rates. The pace and direction of additional interest rate changes remain uncertain. If interest
rates on risk-free debt increase, or if our spread above risk-free rates increase, or both, we would expect an increase in interest expense.
If interest rates in general should rise, our expenses would likewise rise, which could have a material adverse effect on our financial
position, liquidity, results of operation and our ability to enter into future financing transactions.

 21 

If We Are Unable to Compete Successfully with our Competitors,
Our Results of Operations May Be Impaired.

The automobile financing business
is highly competitive. We compete with a number of national, regional and local finance companies. In addition, competitors or potential
competitors include other types of financial services companies, such as commercial banks, savings and loan associations, leasing companies,
credit unions providing retail loan financing and lease financing for new and used vehicles and captive finance companies affiliated with
major automobile manufacturers, such as Ford Motor Credit Company, LLC and General Motors Financial Company, Inc. Many of our competitors
and potential competitors possess substantially greater financial, sales, technical, personnel and other resources than we do, including
greater access to capital markets for unsecured commercial paper and investment grade rated debt instruments, and to other funding sources
which may be unavailable to us. Moreover, our future profitability will be directly related to the availability and cost