Company: CPSS
Filing Date: 2025-03-12
Form Type: 10-K
Source: 0001683168-25-001548
Chunk: 37

Company: CONSUMER PORTFOLIO SERVICES, INC.
Filing Date: 2025-03-12
Form: 10-K
Item: Item 1
Chunk 37
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ables), lack of available
credit, the rate of inflation (such as the recent increase in inflation) and consumer perceptions of the economy, as well as other factors,
such as terrorist events, civil unrest, cyber-attacks, public health emergencies, extreme weather conditions or significant changes in
the geopolitical environment (such as the ongoing military conflict between Ukraine and Russia and the conflict in Israel) and/or public
policy, including increased state, local or federal taxation, could adversely affect the ability and willingness of obligors to meet their
payment obligations under the receivables we originate. Our operating results could be adversely affected if obligors are unable to make
timely payments on their receivables.

The above described negative
economic factors, as well as others, have also historically resulted in decreased consumer demand for motor vehicles, which may result
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