Finance receivables consist of Contracts and Direct Loans, each of which comprise a portfolio segment. Each portfolio segment consists of smaller balance homogeneous loans which are collectively evaluated for impairment.

The Company purchases individual Contracts from used and new automobile dealers in its markets. There is no relationship between the Company and the dealer with respect to a given Contract once the assignment of that Contract is complete. The dealer has no vested interest in the performance of any Contract the Company purchases. The Company’s charge off policy is 121 days past due. In addition, Chapter 13 Bankruptcies, once the Company is notified of such, is notated on the customer's account of the bankruptcy status. When the Company receives notice that a Chapter 13 Bankruptcy plan is not confirmed by the courts or the loan is 121 days past due, the loan is charged off. This policy is in line with industry standards, considering the sub-prime nature of our customers. In the event of repossession, the charge-off will occur after standard collection practices by the Company, as determined by the residency state of a customer. This practice is consistent with the sub-prime industry.

Contracts and Direct Loans included in finance receivables are detailed as follows as of fiscal years ended March 31:

The Company purchases Contracts from automobile dealers at a negotiated price that is less than the original principal amount being financed by the purchaser of the automobile. The Contracts are predominantly for used vehicles. As of March 31, 2022, the average model year of vehicles collateralizing the portfolio was a 2012 vehicle. The terms of the Contracts range from 12 to 84 months and bear an average contractual interest rate of 22.9% and 23.4% as of March 31, 2022 and 2021, respectively.

Direct Loans are typically for amounts ranging from $1,000 to $15,000 and are generally secured by a lien on an automobile, watercraft or other permissible tangible personal property. The majority of Direct Loans are originated with current or former customers under the Company’s automobile financing program. The typical Direct Loan represents a better credit risk than Contracts due to the customer’s historical payment history with the Company; however, the underlying collateral is less valuable. In deciding whether or not to make a loan, the Company considers the individual’s credit history, job stability, income, and impressions created during a personal interview with a Company loan officer. Additionally, because most of the Direct Loans made by the Company to date have been made to borrowers under Contracts previously purchased by the Company, the payment history of the borrower under the Contract is a significant factor in making the loan decision. Direct Loans constituted approximately 14% of the aggregate principal amount of the Company’s loan portfolio as of March 31, 2022, and 8% of the aggregate principal amount of the Company’s loan portfolio as of March 31, 2021. The terms of the Direct Loans range from 6 to 72 months and bear an average contractual interest rate of 29.8% and 29.7% as of March 31, 2022 and 2021, respectively.

The following presents the activity in our allowance for credit losses:


	For the year ended March 31, 2022
	(In thousands)
	Indirect			Direct			Total
Balance at beginning of year	$	6,001		$	153		$	6,154
Provision for credit losses		4,210			1,755			5,965
Charge-offs		(13,515	)		(980	)		(14,495	)
Recoveries		5,265			60			5,325
Balance at end of year	$	1,961		$	988		$	2,949


	For the year ended March 31, 2021
	(In thousands)
	Indirect			Direct			Total
Balance at beginning of year	$	10,433		$	729		$	11,162
Provision for credit losses		7,250			-			7,250
Charge-offs		(17,141	)		(682	)		(17,823	)
Recoveries		5,459			106			5,565
Balance at end of year	$	6,001		$	153		$	6,154

A performing account is defined as an account that is less than 60 days past due. The Company defines an automobile contract as delinquent when more than 25% of payments contractually due by a certain date has not been paid by the immediately following due date, which date may have been extended within limits specified in the servicing agreements or as a result of a deferral. The period of delinquency is based on the number of days payments are contractually past due, as extended where applicable.

In certain circumstances, the Company will grant obligors one-month payment extensions. The only modification of terms in those circumstances is to advance the obligor’s next due date by one month and extend the maturity date of the receivable. There are no other concessions, such as a reduction in interest rate, forgiveness of principal or of accrued interest. Accordingly, the Company considers such extensions to be insignificant delays in payments rather than troubled debt restructurings.

A non-performing account is defined as an account that is contractually delinquent for 60 days or more or is a Chapter 13 bankruptcy account, and the accrual of interest income is suspended. The Company’s charge-off policy for contractually delinquent is 121 days. The Company’s charge-off policy aligns with practices within the subprime auto financing segment. See “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations” for more details.

In the event an account is dismissed from bankruptcy, the Company will decide, based on several factors, to begin repossession proceedings or to allow the customer to begin making regularly scheduled payments.

The following table is an assessment of the credit quality by creditworthiness as of March 31:


	(In thousands)
	2022						2021
	Contracts		Direct Loans		Total		Contracts		Direct Loans		Total
Performing accounts	$	149,976	$	24,102	$	174,078	$	166,828	$	13,717	$	180,545
Non-performing accounts		4,167		274		4,441		3,367		192		3,559
Total		154,143		24,376		178,519		170,195		13,909		184,104
Chapter 13 bankruptcy		254		13		267		123		10		133
Finance receivables	$	154,397	$	24,389	$	178,786	$	170,318	$	13,919	$	184,237

The following tables present certain information regarding the delinquency rates experienced by the Company with respect to Contracts and Direct Loans, excluding any Chapter 13 bankruptcy accounts:


	(In thousands)
Contracts	Balance Outstanding		30 – 59 days			60 –89 days			90-119 days			120+ days			Total
March 31, 2022	$	154,143	$	7,097		$	2,936		$	1,183		$	48		$	11,264
				4.60	%		1.90	%		0.77	%		0.03	%		7.31	%
March 31, 2021	$	170,195	$	6,289		$	2,430		$	896		$	42		$	9,657
				3.70	%		1.43	%		0.53	%		0.02	%		5.67	%


Direct Loans	Balance Outstanding		30 – 59 days			60 –89 days			90-119 days			120+ days			Total
March 31, 2022	$	24,376	$	607		$	197		$	77		$	-		$	881
				2.49	%		0.81	%		0.32	%		0.00	%		3.61	%
March 31, 2021	$	13,909	$	253		$	101		$	81		$	10		$	445
				1.82	%		0.73	%		0.58	%		0.07	%		3.20	%