Credit Acceptance Corporation, the lender to car buyers with subprime credit scores, warned in April that it is seeing a sharp drop-off in payments as people shift their financial priorities to get through the coronavirus pandemic.

 

As unemployment soars, borrowers are putting off payments or "reallocating resources," Credit Acceptance said April 20 in a regulatory filing, explaining that it needs more time to publish a quarterly report. New lending also is slowing as dealerships in 26 states are forced to shutter their lots, the company said.
 
"A continued disruption in our workforce, decrease in collections from our consumers or decline in consumer loan assignments could cause a material adverse effect on our financial position, liquidity and results of operations," Credit Acceptance wrote.
 
The firm is among the first to report an uptick in delinquencies as some lenders offer forbearance, hoping that what consumers need is time to get through the pandemic so they can resume payments. Ally Financial Inc. said April 20 that about 25% of its auto-loan customers have taken advantage of its payment-deferral program.
 
Offering forbearance can make it harder for shareholders and analysts to gauge the degree to which borrowers are unable to pay. The filing by Credit Acceptance shows some consumers already can’t keep up — evidence of more trouble ahead for auto lenders. Its shares fell 9% to $268 in late trading April 20 in New York.