DougBusk: Well, I mean, that’s a complicated question, especially after three years of the pandemic. We are originating a higher credit-score customer. Part of that is just due to the fact that elevated used car prices and inventory shortages have caused it to be very difficult for the deeper subprime consumer, the purchase of vehicles in certain respects. So we’ve seen an increase in the credit quality of kind of our bread and butter business, if you will, due to that phenomenon. All those returns are expected to be consistent with what we expected five years ago or so. The other thing that’s contributing to an increase in credit quality is we’ve intentionally rolled out a program targeted at a little higher credit-quality borrower.
The idea between that program is to provide us with incremental volume. Now that incremental volumes at a return that’s somewhat lower than our bread and butter business, but still above our cost of capital. I mean that’s the conceptual thinking behind it. Obviously, whether those statements about returns or not prove to be true, will be dependent on loan performance.
Ray Cheesman: Along the same lines, I believe I saw it in the press release that it said that when consumer credit tightens, prepayments slow. And then we also have the phenomenon that the ’22 class was the last group that bought with kind of the 68% used car value surge that gets talked about in the press a lot. And now of course, that’s rolling over. When you say that you updated for your loan assumptions during the quarter, I’m guessing those were some of the things you took into account so that we shouldn’t see another one of those in, say, Q3 or Q4 or do you kind of rejigger or rethink things every single quarter? You said you make your best guess.
DougBusk: Yes. I mean we think we’ve put our best guess forward here. We’re – like I said, we’re using more recent loan performance data, and we’re comfortable with our forecast. But obviously, if you look at our track record, we’re never perfectly accurate. Sometimes the loans perform better than expected and some performed worse. So we’ll periodically adjust our models and update our assumptions, but we’re putting our best foot forward here.
Ray Cheesman: Can I ask just one more? Do you guys do electric vehicles or have any plans to?
DougBusk: We do electric vehicles, not a significant amount of them, and the chief barrier there is just price. It creates affordability issues for our targeted customer.
Ray Cheesman: Okay. Thank you very much, Doug.
DougBusk: You bet.
Operator: Thank you. And with no further questions in the queue, I would like to turn the conference back over to Mr. Busk for any additional or closing remarks.
Doug Busk: We would like to thank everyone for their support and for joining us on our conference call today. If you have any additional follow-up questions, please direct them to our Investor Relations mailbox at ir@creditacceptance.com. We look forward to talking to you again next quarter. Thank you.
Operator: Once again, this does conclude today’s conference. We thank you for your participation. Everyone, have a great day.
