Company: CPSS
Filing Date: 2025-03-12
Form Type: 10-K
Source: 0001683168-25-001548
Chunk: 3

Company: CONSUMER PORTFOLIO SERVICES, INC.
Filing Date: 2025-03-12
Form: 10-K
Item: Item 1
Chunk 3
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2 

Contract Acquisitions

When a retail automobile buyer
elects to obtain financing from a dealer, the dealer takes a credit application to submit to its financing sources. Typically, a dealer
will submit the buyer’s application to more than one financing source for review. We believe the dealer’s decision to choose a financing
source is based primarily on: (i) the interest rate and monthly payment made available to the dealer’s customer; (ii) any fees to be charged
to (or paid to) the dealer by the financing source; (iii) the timeliness, consistency, and predictability of response; (iv) funding turnaround
time; (v) any conditions to purchase; and (vi) the financial stability of the financing source. Dealers can send credit applications to
us by entering the necessary data on our website or through one of two third-party application aggregators. For the year ended December
31, 2024, we received 3.3 million applications. Approximately 57% of all applications came through DealerTrack (the industry leading dealership
application aggregator), 43% via another aggregator, Route One. A portion of the DealerTrack and Route One volume are applications from
our pass-through arrangements with other lenders who send us applications from their dealers in cases where those lenders choose not to
approve those applications. For the year ended December 31, 2024, such pass-through applications represented 41% of our total applications.
For the year ended December 31, 2024, our automated application decisioning system produced our initial decision within seconds on approximately
99% of those applications.

Upon receipt an application,
if the application meets certain minimum criteria, we immediately order two credit reports to document the buyer’s credit history and
an alternative data credit score provided by a major credit reporting bureau. If, upon review by our proprietary automated decisioning
system, or in some cases, one of our credit analysts, we determine that the applicant and structure of the automobile financing contract
meets our criteria, we advise the dealer of our decision to approve the contract and the terms under which we will purchase it. For applications
that do not meet our criteria, we may forward them to one or more business partners who also invest in subprime automobile contracts.
In the case of one third-party partner, as described above, we may purchase contracts they approve, followed by immediate resale to them,
after which we retain the servicing. If this third-party declines the application, we advise the dealer that we