Fair Value Disclosures

3 Months Ended

Jun. 30, 2023

Note 8. Fair Value Disclosures

The Company’s financial instruments consist of cash, finance receivables, and the Credit Facility. Each of these financial instruments are not carried at fair value.

Finance receivables, net, approximates fair value based on the price paid to acquire Contracts. The price paid reflects competitive market interest rates and purchase discounts for the Company’s chosen credit grade in the economic environment. This market is highly liquid as the Company acquires individual loans on a daily basis from dealers.

The initial terms of the Contracts generally range from 12 to 72 months. Beginning in December 2017, the maximum initial term of a Contract was reduced to 60 months. The initial terms of the Direct Loans generally range from 12 to 60 months. If liquidated outside of the normal course of business, the amount received may not be the carrying value.

Repossessed assets, which are not financial instruments, are valued at the lower of the finance receivable balance prior to repossession or the estimated net realizable value of the repossessed asset. The Company estimates the net realizable value using estimated auction wholesale proceeds less costs to sell plus insurance claims outstanding, if any.

Based on current market conditions, the fair value of the Credit Facility as of June 30, 2023 was estimated to be equal to the book value. The interest rate for the Credit Facility is a variable rate based on SOFR pricing options.


	(In thousands)
	Fair Value Measurement Using
Description	Level 1		Level 2		Level 3		Fair Value		Carrying Value
Cash:
June 30, 2023	$	678	$	-	$	-	$	678	$	678
March 31, 2023	$	454	$	-	$	-	$	454	$	454
Finance receivables:
June 30, 2023	$	-	$	-	$	93,854	$	93,854	$	93,854
March 31, 2023	$	-	$	-	$	105,971	$	105,971	$	106,919
Repossessed assets:
June 30, 2023	$	-	$	-	$	1,953	$	1,953	$	1,953
March 31, 2023	$	-	$	-	$	1,491	$	1,491	$	1,491
Credit Facility:
June 30, 2023	$	-	$	-	$	15,250	$	15,250	$	15,250
March 31, 2023	$	-	$	-	$	29,100	$	29,100	$	29,100

The Company may be required, from time to time, to measure certain assets and liabilities at fair value on a nonrecurring basis. There were none at June 30, 2023 and March 31, 2023.

Level 1 is for financial assets and liabilities that have a regular mark to market mechanism for setting a fair market value. These assets and liabilities are considered to have readily observable, transparent prices and therefor a reliable, fair market value. Management has determined that this level to be most appropriate for cash.

Level 2 is for financial assets and liabilities that do not have regular market pricing, but whose fair value can be determined based on other data values or market pricing.

At each reporting period, all assets and liabilities for which the fair value measurement is based on significant unobservable inputs are classified as Level 3. Management has determined that this level to be most appropriate for the finance receivables, repossessed assets, and Credit Facility.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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