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KBRA Assigns Preliminary Ratings to CarNow Auto Receivables Trust 2017

NEW YORK–(BUSINESS WIRE)–Kroll Bond Rating Agency (KBRA) announces the preliminary ratings to four classes of notes issued by CarNow Auto Receivables Trust 2017-1 (“CNART 2017-1”), a subprime auto asset-backed securities transaction.

CNART 2017-1 will issue $126.32 million of notes collateralized by approximately $159.2 million of subprime auto loan receivables. The transaction has initial credit enhancement levels ranging from 49.00% for the Class A notes to 29.00% for the Class C notes. The target enhancement levels for the Class A notes and Class C notes are 52.75% and 32.75%, respectively.

This transaction represents the first term ABS securitization in 2017 for J.D. Byrider and its finance subsidiary Byrider Finance, LLC, dba CarNow Acceptance Company and J.D. Byrider’s sixth securitization overall. Byrider Finance, LLC is the sponsor and servicer of the loans supporting the offered securities for this transaction.

J.D. Byrider has been in the Buy Here Pay Here auto finance business for over 25 years with experience buying, reconditioning and selling vehicles and originating and servicing auto loans to lower quality subprime obligors. J.D. Byrider focuses on providing reliable, needs based transportation and financing to its customers. The Company i) performs a rigorous inspection and reconditioning process on each vehicle, ii) offers no-haggle vehicle pricing with a 24 month/24,000 mile warranty iii) provides financing that fits the customer’s personal budget including bi-weekly or semi-monthly payment options to match the customer’s payday cycle and iv) focuses on customer service at each stage of the process. J.D. Byrider has a network of 166 stores, of which 27 are Company-owned and 139 are franchised as of December 31, 2016. The Company-owned stores are located predominantly in the mid-west, Indiana, Ohio, Pennsylvania, Kentucky and Tennessee.

KBRA applied its Global Auto Loan ABS methodology as part of its analysis of the transaction’s underlying collateral pool, the proposed capital structure and J.D. Byrider’s historical static pool data. KBRA also conducted an operational assessment of the Company, as well as a review of the transaction’s legal structure and transaction documents. KBRA will also review the operative agreements and legal opinions for the transaction prior to closing.

For complete details on the analysis, please see KBRA’s pre-sale report, CarNow Auto Receivables Trust 2017-1, which was published today at www.kbra.com.

Preliminary Ratings Assigned: CarNow Auto Receivables Trust 2017-1

Class Rating Expected Initial Principal Balance
A A (sf) $91,470,000
B BBB (sf) $23,090,000
C BB (sf) $11,760,000

Representations & Warranties Disclosure

All Nationally Recognized Statistical Rating Organizations are required, pursuant to SEC Rule 17g-7, to provide a description of a transaction’s representations, warranties and enforcement mechanisms that are available to investors when issuing credit ratings. KBRA’s disclosure for this transaction can be found in the report available here.

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The reference to $1,522,305 above represents the two-year annual average net income from operations during the period between January 1, 2020 and December 31, 2021 (“Traditional Measurement Period”) for the top 25%, or 26 of the 107 franchisee-owned Byrider Traditional stores. 38.4%, or 10 of those 26 Traditional Mature Stores, met or exceeded that two-year annual average. The entire set of 107 Traditional Mature Stores generated a two-year annual average net income from operations of $721,720 during the Traditional Measurement Period. 42.06%, or 45 of the 107 Traditional Mature Stores, met or exceeded that average. More detailed information regarding Traditional Mature Stores, including the average net income from operations for the bottom 25% of the Traditional Mature Stores, can be found in Byrider Franchising, LLC’s Franchise Disclosure Document dated July 6, 2022. This information is not intended as an offer to sell, or the solicitation of an offer to buy, a franchise. It is for informational purposes only. Currently, the following states regulate the offer and sale of franchises: California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Oregon, Rhode Island, South Dakota, Virginia, Washington, and Wisconsin. If you are a resident of one of these states, we will not offer you a franchise unless and until we have complied with applicable pre-sale registration and disclosure requirements in your jurisdiction. © Byrider Franchising, LLC. 12802 Hamilton Crossing Blvd., Carmel, Indiana 46032. All Rights Reserved.

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