CONFORMED COPY
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
May 19, 1998
Date of Report ..........................................................
(Date of earliest event reported)
CHRYSLER FINANCIAL CORPORATION
.........................................................................
(Exact name of registrant as specified in its charter)
State of Michigan 333-31093 38-2997412
.........................................................................
(State or other jurisdiction (Commission) (IRS Employer
of incorporation) File No.) Identification No.)
27777 Franklin Rd., Southfield, Michigan 48034
..............................................
(Address of principal executive offices)
(248) 948-3067
Registrant's telephone number, including area code.......................
This filing relates to Registration Statement No. 333-31093.
<PAGE>
Item 5. Other Events.
-------------
In connection with the proposed offering of Premier Auto Trust 1998-3,
Asset Backed Notes, Class A-2, Class A-3, Class A-4, and Class B, attached as
Exhibit 99 are certain materials prepared by Chrysler Financial Corporation
that are required to be filed pursuant to the no-action letter dated May 20,
1994 issued by the staff of the Securities and Exchange Commission (the
"Commission") to Kidder, Peabody Acceptance Corporation-1, Kidder, Peabody &
Co. Incorporated and Kidder Structured Asset Corporation and the no-action
letter dated February 15, 1995 issued by the staff of the Commission to the
Public Securities Association.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
-------------------------------------------------------------------
Listed below are the financial statements, pro forma financial
information and exhibits, if any, filed as a part of this Report:
(a) Financial statements of businesses acquired;
None
(b) Pro forma financial information:
None
(c) Exhibits:
Exhibit 99
-2-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CHRYSLER FINANCIAL CORPORATION
Date: May 21, 1998 By: /s/ B.C. Babbish
----------------------
B.C. Babbish
Assistant Secretary
-3-
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description of Exhibit
- ------- ----------------------
99 Material prepared by Chrysler Financial Corporation in connection
with Premier Auto Trust 1998-3 pursuant to the no-action letter
dated May 20, 1994 issued by the staff of the Securities and
Exchange Commission (the "Commission") to Kidder, Peabody
Acceptance Corporation-1, Kidder, Peabody & Co. Incorporated and
Kidder Structured Asset Corporation and the no-action letter
dated February 15, 1995 issued by the staff of the Commission to
the Public Securities Association.
-4-
EXHIBIT 99
Premier Auto Trust 1998-3 Structural and Collateral Materials
<PAGE>
Premier Auto Trust 1998-3
Chrysler Financial Corporation, Seller and Servicer
Subject to Revision
Term Sheet dated May 19, 1998
Issuer................................ Premier Auto Trust 1998-3 (the "Trust"
or the "Issuer").
The Notes............................. (i) Class A-1 _____% Asset Backed
Notes (the "Class A-1 Notes") in the
aggregate initial principal amount of
$300,000,000. The Class A-1 Notes are
not being offered hereby;
(ii) Class A-2 ____% Asset Backed
Notes (the "Class A-2 Notes") in the
aggregate initial principal amount of
$510,000,000;
(iii) Class A-3 _____% Asset Backed
Notes (the "Class A3 Notes") in the
aggregate initial principal amount of
$370,000,000;
(iv) Class A-4 _____% Asset Backed
Notes (the "Class A-4 Notes" and,
together with the Class A-1 Notes,
Class A-2 Notes and Class A-3 Notes,
the "Class A Notes") in the aggregate
initial principal amount of
$311,875,000; and
(v) Class B __% Asset Backed Notes
(the "Class B Notes" and, together
with the Class A Notes, the "Notes")
in the aggregate initial principal
amount of $58,125,000. The Class B
Notes are subordinated to the Class A
Notes to the extent described herein.
Terms of the Notes:
A. Distribution Dates.............. Payments of interest and principal on
the Notes will be made on the eighth
day of each month or, if any such day
is not a Business Day, on the next
succeeding Business Day (each, a
"Distribution Date"), commencing
June 8, 1998.
B. Interest Rates.................. The Notes will have fixed interest
rates.
C. Interest........................ Interest on the outstanding principal
amount of any Class of Notes, other
than the Class A-1 Notes, will accrue
at the applicable Interest Rate from
the Closing Date (in the case of the
first Distribution Date) or from the
eighth day of the month preceding the
month of a Distribution Date to and
including the seventh day of the month
of such Distribution Date (each, an
"Interest Accrual Period"). Interest
on the outstanding principal amount of
the Class A-1 Notes will accrue at the
applicable Interest Rate from the
Closing Date (in the case of the first
Distribution Date) or from the most
recent Distribution Date on which
interest has been paid to but
excluding the following Distribution
Date (each, a "Class A-1 Interest
Accrual Period"). Interest on each
class of Notes, other than the Class
A-1 Notes, will be calculated on the
basis of a 360-day year consisting of
twelve 30-day months. Interest on the
Class A-1 Notes will be calculated on
the basis of the actual number of days
in the
Class A-1 Interest Accrual
Period divided by 360. The failure to
pay interest on the Class B Notes will
not be an Event of Default unless the
Class A-4 Notes have been paid in
full.
D. Principal....................... Except during the Release Period
described below under
"Overcollateralization and Release of
Initial Overcollateralization Amount",
principal of the Notes will be payable
on each Distribution Date in an amount
equal to the Noteholders' Principal
Distributable Amount for the calendar
month (the "Collection Period")
preceding such Distribution Date to
the extent of funds available
therefor. The "Noteholders' Principal
Distributable Amount" will equal (i)
the Regular Principal Distribution
Amount plus (ii) the Accelerated
Principal Distribution Amount. The
"Regular Principal Distribution
Amount" with respect to any
Distribution Date will generally equal
the amount of principal paid plus the
unpaid principal balance of liquidated
defaulted Receivables. The
"Accelerated Principal Distribution
Amount" with respect to a Distribution
Date will equal the portion, if any,
of the Total Distribution Amount for
the related Collection Period that
remains after payment of (a) the
Servicing Fee (together with any
portion of the Servicing Fee that
remains unpaid from prior Distribution
Dates), (b) the interest due on the
Notes, (c) the Regular Principal
Distribution Amount, and (d) the
amount, if any, required to be
deposited in the Reserve Account on
such Distribution Date.
During the Release Period, the
principal of the Notes payable on each
Distribution Date will equal the
Release Period Noteholders' Principal
Distributable Amount described below
under "Overcollateralization and
Release of Initial
Overcollateralization Amount".
No principal payments will be made (i)
on the Class A-2 Notes until the Class
A-1 Notes have been paid in full; (ii)
on the Class A-3 Notes until the Class
A-2 Notes have been paid in full;
(iii) on the Class A-4 Notes until the
Class A-3 Notes have been paid in
full; or (iv) on the Class B Notes
until the Class A-4 Notes have been
paid in full.
The outstanding principal amount of
the Class A-1 Notes, to the extent not
previously paid, will be payable on
the [February 1999] Distribution Date
(the "Class A-1 Final Scheduled
Distribution Date"); the outstanding
principal amount of the Class A-2
Notes, to the extent not previously
paid, will be payable on the [December
2000] Distribution Date (the "Class
A-2 Final Scheduled Distribution
Date"); the outstanding principal
amount of the Class A-3 Notes, to the
extent not previously paid, will be
payable on the [December 2001]
Distribution Date (the "Class A-3
Final Scheduled Distribution Date");
the outstanding principal amount of
the Class A-4 Notes, to the extent not
previously paid, will be payable on
the [October 2002] Distribution Date
(the "Class A-4 Final Scheduled
Distribution Date"); and the
outstanding principal amount of the
Class B Notes, to the extent not
previously paid, will be payable on
the [September 2004] Distribution Date
(the "Class B Final Scheduled
Distribution Date").
E. Optional Redemption............. The outstanding Class A-4 Notes and
Class B Notes will be subject to
2
<PAGE>
redemption in whole, but not in part,
on any Distribution Date by the
Servicer when the Pool Balance shall
have declined to 10% or less of the
Initial Pool Balance (as defined
below).
Overcollateralization and
Release of Initial Over-
collateralization Amount............ The $1,615,892,109.69 initial
aggregate principal balance of the
Receivables (the "Initial Pool
Balance") as of May 15, 1998 (the
"Cutoff Date") will exceed the
$1,550,000,000.00 initial aggregate
principal amount of the Notes (the
"Initial Note Principal Balance") by
an amount equal to $65,892,109.69 (the
"Initial Overcollateralization
Amount"), which is approximately 4.25%
of the Initial Note Principal Balance.
Unless offset by losses on the
Receivables or the release of cash
during the Release Period as described
below, the distribution of the
Accelerated Principal Distribution
Amount, if any, on a Distribution Date
is expected to cause the aggregate
principal amount of the Notes to
decrease faster than the Pool Balance
decreases, thereby increasing the
Overcollateralization Amount. The
"Overcollateralization Amount" in
respect of a Distribution Date is
equal to (a) the Pool Balance as of
the end of the related Collection
Period (the "Related Pool Balance")
minus (b) the aggregate outstanding
amount of Notes after giving effect to
payments made on the Notes on such
Distribution Date (the "Note Amount").
Subject to the conditions set forth
below, on each Distribution Date
during the Release Period (as defined
below), the amount of principal
distributable on the Notes will be the
Release Period Noteholders' Principal
Distributable Amount rather than the
Noteholders' Principal Distributable
Amount. The "Release Period
Noteholders' Principal Distributable
Amount" shall equal, on any
Distribution Date during the Release
Period, the excess of (a) the Note
Amount on such Distribution Date
(prior to giving effect to any
distributions on such Distribution
Date) over (b) the product of (1)
95.0% and (2) the Related Pool
Balance. On each Distribution Date
during the Release Period, any portion
of the Total Distributable Amount
which remains after payment of (a) the
Servicing Fee, (b) the Noteholders'
Interest Distributable Amount, (c) the
Release Period Noteholders' Principal
Distributable Amount and (d) any
amount required to increase the amount
in the Reserve Account to the
Specified Reserve Account Balance will
be released to the Trust and then to
Premier Receivables L.L.C. (the
"Company") (such released amount being
the "Cash Release Amount" or "Cash
Release"). The cumulative amount of
all Cash Releases during the Release
Period shall not exceed the Initial
Overcollateralization Amount.
The release of cash to the Trust, and
then to the Company, as described
above is subject to the satisfaction
of all of the following conditions:
(1) no Cash Release will be permitted
until the date (the "First Release
Distribution Date") that is the later
of:
(i) the Distribution Date
following the Distribution Date on
which the Overcollateralization
Amount is at least equal to the
3
<PAGE>
[Initial Overcollateralization
Amount]
plus
----
[2% x (Related Pool Balance for such
preceding Distribution Date
minus
-----
Initial Overcollateralization
Amount)]; and
(ii) the Distribution Date
following the Distribution Date on
which the Class A-1 Notes have been
repaid in full;
(2) the amount in the Reserve Account
shall be equal to the applicable
Specified Reserve Account Balance; and
(3) the cumulative amount of the Cash
Releases will not exceed the Initial
Overcollateralization Amount.
On the Distribution Date (the "Last
Release Distribution Date") on which
the cumulative amount of the Cash
Releases equals the Initial
Overcollateralization Amount, the
amount of principal distributable to
the Noteholders will be the
Noteholders' Principal Distributable
Amount less the Cash Release Amount
released on such Distribution Date. On
each Distribution Date thereafter, the
full Noteholders' Monthly Principal
Distributable Amount will be
distributable as principal to the
Noteholders. The "Release Period" is
the period from the First Release
Distribution Date to the Last Release
Distribution Date. Any Cash Release
released to the Company will not be
available to make payments on the
Notes.
Reserve Account....................... The "Reserve Account" will be created
with an initial deposit by Chrysler
Financial Corporation ("CFC") on the
Closing Date of cash or Eligible
Investments having a value at least
equal to $15,500,000.00 (the
"Specified Reserve Account Amount"),
which is 1.00% of the Initial Note
Principal Balance. If the
Overcollateralization Percentage at
any time on or after the Last Release
Distribution Date equals at least
7.75%, the Specified Reserve Account
Balance will be $11,625,000.00 which
is 0.75% of the Initial Note Principal
Balance. The "Overcollateralization
Percentage" in respect of a
Distribution Date is the percentage
derived from a fraction, the numerator
of which is the Overcollateralization
Amount for such Distribution date and
the denominator of which is the
Related Pool Balance.
Funds will be withdrawn from the
Reserve Account to cover any
shortfalls in the amounts due to the
Noteholders. On each Distribution
Date, the Reserve Account will be
reinstated up to the Specified Reserve
Account Balance to the extent of the
portion, if any, of the Total
Distribution Amount remaining after
payment of the Servicing Fee and the
amounts due to the Noteholders.
The "Pool Balance" at any time will
represent the aggregate principal
balance of the Receivables at the end
of the preceding Collection Period,
after giving effect to all payments
received from Obligors and Purchase
4
Amounts to be remitted by the Servicer
or the Seller, as the case may be, all
for such Collection Period, and all
losses realized on Receivables
liquidated during such Collection
Period.
Priority of Payments;
Subordination of Class B Notes........ Collections in respect of the
Receivables for each Collection Period
will generally be applied in the
following order of priority: (i) the
Servicing Fee, together with any
previously unpaid Servicing Fees, to
the Servicer, (ii) interest on the
Class A Notes, to the holders of the
Class A Notes, (iii) interest on the
Class B Notes, to the holders of the
Class B Notes, (iv) the Regular
Principal Distribution Amount (or,
during the Release Period, the Release
Period Noteholders' Principal
Distributable Amount), in the priority
set forth herein, to the applicable
Noteholders, (v) amounts, if any, to
the Reserve Account until it contains
the Specified Reserve Account Balance,
(vi) except during the Release Period,
the Accelerated Principal Distribution
Amount, to the applicable Noteholders,
(vii) during the Release Period, the
Cash Release Amount, to the Company,
and (viii) the remaining balance, if
any, to the Company. No principal
payments will be made on the Class B
Notes until the Class A Notes have
been paid in full.
Rating of the Notes................... The Class A Notes will be rated in the
highest investment rating category by
at least two nationally recognized
rating agencies. The Class B Notes
will be rated at least in the "A"
category or its equivalent by such
rating agencies.
5
<PAGE>
The Receivables Pool
As of the Cutoff Date, each Receivable (i) had a principal balance
of at least $300 and (ii) was not more than 30 days past due (an account is
not considered past due if the amount past due is less than 10% of the
scheduled monthly payment). As of the Cutoff Date, no Obligor on any
Receivable was noted in the related records of the Seller as being the
subject of a bankruptcy proceeding, and no Obligor on any Receivable financed
a Financed Vehicle under the Seller's "New-Finance Buyer Plan" program. No
selection procedures believed by the Seller to be adverse to Noteholders were
used in selecting the Receivables.
Set forth in the following tables is information concerning the
composition, distribution by annual percentage rate ("APR") and the
geographic distribution of the Receivables Pool as of the Cutoff Date.
<TABLE>
<CAPTION>
Premier Auto Trust 1998-3
Composition of the Receivables Pool
Weighted Average Aggregate Number of Weighted Weighted Average
APR of Principal Balance Receivables Average Average Principal
Receivables Remaining Original Term Balance
Term
- ---------------- ------------------ ----------- ------------ ------------- ----------
<S> <C> <C> <C> <C> <C>
9.22% $1,615,892,109.69 101,142 56.68 months 58.92 months $15,976.47
</TABLE>
Approximately 76.09% of the aggregate principal balance of the
Receivables, constituting 67.97% of the number of the Receivables, represent
new vehicles, and approximately 23.91% of the aggregate principal balance of
the Receivables, constituting 32.03% of the number of the Receivables,
represent used vehicles. Approximately 84.75% of the aggregate principal
balance of the Receivables represent vehicles manufactured or distributed by
Chrysler and approximately 15.25% of the Initial Pool Balance represents
financing of vehicles manufactured or distributed by vehicle manufacturers
other than Chrysler. All of the Receivables are Simple Interest Receivables.
6
<PAGE>
<TABLE>
<CAPTION>
Premier Auto Trust 1998-3
Distribution by APR of the Receivables Pool
Percent
Aggregate of Aggregate
APR Range Number of Principal Principal
Receivables Balance Balance(1)
--------- ----------- ---------- ------------
<C> <C> <C> <C>
0.00% to 5.00% .......... 12,514 $ 226,159,167.15 14.0%
5.01% to 6.00% .......... 6,906 157,348,084.03 9.7
6.01% to 7.00% .......... 1,767 32,736,185.52 2.0
7.01% to 8.00% .......... 11,255 184,601,891.49 11.4
8.01% to 9.00% .......... 14,723 235,458,475.04 14.6
9.01% to 10.00% ......... 14,153 218,052,404.57 13.5
10.01% to 11.00% ........ 9,590 150,363,420.55 9.3
11.01% to 12.00% ........ 7,783 118,796,934.63 7.4
12.01% to 13.00% ........ 6,061 86,318,402.78 5.3
13.01% to 14.00% ........ 4,558 60,698,977.84 3.8
14.01% to 15.00% ........ 3,498 43,565,230.11 2.7
15.01% to 16.00% ........ 1,984 24,838,757.40 1.5
16.01% to 17.00% ........ 1,888 21,401,963.71 1.3
17.01% to 18.00% ........ 2,137 28,914,658.86 1.8
Greater than 18.00% ..... 2,325 26,637,556.01 1.6
------- ----------------- -----
Totals ............. 101,142 $1,615,892,109.69 100.0%
======= ================= =====
<FN>
- ---------
(1) Percentages may not add to 100.0% because of rounding.
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Premier Auto Trust 1998-3
Geographic Distribution of the Receivables Pool(1)(2)
State Percent of State Percent of
- ----- Aggregate ----- Aggregate
Principal Principal
Balance Balance
---------- ----------
<S> <C> <C> <C>
Alabama................ 0.9% Montana................ 0.1%
Alaska................. 0.3 Nebraska............... 0.7
Arizona................ 1.3 Nevada................. 0.6
Arkansas............... 0.8 New Hampshire.......... 1.5
California............. 5.7 New Jersey............. 4.0
Colorado............... 1.2 New Mexico............. 0.5
Connecticut............ 1.3 New York............... 6.2
Delaware............... 0.4 North Carolina......... 3.2
District of Columbia... 0.0 North Dakota........... 0.4
Florida................ 5.8 Ohio................... 2.0
Georgia................ 1.9 Oklahoma............... 1.0
Hawaii................. 0.1 Oregon................. 1.1
Idaho.................. 0.1 Pennsylvania........... 7.1
Illinois............... 5.9 Rhode Island........... 0.4
Indiana................ 2.9 South Carolina......... 1.3
Iowa................... 1.1 South Dakota........... 0.3
Kansas................. 1.6 Tennessee.............. 1.3
Kentucky............... 1.4 Texas.................. 6.8
Louisiana.............. 1.2 Utah................... 0.3
Maine.................. 0.6 Vermont................ 0.5
Maryland............... 5.0 Virginia............... 3.4
Massachusetts.......... 2.8 Washington............. 1.1
Michigan............... 5.2 West Virginia.......... 0.6
Minnesota.............. 2.5 Wisconsin.............. 1.6
Mississippi............ 0.6 Wyoming................ 0.1
------
Missouri............... 3.2 Total............... 100.0%
======
<FN>
- ---------
(1) Based on physical addresses of the dealers originating the receivables.
(2) Percentages may not add to 100.0% because of rounding.
Delinquencies, Repossessions and Net Losses
Set forth below is certain information concerning the experience
of CFC and its United States subsidiaries pertaining to retail new and used
automobile and light duty truck receivables, including those previously sold
which CFC continues to service. There can be no assurance that the
delinquency, repossession and net loss experience on the Receivables will be
comparable to that set forth below.
8
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
Delinquency Experience(1)
(Dollars in Millions)
At March 31, At December 31,
------------------------------------------ ---------------------------------------------
1998 1997 1997 1996
-------------------- ------------------- -------------------- --------------------
Number of Number of Number of Number of
Contracts Amount Contracts Amount Contracts Amount Contracts Amount
--------- ------ --------- ------ --------- ------ --------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Portfolio .............. 1,708,879 $22,204 1,675,853 $21,150 1,697,755 $21,879 1,679,880 $21,197
Period of
Delinquency
31-60 Days ........... 40,777 $ 485 46,645 $ 609 58,421 $ 708 65,297 $ 843
61 Days or More ..... 4,158 58 5,972 90 7,360 102 8,175 118
--------- ------- --------- ------- -------- ------- --------- -------
Total Delinquencies .... 44,935 $ 543 52,617 $ 699 65,781 $ 810 73,472 $ 961
Total Delinquencies as
a Percent of the
Portfolio............. 2.63% 2.42% 3.14% 3.31% 3.87% 3.70% 4.37% 4.53%
<CAPTION>
At December 31,
--------------------------------------------------------------------
1995 1994 1993
-------------------- ------------------- --------------------
Number of Number of Number of
Contracts Amount Contracts Amount Contracts Amount
--------- ------ --------- ------ --------- ------
<S> <C> <C> <C> <C> <C> <C>
Portfolio ............... 1,653,533 $20,913 1,444,736 $16,977 1,352,218 $14,116
Period of Delinquency
31-60 Days ............ 55,507 $ 720 25,888 $ 293 16,350 $ 153
61 Days or More ....... 6,792 100 2,085 27 1,383 15
--------- ------- --------- ------- --------- -------
Total Delinquencies ..... 62,299 $ 820 27,973 $ 320 17,733 $ 168
Total Delinquencies as
a Percent of the
Portfolio ............. 3.77% 3.92% 1.94% 1.88% 1.31% 1.19%
<FN>
- ---------
(1) All amounts and percentages are based on the gross amount scheduled to
be paid on each contract, including unearned finance and other charges.
The information in the table includes an immaterial amount of retail
installment sale contracts on vehicles other than automobiles and light
duty trucks and includes previously sold contracts which CFC continues
to service.
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Credit Loss/Repossession Experience(1)
(Dollars in Millions)
Three-Months
Ended March 31 Year Ended December 31,
--------------------------- ----------------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Average Amount Outstanding
During the Period .......... $ 22,119 $ 21,203 $ 21,485 $ 21,062 $ 19,486 $ 15,517 $ 12,882
Average Number of Contracts
Outstanding During the
Period ..................... 1,702,837 1,679,235 1,688,525 1,671,405 1,572,963 1,396,497 1,341,084
Percent of Contracts Acquired
During the Period with
Recourse to the Dealer ..... 7.76% 10.80% 10.91% 9.05% 14.8% 17.0% 16.2%
Repossessions as a Percent of
Average Number of Contracts
Outstanding(2) ............. 3.14% 3.21% 3.40% 3.82% 3.05% 2.36% 2.15%
Net Losses as a Percent of
Liquidations(3)(4) ........ 3.45% 3.01% 3.36% 3.17% 2.25% 1.38% 1.34%
Net Losses as a Percent of
Average Amount
Outstanding(2)(3) .......... 1.72% 1.58% 1.80% 1.68% 1.16% 0.73% 0.75%
<FN>
- ---------
(1) Except as indicated, all amounts and percentages are based on the gross
amount scheduled to be paid on each contract, including unearned finance
and other charges. The information in the table includes an immaterial
amount of retail installment sales contracts on vehicles other than
automobiles and light duty trucks and includes previously sold contracts
that CFC continues to service.
(2) Percentages have been annualized for the three months ended March 31,
1998 and 1997 and are not necessarily indicative of the experience for th
year.
(3) Net losses are equal to the aggregate of the balances of all contracts
which are determined to be uncollectible in the period, less any
recoveries on contracts charged off in the period or any prior periods,
including any losses resulting from disposition expenses and any losses
resulting from the failure to recover commissions to dealers with
respect to contracts that are prepaid or charged off.
(4) Liquidations represent a reduction in the outstanding balances of the
contracts as a result of monthly cash payments and charge-offs.
</TABLE>
During 1997, CFC experienced high credit losses on automotive
retail receivables. CFC management attributes the credit losses to the
combined effect of the credit mix of retail receivable originations and the
increase in frequency of default and repossession necessitating an increase
in the level of servicing and collection by CFC. While such credit loss
experience may continue, actions have been taken to improve credit mix,
collections and servicing of the retail receivable portfolio. However, no
assurance can be given as to future results.
The net loss figures above reflect the fact that the Seller had
recourse to Dealers on a portion of its retail installment sale contracts. By
aggregate principal balance, approximately 1.85% of the Receivables represent
contracts with recourse to Dealers.
10
