SF-3 1 d249020dsf3.htm SF-3 SF-3
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As filed with the Securities and Exchange Commission on August 30, 2016

Registration No. 333-            

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM SF-3

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

EFCAR, LLC

(Depositor for the trusts described herein)

(Exact name of registrant as specified in its charter)

 

 

A Delaware Limited Liability Company

IRS Employer Number: 45-3969432

Commission File Number of depositor: 333-            

Central Index Key Number: 0001654238

222 West Las Colinas Boulevard, Suite 1800 N

Irving, Texas 75039

(214) 572-8276

 

 

EXETER FINANCE CORP.

(Sponsor for the trusts described herein)

(Exact name of sponsor as specified in its charter)

 

 

A Texas Corporation

Central Index Key Number of sponsor: 0001541713

222 West Las Colinas Boulevard, Suite 1800 N

Irving, Texas 75039

(214) 572-8276

 

 

WALTER EVANS, ESQ.

Exeter Finance Corp.

222 West Las Colinas Boulevard, Suite 1800 N

Irving, Texas 75039

(214) 572-8256

(Name, Address and Telephone Number, including area code, of Agent for Service)

 

 

Copy to:

JOHN P. KEISERMAN, ESQ.

Katten Muchin Rosenman LLP

575 Madison Avenue

New York, New York 10022

(212) 940-6385

 

 

Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this registration statement as determined by market conditions.

If any of the securities being registered on this Form SF-3 are to be offered pursuant to Rule 415 under the Securities Act of 1933, check the following box.  x

If this Form SF-3 is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this Form SF-3 is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

 

 

CALCULATION OF REGISTRATION FEE

 

 

Title of Each Class of

Securities to be Registered

 

Amount

to be

Registered

 

Proposed

Maximum

Offering Price

Per Unit

 

Proposed

Maximum

Aggregate

Offering Price

 

Amount of

Registration Fee(1)

Asset Backed Securities

  (2)   (2)   (2)   (2)

 

 

(1) Calculated in accordance with Rule 457(s) of the Securities Act of 1933.
(2) An unspecified amount of securities of each identified class is being registered as may from time to time be offered at unspecified prices. The registrant is deferring payment of all of the registration fees for such securities in accordance with Rules 456(c) and 457(s) of the Securities Act of 1933.

 

 

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant files a further amendment that specifically states that this registration statement will thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this registration statement becomes effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

 

 

 


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$         [(1)] Automobile Receivables Backed Notes

Exeter Automobile Receivables Trust 20    -  

Issuing Entity (CIK No.                     )

EFCAR, LLC

Depositor (CIK No. 0001654238)

 

LOGO

 

 

 

  

Sponsor and Servicer (CIK No. 0001541713)

 

The issuing entity will issue -

 

•       [seven] classes of notes that are offered by this prospectus[; and

 

•       [[one] class of subordinated notes that is not offered by this prospectus. These subordinated notes [are anticipated to be privately placed primarily with institutional investors]/[will initially be retained by the depositor or an affiliate of the depositor].]]

 

We suggest that you read the section entitled “Risk Factors” on page 20 of this prospectus and consider the factors in that section before making a decision to invest in the notes.

 

The notes are automobile loan asset-backed securities which represent obligations of the issuing entity and are not interests in or obligations of any other person or entity.

 

Neither the notes nor the automobile loan contracts will be insured or guaranteed by any governmental agency or instrumentality.

 

You should retain this prospectus for future reference.

  

 

The notes -

 

•       are backed by a pledge of assets of the issuing entity. The assets of the issuing entity securing the notes will include a pool of sub-prime automobile loan contracts secured by new and used automobiles, light duty trucks, minivans and sports utility vehicles. These sub-prime automobile loan contracts are contracts made to borrowers who have experienced prior credit difficulties and generally have credit bureau scores ranging from 470 to 670. These sub-prime automobile loan contracts generally conform with the Federal Deposit Insurance Corporation’s definition of “sub-prime”;

 

•       receive monthly distributions [of interest and, after the revolving period, of principal] on the      day of each month, or, if not a business day, then on the next business day, beginning on             , 20    ; and

 

•       currently have no trading market.

 

Credit enhancement for the notes offered by this prospectus will consist of -

 

•       excess cashflow collected on the pool of automobile loan contracts;

 

•       overcollateralization resulting from the excess of the principal amount of the automobile loan contracts over the aggregate principal amount of the notes;

  

 

•       the subordination of each class of notes to those classes senior to it[, including the subordination of the class of notes which is not being offered by this prospectus to each class of notes being offered by this prospectus]; and

 

•       a reserve account that can be used to cover payments of timely interest, parity payments and ultimate principal of the notes.

[Exeter Automobile Receivables Trust 20    -     will offer asset-backed notes with an aggregate initial principal balance of $        or an aggregate initial principal balance of $        . If the aggregate initial principal balance of the publicly offered notes is $        , the following notes will be offered:]

 

     Principal
Amount [(2)]
     Interest
Rate
    Final Scheduled
Distribution Date
[(3)]
    Price
to Public(4)
    Underwriting
Discounts
    Proceeds
to Seller (5)
 

Class A-1 Notes

   $                                       , 20                               

Class A-2[-A] Notes[(6)]

   $                                       , 20                               

[Class A-2-B Notes(6)]

   $                      One-month LIBOR +                  , 20                                %] 

Class A-3 Notes

   $                                       , 20     %                           

Class B Notes

   $                                       , 20                               

Class C Notes

   $                                       , 20                               

Class D Notes

   $                                       , 20                               
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
   $                        $                   $                   $                

 

[(1) Aggregate initial principal balance of the publicly offered notes if the aggregate initial principal balance of the issued notes is $        . If the aggregate initial principal balance of the issued notes is $        , the aggregate initial principal balance of the publicly offered notes will be $        .]
[(2) If the aggregate initial principal balance of the publicly offered notes is $        , the following notes will be offered: $         of Class A-1 Notes, $         aggregate amount of Class A-2[-A] Notes [and Class A-2-B Notes], $         of Class A-3 Notes, $         of Class B Notes, $         of Class C Notes and $         of Class D Notes. The sponsor will make the determination regarding the initial principal balance of the notes based on, among other considerations, market conditions at the time of pricing. See “Risk Factors—Risks associated with unknown aggregate initial principal balance of the notes.”]
[(3) If the aggregate initial principal balance of the publicly offered notes is $            , the final scheduled distribution dates for the notes will be as follows:             , 20     for the Class A-1 Notes,             , 20     for the Class A-2 Notes,             , 20     for the Class A-3 Notes,             , 20     for the Class B Notes,             , 20            for the Class C Notes and             , 20     for the Class D Notes.]
(4) Plus accrued interest, if any, from             , 20    .
(5) Before deducting expenses, estimated to be $        .
[(6) The allocation of the principal amount between the Class A-2-A Notes and the Class A-2-B Notes will be determined on or before the date of pricing.]

[The issuing entity will not pay principal during the revolving period, which is scheduled to terminate on             , 20    . However, if the revolving period terminated early as a result of an early amortization event, principal payments may commence prior to that date.] [The issuing entity will enter into a hedge agreement with [hedge counterparty] for the purpose of providing an additional source of funds for payments on the notes.]

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

 

[                    ]   Joint Bookrunners   [                    ]
[                    ]   Co-Managers for the Class A Notes   [                    ]

 

 

Prospectus dated             , 20    .

The registrant intends to utilize pay-as-you-go takedowns from the registration statement on Form SF-3 to which this form of prospectus relates (Registration No. 333-            ) and in connection with any corresponding issuance of securities the registrant will pay the related registration fee and include the following table in the related prospectus.]

 

 

Title of Each Class of

Securities to be Registered

 

Amount

to be

Registered

 

Proposed

Maximum

Offering Price

per Unit

 

Proposed

Maximum

Aggregate

Offering Price

 

Amount of

Registration fee

Asset Backed Securities

  $                   %   $               $            

 

 


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This document is not an offer to sell these securities, and it is not soliciting an offer to buy these securities, in any state where the offer or sale is not permitted.

 

 

We do not claim the accuracy of the information in this prospectus as of any date other than the date stated on the cover of this prospectus.

TABLE OF CONTENTS

 

     Page  

SUMMARY OF PROSPECTUS

     4   

RISK FACTORS

     20   

USE OF PROCEEDS

     46   

THE SPONSOR AND THE SERVICER

     46   

THE DEPOSITOR

     47   

[THE BACKUP SERVICER]

     48   

THE ISSUING ENTITY

     49   

THE OWNER TRUSTEE

     52   

THE INDENTURE TRUSTEE

     52   

THE CUSTODIAN

     53   

THE ASSET REPRESENTATIONS REVIEWER

     53   

[THE HEDGE COUNTERPARTY]

     54   

[THE ORIGINATOR[S]]

     55   

THE SPONSORS AUTOMOBILE FINANCING PROGRAM

     55   

THE SPONSORS SECURITIZATION PROGRAM

     59   

THE SPONSORS [VINTAGE ORIGINATION AND] STATIC POOL INFORMATION

     59   

THE TRUST PROPERTY

     60   

DEPOSITOR REVIEW OF AUTOMOBILE LOAN CONTRACTS

     61   

THE AUTOMOBILE LOAN CONTRACTS

     62   

YIELD AND PREPAYMENT CONSIDERATIONS

     90   

DESCRIPTION OF THE NOTES

     103   
     Page  

DESCRIPTION OF THE TRANSACTION DOCUMENTS

     111   

MATERIAL LEGAL ASPECTS OF THE AUTOMOBILE LOAN CONTRACTS

     136   

MATERIAL FEDERAL INCOME TAX CONSEQUENCES

     146   

ERISA CONSIDERATIONS

     151   

POOL FACTORS

     153   

[LEGAL INVESTMENT

     153   

VOLCKER RULE CONSIDERATIONS

     153   

LEGAL PROCEEDINGS

     154   

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     155   

CREDIT RISK RETENTION

     155   

RATINGS

     158   

UNDERWRITING

     159   

LEGAL OPINIONS

     162   

INCORPORATION BY REFERENCE

     162   

FINANCIAL INFORMATION

     163   

GLOSSARY

     164   

ANNEX A [VINTAGE ORIGINATION INFORMATION ]

     A-1   

ANNEX B STATIC POOL INFORMATION

     B-1   

ANNEX C CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES

     C-1   
 

 

Until ninety (90) days after the date of this prospectus, all dealers that buy, sell or trade the notes, may be required to deliver a prospectus, regardless of whether they are participating in the offer. This is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

 

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Important Notice about the Information Presented in this Prospectus

 

  You should rely only on information provided or referenced in this prospectus. We have not authorized anyone to provide you with different information.

 

  We include cross-references in this prospectus to captions in these materials where you can find further related discussions. The table of contents on the previous page provides the pages on which these captions are located.

Where You Can Find More Information

The depositor, EFCAR, LLC, as registrant, filed with the Securities and Exchange Commission, or the Commission, or the SEC, under the Commission file number 333-                    , a registration statement under the Securities Act of 1933, as amended, or the Securities Act, with respect to the notes offered pursuant to this prospectus. This prospectus, which forms a part of the registration statement, omits certain information contained in such registration statement pursuant to the rules and regulations of the Commission.

As long as the issuing entity is required to report under the Securities Exchange Act of 1934, as amended, or the Exchange Act, the servicer or the depositor will file for the issuing entity, annual reports on Form 10-K and distribution reports on Form 10-D, any current reports on Form 8-K, and amendments to those reports with the Commission under the file number 333-            -        . A copy of any reports may be obtained by any noteholder by request to the servicer.

The depositor engaged a third party to assist in certain components of the review of the automobile loan contracts that is described under “Depositor Review of Automobile Loan Contracts.” The report produced by that third party is a “third-party due diligence report” pursuant to Rule 15Ga-2 of the Exchange Act, and the findings and conclusions of that report were therefore filed with the Commission on a Form ABS-15G on             , 20    under file number 333-            -        .

A number of items are incorporated by reference into this prospectus. See “Incorporation by Reference” for a description of incorporation by reference.

You can read and copy the registration statement and the reports referenced above at the public reference room at the Commission at 100 F Street N.E., Washington, DC 20549. You can obtain information about the public reference section by calling the SEC at 1-800-SEC-0330. In addition, the Commission maintains a website containing reports, proxy materials, information statements and other items. The address is http://www.sec.gov.

You may request a free copy of any of the filings incorporated by reference into this prospectus by writing or calling: Exeter Finance Corp., 222 West Las Colinas Boulevard, Suite 1800 N, Irving, Texas 75039; telephone (214) 572-8276.

Forward-Looking Statements

Any projections, expectations and estimates in this prospectus are not historical in nature but are forward-looking statements based on information and assumptions the sponsor and the depositor consider reasonable. Forward-looking statements are about circumstances and events that have not yet taken place, so they are uncertain and may vary materially from actual events. Neither the sponsor nor the depositor is obligated to update or revise any forward-looking statements, including changes in economic conditions, portfolio or asset pool performance or other circumstances or developments, after the date of this prospectus.

 

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Summary of Transaction Parties (1)

 

LOGO

 

 

(1) This chart provides only a simplified overview of the relationships between the key parties to the transaction. Refer to this prospectus for a further description of the relationships between the key parties.
(2) The Class E Notes and the Certificate are not being offered hereby.

 

2


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Flow of Funds(1)

 

LOGO

 

(1) This chart provides only a simplified overview of the priority of the monthly distributions. The order in which funds will flow each month as indicated above is applicable for so long as no event of default has occurred. For more detailed information or for information regarding the flow of funds upon the occurrence of an event of default, please refer to the prospectus for a further description.

 

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Summary of Prospectus

 

  This summary highlights selected information from this prospectus and does not contain all of the information that you need to consider in making your investment decision. To understand all of the terms of the offering of the notes, carefully read this entire prospectus.

 

  This summary provides an overview of certain calculations, cash flows and other information to aid your understanding and is qualified by the full description of these calculations, cash flows and other information in this prospectus.

 

  There are material risks associated with an investment in the notes. You should read the section entitled “Risk Factors” on page      of this prospectus and consider the risk factors described in that section before making a decision to invest in the notes.

 

The Issuing Entity

Exeter Automobile Receivables Trust 20    -    , or the issuing entity, is a Delaware statutory trust. The issuing entity will issue the notes and be liable for their payment. The issuing entity’s principal asset will be a pool of sub-prime automobile loan contracts secured by new and used automobiles, light duty trucks, minivans and sports utility vehicles.

The Depositor

EFCAR, LLC, or the depositor, is a Delaware limited liability company which is a wholly-owned special-purpose subsidiary of Exeter. The depositor will sell the pool of sub-prime automobile loan contracts to the issuing entity.

The Sponsor and the Servicer

Exeter Finance Corp., or Exeter, or the sponsor, or the servicer, is a Texas corporation. Exeter’s principal offices are located at 222 West Las Colinas Boulevard, Suite 1800 N, Irving, Texas 75039; telephone (214) 572-8276.

The sponsor purchased the pool of sub-prime automobile loan contracts without recourse from automobile dealers [and/or unaffiliated third party originators][and/or directly originated the pool of sub-prime automobile loan contracts]. The sponsor will sell the automobile loan contracts to the depositor and, in its capacity as servicer, will service the automobile loan contracts on behalf of the issuing entity.

The Indenture Trustee[, Backup Servicer] and the Custodian

[                ], or the indenture trustee[, or the backup servicer] or the custodian is a [state/national] [entity type]. [                    ] will serve as indenture trustee pursuant to the indenture, as indenture trustee [and backup servicer] pursuant to the sale and servicing agreement and as custodian pursuant to the custodian agreement. [The backup servicer will receive monthly pool data, confirm certain data on the monthly servicer reports and become successor servicer if Exeter is terminated as servicer for any reason.]

The Owner Trustee

[Owner Trustee], or the owner trustee, is a [state/national] [entity type]. [Owner Trustee] will serve as owner trustee not in its individual capacity but solely as owner trustee of the issuing entity, pursuant to the trust agreement.

The Asset Representations Reviewer

[Asset Representations Reviewer], or the asset representations reviewer, is a [state/national] [entity type]. [Asset Representations Reviewer] will serve as asset representations reviewer pursuant to the asset representations review agreement.

[The Hedge Counterparty]

[[Hedge Counterparty], or the hedge counterparty, is a [state/national] [entity type]. In order to hedge against the interest rate risk

 

 



 

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that results from the fixed rate automobile loan contracts producing the income stream that will support the variable rate Class A-2-B Notes, on the closing date, the issuing entity will enter into either an interest rate swap transaction or an interest rate cap transaction with the hedge counterparty.]

[The Originator[s]]

[Insert disclosure regarding the percentage of automobile loan contracts purchased from any material unaffiliated third party originator or originated directly by the sponsor.]

[Statistical Calculation Date

            , 20    . This is the date that was used in preparing the statistical information that is presented in this prospectus.]

[Initial] Cutoff Date

            , 20    . The issuing entity will receive amounts collected on the [initial] automobile loan contracts after this date.

Closing Date

On or about             , 20    .

[Revolving Period

The revolving period will commence on the closing date and will end on the earlier of (i)             , 20         [date no later than the three year anniversary of the closing date] (after giving effect to distributions on that date), which is the scheduled amortization date, and (ii) the date on which an early amortization event occurs (prior to giving effect to any distributions made on that date if such date is a distribution date). Early amortization events are described further in “Description of the Transaction Documents—Early Amortization Events” in this prospectus. If no early amortization event occurs, principal will first be distributable to the noteholders on the             , 20         distribution date. If an early amortization event occurs, principal will first be distributable to the noteholders on the distribution date immediately succeeding such early amortization event or, if the early amortization event occurs on a distribution date, on the date on which the early amortization event occurs.]

Description of the Securities

The issuing entity will issue [                    ] classes of asset-backed notes pursuant to the indenture. The notes are designated as the “Class A-1 Notes,” the “Class A-2[-A] Notes,” [the Class A-2-B Notes,” ]the “Class A-3 Notes,” the “Class B Notes,” the “Class C Notes,” [and] the “Class D Notes” [and the “Class E Notes”]. [The Class A-2-B Notes are sometimes referred to as the “Floating Rate Notes.” The Class A-2-A Notes and the Class A-2-B Notes, collectively, are the “Class A-2 Notes” and constitute a single class having equal rights to payments of principal and interest, which will be made on a pro rata basis based on the principal balance of the Class A-2 Notes.] The Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes are the “Class A Notes.”

A certificate representing the residual interest in the issuing entity will also be issued pursuant to the trust agreement, but the certificate will initially be retained by the depositor or an affiliate and is not being offered pursuant to this prospectus.

[The Class A Notes, the Class B Notes, the Class C Notes and the Class D Notes are being offered by this prospectus and are sometimes referred to as the publicly offered notes. [The Class E Notes are not being offered by this prospectus, and [are anticipated to be privately placed primarily with institutional investors][will initially be retained by the depositor or an affiliate of the depositor]. The Class E Notes are sometimes referred to as the non-offered notes.]

 

 



 

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[If the initial principal balance of the publicly offered notes is $        , each]/[Each] class of notes will have the initial note principal balance, interest rate and final scheduled distribution date listed in the following tables:

[Publicly Offered] Notes

 

Class

   Initial
Note
Principal
Balance[(1)]
     Interest
Rate
    Final
Scheduled
Distribution
Date[(2)]
 

A-1

   $                                           ,20       

A-2[-A(3)]

   $                                           ,20       

[A-2-B(3)]

   $                     
 
 
One-month
LIBOR +
    
  
  
                ,20    

A-3

   $                                           ,20       

B

   $                                           ,20       

C

   $                                           ,20       

D

   $                                           ,20       

 

[(1)  If the aggregate initial principal balance of the publicly offered notes is $        , the following notes will be offered: $         of Class A-1 Notes, $         aggregate amount of Class A-2[-A] Notes [and Class A-2-B Notes], $         of Class A-3 Notes, $         of Class B Notes, $         of Class C Notes and $         of Class D Notes.]
[(2)  If the aggregate initial principal balance of the publicly offered notes is $        , the final scheduled distribution dates for the notes will be as follows:             , 20     for the Class A-1 Notes,             , 20     for the Class A-2 Notes,             , 20     for the Class A-3 Notes,             , 20     for the Class B Notes,             , 20     for the Class C Notes and             , 20     for the Class D Notes.]
[(3)  The allocation of the principal amount between the Class A-2-A Notes and the Class A-2-B Notes will be determined on or before the date of pricing.]

[Non-Offered Notes

 

Class

   Initial
Note
Principal
Balance[(1)]
     Interest
Rate
    Final Scheduled
Distribution
Date[(2)]
 

E

   $                                           ,20    

 

[(1)  If the aggregate initial principal balance of the publicly offered notes is $        , $         of Class E Notes will be issued.]
[(2)  If the aggregate initial principal balance of the publicly offered notes is $        , the final scheduled distribution date for the Class E Notes will be             , 20    .]

[The sponsor will make the determination regarding the initial principal balance of the notes based on, among other considerations, market conditions at the time of pricing. See “Risk Factors—Risks associated with unknown aggregate initial principal balance of the notes.”

Interest on each class of notes will accrue during each interest period at the applicable interest rate.]

[With respect to the Floating Rate Notes, for each interest period, LIBOR will be the rate for deposits in U.S. dollars for a one-month period which appears on the Reuters Screen LIBOR01 Page (or similar replacement page) as of 11:00 a.m., London time, on the related LIBOR determination date, as described further under “Description of the Notes—Determination of LIBOR.”

The LIBOR determination date for each interest period will be:

 

              , 20     for the interest period from the closing date to the first distribution date; and

 

  for each interest period thereafter, the second London business day prior to the distribution date on which such interest period begins.]

The [publicly offered] notes will initially be issued in book-entry form only, and will be issued in minimum denominations of $1,000 and multiples of $1,000 (except for one note of each class which may be issued in a denomination other than an integral multiple of $1,000).

The notes will not be listed on any securities exchange.

You may hold your [publicly offered] notes through The Depository Trust Company in the United States or through Clearstream Banking, société anonyme or the Euroclear System in Europe.

The notes will be secured solely by the pool of sub-prime automobile loan contracts and the other assets of the issuing entity which are described under “—The Trust Property.”

 

 



 

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Distribution Dates

 

  The distribution date will be the      day of each month, subject to the business day rule set forth below, commencing on             , 20    .

 

  Business day rule:

If any distribution date is not a business day, then the distribution due on that date will be made on the next business day.

 

  Record dates:

The record date for each distribution date is the close of business on the business day immediately preceding that distribution date.

 

  Collection periods:

The collection period for each distribution date is the calendar month immediately preceding the calendar month in which that distribution date occurs or, for the first distribution date, the period after the [initial] cutoff date to the close of business on             , 20    . Amounts received on the trust property during each collection period will be used to make the payments described under “—Payments” on the related distribution date.

Payments

As further described under the section of this prospectus entitled “Description of the Transaction Documents — Distributions — Distribution Date Payments,” the servicer will instruct the indenture trustee to make the distributions from available funds on each distribution date in the following order of priority (except in those circumstances when a priority of payments set forth under “—Events of Default” is applicable):

 

1. [if the hedge agreement is a swap agreement, to the hedge counterparty, net payments (excluding swap termination payments), if any, then due to it under the interest rate swap transaction;]

 

[2.] to the servicer, the servicing fee for the related calendar month, any supplemental servicing fees for the related calendar month, any reimbursements for mistaken deposits and other related amounts and
  certain other amounts due on the automobile loan contracts that the servicer is entitled to retain; to the sponsor, amounts deposited into the lockbox account but not related to interest, principal or extension fees due on the automobile loan contracts; and to any successor servicer, transition fees not to exceed the cap specified in the sale and servicing agreement;

 

2. to the indenture trustee, the custodian, the owner trustee[, the backup servicer] and the asset representations reviewer, any accrued and unpaid fees, expenses and indemnities then due to each of them (to the extent the servicer has not previously paid those fees, expenses and indemnities), in each case subject to a maximum annual limit specified in the sale and servicing agreement;

 

3. [pari passu, (a)] to pay interest due on the Class A Notes [and (b) if the hedge agreement is a swap agreement, to the hedge counterparty, swap termination payments (so long as the hedge counterparty is not a defaulting party or the sole affected party with respect to the termination of the hedge agreement);];

 

4. [after the revolving period,] to pay principal to the extent necessary to reduce the principal balance of the Class A Notes to the pool balance, which amount will be paid out as described under “—Principal”;

 

5. to pay the remaining principal balance of any Class A Notes on their respective final scheduled distribution dates;

 

6. to pay interest due on the Class B Notes;

 

7. [after the revolving period,] to pay principal to the extent necessary, after giving effect to any payments made under clauses 4 and 5 above, to reduce the combined principal balance of the Class A Notes and Class B Notes to the pool balance, which amount will be paid out as described under “—Principal”;
 

 



 

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8. to pay the remaining principal balance of the Class B Notes on its final scheduled distribution date;

 

9. to pay interest due on the Class C Notes;

 

10. [after the revolving period,] to pay principal to the extent necessary, after giving effect to any payments made under clauses 4, 5, 7 and 8 above, to reduce the combined principal balance of the Class A Notes, Class B Notes and Class C Notes to the pool balance, which amount will be paid out as described under “—Principal”;

 

11. to pay the remaining principal balance of the Class C Notes on its final scheduled distribution date;

 

12. to pay interest due on the Class D Notes;

 

13. [after the revolving period,] to pay principal to the extent necessary, after giving effect to any payments made under clauses 4, 5, 7, 8, 10 and 11 above, to reduce the combined principal balance of the Class A Notes, Class B Notes, Class C Notes and Class D Notes to the pool balance, which amount will be paid out as described under “—Principal”;

 

14. to pay the remaining principal balance of the Class D Notes on its final scheduled distribution date;

 

15. [to pay interest due on the Class E Notes;]

 

16. [[after the revolving period,] to pay principal to the extent necessary, after giving effect to any payments made under clauses [4, 5, 7, 8, 10, 11, 13 and 14] above, to reduce the combined principal balance of the Class A Notes, Class B Notes, Class C Notes, Class D Notes and Class E Notes to the pool balance, which amount will be paid out as described under “—Principal”;]

 

17. [to pay the remaining principal balance of the Class E Notes on its final scheduled distribution date;]

 

18. to the reserve account, the amount necessary to cause the amount deposited therein to equal the specified reserve account amount;
19. to pay principal to achieve the specified amount of overcollateralization, which amount will be paid out as described under “—Principal”;

 

20. to pay each of the indenture trustee, the custodian, the owner trustee[, the backup servicer] and any successor servicer and the asset representations reviewer any fees, expenses and indemnities then due to such party that are in excess of the related cap or annual limitation specified in the sale and servicing agreement;

 

21. [if the hedge agreement is a swap agreement, to the hedge counterparty, any unpaid swap termination payments;] and

 

22. to pay all remaining amounts to the certificateholder.

On any distribution date that the amount on deposit in the reserve account, together with available funds, is sufficient to pay all amounts due pursuant to priorities 1 through [17] set forth above and the note principal balance of all outstanding classes of notes, such amounts will be used to pay the outstanding notes and applicable fees and expenses in full on such distribution date.

Interest

Interest on the notes will be payable on each distribution date. The interest period relating to each distribution date will be the period from and including the      day of the preceding calendar month—or, in the case of the first distribution date, from and including the closing date—to but excluding the      day of the current calendar month. Interest on the notes of each class will accrue at the interest rate for that class during each interest period. Interest payable on the Class A Notes will be paid pari passu to the holders of the Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes.

[Interest on the Class A-1 Notes [and the Class A-2-B Notes ] will be calculated on an “actual/360” basis.] Interest on the [other classes of] notes will be calculated on a “30/360” basis.

 

 



 

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Principal

 

  Principal of the notes will be payable on each distribution date [after the revolving period]:

 

  1. as necessary to prevent undercollateralization or to cause the remaining principal balance of a class of notes to be repaid on its final scheduled distribution date, and

 

  2. as necessary to build or maintain overcollateralization at its required amount.

 

  The classes of notes are “sequential pay” classes. On each distribution date, all amounts allocated to the payment of principal as described in clauses [4, 5, 7, 8, 10, 11, 13, 14, 16, 17 and 19] of “Payments” above will be aggregated and will be paid out in the following order (except in those circumstances when a priority of payments set forth below in “Events of Default—Post-Default Application of Funds “ is applicable):

first, the Class A–1 Notes will amortize, until they are paid in full;

once the Class A–1 Notes are paid in full, the Class A–2 Notes will begin to amortize, until they are paid in full;

once the Class A–2 Notes are paid in full, the Class A–3 Notes will begin to amortize, until they are paid in full;

once the Class A–3 Notes are paid in full, the Class B Notes will begin to amortize, until they are paid in full;

once the Class B Notes are paid in full, the Class C Notes will begin to amortize, until they are paid in full; [and]

once the Class C Notes are paid in full, the Class D Notes will begin to amortize, until they are paid in full[; and

once the Class D Notes are paid in full, the Class E Notes will begin to amortize, until they are paid in full].

 

  Because the notes are “sequential pay,” if, due to losses, insufficient liquidation proceeds or otherwise, the trust property proves to be inadequate to repay the principal of all of the notes in full, it is possible that certain earlier maturing classes of notes will be paid in full and that the losses will be fully borne by the later maturing classes of notes. In that case, losses would be borne in reverse order of payment priority (i.e. beginning with the most junior class then outstanding).

The Trust Property

The issuing entity’s assets will principally include:

 

  a pool consisting of primarily sub-prime automobile loan contracts, which are secured by new and used automobiles, light duty trucks, minivans and sports utility vehicles;

 

  collections on the automobile loan contracts received after             , 20     [or, in the case of subsequent automobile loan contracts, after the related cutoff date];

 

  the security interests in the financed automobiles securing the automobile loan contracts;

 

  the automobile loan contract files;

 

  an assignment of all rights to proceeds from claims on insurance policies covering the financed automobiles or the obligors;

 

  an assignment of all rights to proceeds from liquidating the automobile loan contracts;

 

  an assignment of the depositor’s rights against dealers under agreements between the sponsor and the dealers;

 

  [an assignment of the depositor’s rights against other unaffiliated third party originators under agreements between the sponsor and such other unaffiliated third party originators;]
 

 



 

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  amounts held in [pre-funding account,][the revolving account,] the collection account, the lockbox account, the note distribution account and the reserve account;

 

  other rights under the transaction documents; and

 

  all proceeds from the items described above.

The Automobile Loan Contract Pool

 

  The automobile loan contracts consist of motor vehicle retail installment sale contracts originated by dealers [and/or unaffiliated third party originators][and/or originated directly by the sponsor] for assignment to the sponsor. All of the automobile loan contracts were originated in accordance with the sponsor’s credit policies. The automobile loan contracts are contracts made primarily to borrowers who have experienced prior credit difficulties and generally have credit bureau scores ranging from 470 to 670.

 

  [From time to time on distribution dates during the revolving period, collections on the automobile loan contracts that have been deposited to the revolving account pursuant to the priority of payments set forth under “Description of the Transaction Documents—Distributions—Distribution Date Payments” in this prospectus will be used to purchase subsequent automobile loan contracts.]

 

  Upon discovery of a breach by the depositor of any of the representations and warranties with respect to the automobile loan contracts under the sale and servicing agreement in which the interests of any noteholder are materially and adversely affected by the breach, the depositor shall have the obligation to repurchase from the issuing entity any related automobile loan contract affected by the breach.

 

  Upon the discovery of a breach by the sponsor of any of the representations and warranties with respect to the automobile loan contracts under the purchase agreement in which the interests of the noteholders are materially and adversely affected by the
   

breach, or of any other event which requires the repurchase of an automobile loan contract by the depositor under the sale and servicing agreement, the sponsor shall have the obligation to repurchase from the depositor any related automobile loan contract affected by the breach.

 

  Upon discovery of a breach by the servicer of certain covenants with respect to its servicing of the automobile loan contracts under the sale and servicing agreement in which the interests of the noteholders are materially and adversely affected by the breach, the servicer shall have the obligation to purchase from the issuing entity any related automobile loan contract affected by the breach.

Servicing Fee

The servicer will be paid on each distribution date from available funds prior to any payments on the notes. The servicer will receive the following fees as payment for its services on each distribution date:

 

  For so long as the sponsor [or the backup servicer] is the servicer:

 

    A servicing fee, equal to     % times the aggregate principal balance of the automobile loan contracts as of the beginning of the calendar month preceding the calendar month in which the distribution date occurs (or, in the case of the first distribution date, as of             , 20    ) times one-twelfth; and

 

    A supplemental servicing fee, equal to all administrative fees, expenses and charges paid by or on behalf of obligors, including late fees, prepayment fees and liquidation fees collected on the automobile loan contracts during the preceding calendar month (but excluding any fees or expenses related to extensions).

 

  If any entity other than the sponsor [or the backup servicer] becomes the servicer, the servicing fee may be adjusted as agreed upon by the majority noteholders of the most senior class outstanding and the successor servicer as set forth in the sale and servicing agreement.
 

 



 

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[Statistical] Pool Information

 

  [The statistical information in this prospectus is based on the automobile loan contracts in the pool as of the statistical calculation date. The statistical distribution of the characteristics of the [initial] automobile loan contract pool as of the [initial] cutoff date, which is             , 20    , will vary somewhat from the statistical distribution of those characteristics as of the statistical calculation date, although the sponsor and the depositor do not expect that the variance will be material.]

 

  [One [statistical] pool was produced that relates to the publicly offered notes if their aggregate initial note principal balance is $            .] As of [the statistical calculation date]/[the [initial] cutoff date], the automobile loan contracts in [the]/[that] [statistical] pool had:

 

    an aggregate principal balance of $            ;

 

    a weighted average annual percentage rate of approximately     %;

 

    a weighted average original term to maturity of approximately      months;

 

    a weighted average remaining term to maturity of approximately      months;

 

    an individual remaining term to maturity of not more than      months and not less than     months; and

 

    a weighted average custom score of approximately                      and a weighted average [non-zero] credit bureau score of approximately                     .

 

  [One [statistical] pool was produced that relates to the publicly offered notes if their aggregate initial note principal balance is $            .] As of [the statistical calculation date]/[the [initial] cutoff date], the automobile loan contracts in [the]/[that] [statistical] pool had:

 

    an aggregate principal balance of $            ;
    a weighted average annual percentage rate of approximately     %;

 

    a weighted average original term to maturity of approximately      months;

 

    a weighted average remaining term to maturity of approximately      months;

 

    an individual remaining term to maturity of not more than      months and not less than      months; and

 

    a weighted average custom score of approximately      and a weighted average [non-zero] credit bureau score of approximately     .

 

  [As of the [initial] cutoff date, [if the aggregate initial principal balance of the publicly offered notes is $            ,] the automobile loan contracts in the pool are expected to have an aggregate principal balance of approximately $            .]

 

  [As of the [initial] cutoff date, [if the aggregate initial principal balance of the publicly offered notes is $            ,] the automobile loan contracts in the pool are expected to have an aggregate principal balance of approximately $            .]

 

  [As of the [initial] cutoff date, [if the aggregate initial principal balance of the publicly offered notes is $            ,] up to     % of the automobile loan contracts may have a scheduled payment that is between              and              days past due.]

 

  [As of the [initial] cutoff date, [if the aggregate initial principal balance of the publicly offered notes is $            ,] up to     % of the automobile loan contracts may have a scheduled payment that is between      and      days past due.]
 

 



 

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  [As of [the statistical calculation date]/[the [initial] cutoff date],     % of the automobile loan contracts in the [statistical] pool [relating to the publicly offered notes if they have an aggregate initial note principal balance of $        ] have been delinquent between 31 and 60 days once; and     % of [the]/[that] automobile loan contracts in the [statistical] pool have been delinquent between 61 and 90 days once.]

 

  [As of [the statistical calculation date]/[the [initial] cutoff date],     % of the automobile loan contracts in the [statistical] pool [relating to the publicly offered notes if they have an aggregate initial note principal balance of $        ] have been delinquent between 31 and 60 days once; and     % of [the]/[that] automobile loan contracts in the [statistical] pool have been delinquent between 61 and 90 days once.]

 

  [As of [the statistical calculation date]/[the [initial] cutoff date],     % of the automobile loan contracts in the [statistical] pool [relating to the publicly offered notes if they have an aggregate initial note principal balance of $        ] have received one or more monthly payment extensions.]

 

  [As of [the statistical calculation date]/[the [initial] cutoff date],     % of the automobile loan contracts in the [statistical] pool [relating to the publicly offered notes if they have an aggregate initial note principal balance of $        ] have received one or more monthly payment extensions.]

 

  [As of [the statistical calculation date]/[the [initial] cutoff date],     % of the automobile loan contracts in the [statistical] pool [relating to the publicly offered notes if they have an aggregate initial note principal balance of $        ] have had their original terms modified.]

 

  [As of [the statistical calculation date]/[the [initial] cutoff date],     % of the automobile loan contracts in the [statistical] pool [relating to the publicly offered notes if they have an aggregate initial note principal balance of $        ] have had their original terms modified.]
  [As of [the statistical calculation date]/[the [initial] cutoff date],     % of the automobile loan contracts in the [statistical] pool [relating to the publicly offered notes if they have an aggregate initial note principal balance of $        ] are automobile loan contracts that were previously pledged as collateral in securitizations arranged by the sponsor that were repurchased in connection with a “clean-up call” of the related securitization.]

 

  [As of [the statistical calculation date]/[the [initial] cutoff date],     % of the automobile loan contracts in the [statistical] pool [relating to the publicly offered notes if they have an aggregate initial note principal balance of $        ] are automobile loan contracts that were previously pledged as collateral in securitizations arranged by the sponsor that were repurchased in connection with a “clean-up call” of the related securitization.]

 

  [Insert data regarding the number of automobile loan contracts in the [statistical] pool [relating to the publicly offered notes if they have an aggregate initial note principal balance of $        ] that are outside of the sponsor’s underwriting guidelines and a description of the nature of how these automobile loan contracts differ, to the extent applicable and material.]

 

  [Insert data regarding the number of automobile loan contracts in the [statistical] pool [relating to the publicly offered notes if they have an aggregate initial note principal balance of $        ] that are outside of the sponsor’s underwriting guidelines and a description of the nature of how these automobile loan contracts differ, to the extent applicable and material.]

[Revolving Feature

No principal payments will be made on the notes during the revolving period. During the

 

 



 

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revolving period, amounts otherwise available to pay principal on the notes on a distribution date will be deposited into the revolving account and applied to purchase subsequent automobile loan contracts from the depositor on distribution dates, at least once per calendar year. Additionally, excess cashflow will be deposited into the revolving account on each distribution date during the revolving period to purchase subsequent automobile loan contracts to build and maintain the required level of overcollateralization. If no early amortization event occurs, principal will first be distributable to the noteholders on the             , 20     distribution date. If an early amortization event does occur, principal will first be distributable to the noteholders on the distribution date immediately succeeding such early amortization event, or if the early amortization event occurs on a distribution date, on the date on which the early amortization event occurs.

The amount of subsequent automobile loan contracts that may be acquired from the depositor during the revolving period will be capped at the amount necessary to achieve the required level of overcollateralization. The amount of subsequent automobile loan contracts that are acquired from the depositor during the revolving period will be limited both by the amount of collections received by the issuing entity that it can use to purchase such subsequent automobile loan contracts and by the availability of eligible automobile loan contracts for the issuing entity to purchase.

The subsequent automobile loan contracts were, or will also have been, originated by dealers [and/or unaffiliated third party originators] [and/or originated directly by the sponsor] for assignment to the sponsor or will be automobile loan contracts originated directly by the sponsor, and will not be materially different from the automobile loan contracts acquired by the issuing entity on the closing date. All of the subsequent automobile loan contracts will have been originated in accordance with the sponsor’s credit policies. Additional eligibility requirements for the subsequent automobile loan contracts purchased with amounts on deposit in the revolving account are described under “The Automobile Loan Contracts— Eligibility

Criteria for Subsequent Automobile Loan Contracts.” The purchase price for each subsequent automobile loan contract will be its Principal Balance. To the extent that amounts allocated for the purchase of subsequent automobile loan contracts are not so used on any distribution date, they will remain in the revolving account and will be applied on subsequent distribution dates during the revolving period to purchase subsequent automobile loan contracts. Upon termination of the revolving period, the amortization period will begin and amounts received by the issuing entity will be available to be applied to the payment of principal of the notes as further described herein.]

[Pre-funding Feature

Approximately $        of the proceeds from the sale of the notes will be deposited into a pre-funding account and will be used by the issuing entity to purchase subsequent automobile loan contracts from the depositor after the closing date. The issuing entity expects to purchase automobile loan contracts with an aggregate principal balance equal to approximately $        [Insert amount that is no greater than 25% of the proceeds of the offering of the notes] with the amounts on deposit in the pre-funding account from time to time on or before             , 20     [Insert date that is no more than one year from the closing date], which is the last day of the pre-funding period. The automobile loan contracts purchased with the amounts on deposit in the pre-funding account are expected to represent approximately     % of the initial aggregate principal balance of the expected automobile loan contract pool as of             , 20    .

The subsequent automobile loan contracts were, or will also have been, originated by the sponsor or will be automobile loan contracts originated directly by the sponsor, and will not be materially different from the automobile loan contracts acquired by the issuing entity on the closing date. Additional eligibility requirements for the subsequent automobile loan contracts purchased with amounts on deposit in the pre-funding account are described under “The Automobile Loan Contracts— Eligibility Criteria for Subsequent Automobile Loan Contracts.”

 

 



 

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Approximately $         of the proceeds from the sale of the notes will be deposited into a capitalized interest account. Amounts will be released from the capitalized interest account on the first distribution date and on each distribution date thereafter, until the distribution date immediately following the last day of the pre-funding period, and will be used by the issuing entity as an additional source of funds to make payments on those distribution dates. The amount that will be released from the capitalized interest account on each of these distribution dates is described under “The Automobile Loan Contracts—                    .”]

Credit Enhancement

Credit enhancement for the notes will consist of excess cashflow, overcollateralization, subordination and a reserve account.

If available funds together with amounts available under any credit enhancement are insufficient to make required payments of principal of the notes, it is possible that the most senior class of notes outstanding will be paid in full and that the losses will be fully borne in reverse order of payment priority (i.e. starting with the most junior class of notes then outstanding) and losses may be incurred by the later maturing Class A Notes. In addition, the Class B Notes, the Class C Notes, the Class D Notes [and the Class E Notes] will only receive principal payments after each class of notes senior to that class of notes has been paid in full [(except as described below with respect to the Class E Notes)], exposing those noteholders to losses.

Excess Cashflow

It is anticipated that more interest will be paid by the obligors on the automobile loan contracts each month than the amount that is necessary to pay both the interest earned on the notes each month and all of the issuing entity’s monthly fees and expenses (including fees paid to the servicer, [backup servicer,] indenture trustee and owner trustee), resulting in excess cashflow. Any excess cashflow that is generated in a

particular month will be available maintain the reserve account at its target amount[, during the revolving period, to purchase subsequent automobile loan contracts so as to build and maintain a target level of overcollateralization and, after the revolving period], to make accelerated principal payments on the notes to build and maintain a target level of overcollateralization [and to make accelerated payments of principal on the Class E Notes to a specified amount rather than to the certificateholder]. See “Description of the Transaction Documents—Credit Enhancement—Application of Excess Cashflow” in this prospectus for more information regarding the application of excess cashflow.

Overcollateralization

Overcollateralization refers to the amount by which the aggregate principal balance of the automobile loan contracts [plus the amounts on deposit in the [revolving account][pre-funding account], if any,] exceeds the principal balance of the notes. On the closing date, the initial amount of overcollateralization will be approximately     % of [the sum of] the aggregate principal balance of the automobile loan contracts as of the cutoff date [plus the amount on deposit in the [revolving account][pre-funding account]].

[On each distribution date during the revolving period, excess cashflow, if any, will be used to purchase subsequent automobile loan contracts if necessary to build and maintain a target level of overcollateralization.] On each distribution date [after the revolving period], excess cashflow, if any, will be available after any required deposit to the reserve account to build and maintain a target level of overcollateralization as described in “Description of the Transaction DocumentsCredit EnhancementOvercollateralization” of this prospectus.

For the first two distribution dates and for any distribution date thereafter on which no Cumulative Net Loss Trigger exists, the target overcollateralization amount will equal the greater of (1)     % of the aggregate principal balance of the automobile loan contracts as of the end of the related collection period [plus the

 

 



 

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amount in the [revolving account][pre-funding account]] and (ii)     % of the aggregate principal balance of the automobile loan contracts as of the [initial] cutoff date. If a Cumulative Net Loss Trigger event exists on the third distribution date or on any distribution date thereafter, the target overcollateralization amount will equal the greater of (i)     % the aggregate principal balance of the automobile loan contracts as of the end of the related collection period [plus the amount in the [revolving account][pre-funding account]] and (ii)     % of the aggregate principal balance of the automobile loan contracts as of the [initial] cutoff date. See “Description of the Transaction DocumentsCredit EnhancementOvercollateralization” for more information regarding overcollateralization.

Subordination

A class of notes that is lower in priority of payment provides credit support to those classes of notes having higher priority of payment relative to that class. To the extent that the trust property does not generate enough cashflow in a particular month to satisfy all of the issuing entity’s obligations on the related distribution date, any shortfalls or losses will be absorbed as follows:

 

  first, [by the holders of the Class E Notes, to the extent amounts are due to them;

 

  second,] by the holders of the Class D Notes, to the extent amounts are due to them;

 

  [third], by the holders of the Class C Notes, to the extent amounts are due to them;

 

  [fourth], by the holders of the Class B Notes, to the extent amounts are due to them; and

 

  [fifth], by the holders of the Class A Notes, to the extent amounts are due to them.

Reserve Account

On the closing date, [approximately $         will be deposited into the reserve account, which is]     % of the [expected] aggregate principal balance of the automobile loan contracts [as of the [initial] cutoff date]/[will be deposited into the reserve account].

If, on any distribution date, collections on the automobile loan contracts are insufficient to cover the payments of certain fees and expenses of the issuing entity, [net payments (other than termination payments) due to the hedge counterparty,] interest on the notes, principal payments on the notes that are necessary to maintain parity, or principal payments on each class of notes that are necessary to pay off any class of notes on its final scheduled distribution date, then amounts on deposit in the reserve account will be withdrawn and used to pay such shortfalls in the order of priority described under “—Payments” above.

On each distribution date, any excess cashflow will be deposited to the reserve account to maintain the amount on deposit at     % of the aggregate principal balance of the automobile loan contracts as of the [initial] cutoff date[; provided, that the amount on deposit in the reserve account will not exceed the aggregate principal amount of the notes after giving effect to the payments described in clauses [1] through [17] under “—Payments” above]. If the amount on deposit in the reserve account on any distribution date, after giving effect to any withdrawals on that distribution date, exceeds the lesser of (i)     % of the aggregate principal balance of the automobile loan contracts as of the [initial] cutoff date and (ii) the aggregate principal amount of the notes after giving effect to all payments on that distribution date, excess amounts will be added to available funds and distributed in accordance with the priorities set forth under “—Payments” above.

[The Hedge Agreement

On the closing date, the issuing entity will enter into a hedge transaction with the hedge counterparty to hedge the floating interest rate on the Class A-2-B Notes. The hedge transaction will be either an interest rate swap transaction or an interest rate cap transaction.

Swap Transactions

If the issuing entity enters into an interest rate swap transaction with respect to the Class A-2-B

 

 



 

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Notes, then that interest rate swap transaction will have an initial notional amount equal to the initial note principal balance of the Class A-2-B Notes and the notional amount generally will decrease by the amount of any principal payments on the Class A-2-B Notes. The notional amount under the interest rate swap transaction with respect to the Class A-2-B Notes will be equal to (i) the note principal balance of the Class A-2-B Notes or, (ii) if the Class A-2-B Notes have been accelerated following an event of default under the indenture and have been repaid in full, a scheduled amount set forth in the swap agreement.

In general, under the swap transaction on each distribution date, the issuing entity will be obligated to pay the hedge counterparty a fixed rate payment based on a per annum fixed rate of     %, times the notional amount of the applicable interest rate swap transaction and the applicable day-count fraction, and the hedge counterparty will be obligated to pay the issuing entity a per annum floating interest rate payment based on LIBOR times the notional amount of the interest rate swap transaction and the applicable day-count fraction. Payments on the interest rate swap transaction will be exchanged on a net basis. Any net swap payments owed by the issuing entity to the hedge counterparty on the interest rate swap transaction rank higher in priority than all payments on the notes.

The swap transaction may be terminated upon an event of default or a termination event specified in the swap agreement. If the swap transaction is terminated due to an event of default or other termination event, a termination payment may be due to the hedge counterparty by the issuing entity out of available funds.

The issuing entity’s obligation to pay the hedge counterparty any net swap payments and any other amounts due under the swap transaction will be secured by the lien granted by the issuing entity under the indenture.

For a more detailed description of the interest rate swap transactions and the hedge counterparty, see the sections of this prospectus entitled “Description of the Transaction Documents—The Hedge Agreement—Swap Transactions” and “The Hedge Counterparty.”

Cap Transactions

If the issuing entity enters into an interest rate cap agreement that is purchased on or before closing with respect to the Class A-2-B Notes, on each distribution date, the hedge counterparty will pay to the issuing entity an amount equal to the product of (x) the excess, if any, of (i) LIBOR for the related interest period over (ii)     % per annum with respect to the Class A-2-B Notes interest rate cap transaction (if applicable), (y) the notional amount set forth in the related confirmation for the applicable class of Notes for that distribution date, and (z) a fraction, the numerator of which is equal to the actual number of days in the related interest period and the denominator of which is 360. Each interest rate cap agreement will terminate on the earlier of the legal final maturity date of Class A-2-B Notes and the date the notional amount, if applicable, goes to zero.

Any cap agreement may be terminated upon an event of default or a termination event specified in the cap agreement.

For a more detailed description of the interest rate cap agreement and the hedge counterparty, see the sections of this prospectus entitled “Description of the Transaction Documents—The Hedge Agreement—Cap Transactions and “The Hedge Counterparty.”]

Book-Entry Notes

The issuing entity will issue the notes as global securities registered in the name of Cede & Co. as nominee of The Depository Trust Company. The noteholders will not receive definitive securities representing their interests except in limited circumstances described under “Description of the Notes—Book-Entry Registration” in this prospectus.

[Optional] Redemption

[Optional Redemption]

On any distribution date on which the aggregate principal balance of the automobile loan

 

 



 

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contracts declines to [10]% or less of the aggregate principal balance of the [initial] automobile loan contracts as of the cutoff date, the notes then outstanding may be redeemed in whole, but not in part, if the servicer or the depositor exercises its “clean-up call” option to purchase the automobile loan contract pool. The servicer or the depositor may exercise this option by depositing a redemption price that is at least equal to the unpaid principal amount of the notes of each class then outstanding, plus accrued and unpaid interest to the collection account, which amount will then be used to repay all outstanding notes[, plus any amounts remaining unpaid to the hedge counterparty under the interest rate swap transaction, if any].

[Mandatory Redemption

Each class of notes will be redeemed in part on the distribution date at the end of the [revolving period][pre-funding period] in the event that any amounts remain on deposit in the [revolving account][pre-funding account] on that date. The principal amount of each class of notes to be redeemed will be an amount equal to that class’s pro rata share of the amount remaining on deposit in the [revolving account][pre-funding account]. However, if the amount remaining on deposit in the [revolving account][pre-funding account] is $         or less, that amount will be applied to reduce the outstanding principal on the class of notes that otherwise receives a payment of principal on that distribution date.]

Events of Default

The following are events of default under the indenture:

 

    default in the payment of any interest when it becomes due and payable (i) on the Class A Notes or (ii) if no Class A Notes are outstanding, on the Class B Notes or (iii) if no Class A Notes or Class B Notes are outstanding, on the Class C Notes or (iv) if no Class A Notes, Class B Notes or Class C Notes are outstanding, on the Class D Notes [or (v) if no Class A Notes, Class B Notes, Class C Notes or Class D Notes are outstanding, on the Class E Notes] (which default, in each case, remains uncured for      days);
    default in the payment of the principal of any note on its final scheduled distribution date;

 

    certain breaches of representations, warranties and covenants by the issuing entity (subject to any applicable cure period); and

 

    certain events of bankruptcy relating to the issuing entity or the issuing entity’s property (subject to any applicable cure period).

If an event of default has occurred and is continuing, the notes may be accelerated and subject to immediate payment at par, plus accrued interest. If an event of default has occurred and is continuing and the notes are accelerated, the indenture trustee may be directed to sell the trust property, or any portion of the trust property, at one or more private or public sales. Any such liquidation of the trust property may occur only subject to certain provisions that are set forth under “Description of the Notes— Events of Default.

Post-Default Application of Funds

Any amounts that are collected (i) following the occurrence of an event of default (other than an event of default related to a breach of a covenant or a representation and warranty) or (ii) upon a full or partial liquidation of the trust assets, will not be distributed in accordance with the priorities set forth under “—Payments” above but will instead be distributed in accordance with the following priorities:

1. to the servicer [,the hedge counterparty (if the hedge agreement is a swap agreement),] the custodian, the owner trustee, the indenture trustee[, the backup servicer] and the asset representations reviewer, certain amounts due and owing to such entities, pursuant to the priorities in clauses 1 and 2 [and 3], and without regard to the caps set forth in clauses 1 and 2, under “— Payments,” above;

 

 



 

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2. [pari passu, (a)] to the Class A noteholders, for amounts due and unpaid on the Class A notes for interest, ratably, without preference or priority [and (b) if applicable, to the hedge counterparty, swap termination payments (so long as the hedge counterparty is not a defaulting party or the sole affected party with respect to the termination of the hedge agreement)];

3. to the Class A noteholders, for amounts due and unpaid on the Class A notes for principal, first, to the noteholders of the Class A-1 Notes until they are paid in full and, second, to the noteholders of the Class A-2 Notes and the Class A-3 Notes, ratably, without preference or priority, until they are paid in full;

4. to the Class B noteholders, for amounts due and unpaid on the Class B notes for interest;

5. to the Class B noteholders, for amounts due and unpaid on the Class B notes for principal, until the Class B Notes are paid in full;

6. to the Class C noteholders, for amounts due and unpaid on the Class C notes for interest;

7. to the Class C noteholders, for amounts due and unpaid on the Class C notes for principal, until the Class C Notes are paid in full;

8. to the Class D noteholders, for amounts due and unpaid on the Class D notes for interest;

9. to the Class D noteholders, for amounts due and unpaid on the Class D notes for principal, until the Class D Notes are paid in full;

10. [to the Class E noteholders, for amounts due and unpaid on the Class E notes for interest;

11. to the Class E noteholders, for amounts due and unpaid on the Class E notes for principal, until the Class E Notes are paid in full;]

12. [to the hedge counterparty, any unpaid swap termination payments;] and

13. to pay all remaining amounts to the certificateholder.

Post-Default Application of Funds – Representation, Warranty or Covenant Breach

Amounts collected following the occurrence of an event of default related to a breach of a covenant or a representation and warranty will be distributed in accordance with the priorities set forth under “—Payments” above, except that (a) the amounts to be distributed pursuant to clauses 1 and 2 [and 3] under “—Payments” above shall be made without regard to the caps set forth therein and (b) the amount of principal to be distributed pursuant to clause [19] under “—Payments” above shall instead be used to pay principal (i) on the Class A Notes, ratably, without preference of priority, until they are paid in full, (ii) then on the Class B Notes until they are paid in full, (iii) then on the Class C Notes until they are paid in full [and] (iv) then on the Class D Notes until they are paid in full [and (v) then on the Class E Notes until they are paid in full].

Federal Income Tax Consequences

For federal income tax purposes:

 

  Katten Muchin Rosenman LLP, tax counsel, is of the opinion that the publicly offered notes will be characterized as indebtedness and the trust will not be characterized as an association or publicly traded partnership taxable as a corporation. By your acceptance of a publicly offered note, you agree to treat the note as indebtedness.

 

  Interest on the publicly offered notes will be taxable as ordinary income:

 

    when received by a holder using the cash method of accounting, and

 

    when accrued by a holder using the accrual method of accounting.

ERISA Considerations

Subject to the important considerations described under “ERISA Considerations” in this

 

 



 

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prospectus, pension, profit-sharing and other employee benefit plans may purchase the publicly offered notes. Fiduciaries of such plans should consult with counsel regarding the applicability of the provisions of ERISA before purchasing the publicly offered notes.

[Legal Investment

The Class A-1 Notes will be structured to be eligible for purchase by money market funds under Rule 2a-7 of the Investment Company Act of 1940, as amended, or the 1940 Act. A money market fund should consult its legal advisors regarding the eligibility of the Class A-1 Notes under Rule 2a-7 and whether an investment in the Class A-1 Notes satisfies its investment policies and objectives.]

[Vintage Origination and] Static Pool Information

[Vintage origination information for automobile loan contracts originated by dealers [and/or unaffiliated third party originators] [and/or originated directly by the sponsor] for assignment to the sponsor is contained in Annex A to this prospectus.] Static pool information for the sponsor’s securitized asset pools is contained in Annex B to this prospectus.

1940 Act Registration

The issuing entity will be relying on an exclusion or exemption from the definition of “investment company” under the Investment Company Act of 1940, as amended or the 1940 Act, contained in Section 3(c)(5) of the 1940 Act, although there may be additional exclusions or exemptions available to the issuing entity. The issuing entity is being structured so as not to constitute a “covered fund” for purposes of the Volcker Rule under the Dodd-Frank Act (both as defined under “Volcker Rule Considerations” in this prospectus).

Ratings of the Notes

The depositor has engaged [two] nationally recognized statistical rating organizations to assign credit ratings to the publicly offered notes.

The ratings of the [publicly offered] notes will address the likelihood of the payment of principal and interest on the [publicly offered] notes according to their terms. Each engaged rating agency rating the [publicly offered] notes will monitor the ratings using its normal surveillance procedures. Each engaged rating agency may change or withdraw an assigned rating at any time. Any rating action taken by one rating agency may not necessarily be taken by another rating agency. No transaction party will be responsible for monitoring any changes to the ratings on the publicly offered notes. See “Ratings” for more information regarding the ratings.

[Credit Risk Retention

[To be added for offerings after December 24, 2016]

The risk retention regulations in Regulation RR of the Securities Act require the sponsor, either directly or through its majority-owned affiliates, to retain an economic interest in the credit risk of the automobile loan contracts. This credit risk retention requirement will be achieved by [a combination of] [the depositor retaining an “eligible vertical interest”]/[the depositor retaining an “eligible horizontal residual interest”]/[the establishment of an “eligible horizontal cash reserve account”]. See “Credit Risk Retention” for more information regarding the manner in which the risk retention regulations will be satisfied.]

 

 



 

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Risk Factors

You should consider the following factors in connection with the purchase of the notes:

 

[The sponsor may be unable to originate enough automobile loan contracts to purchase a sufficient amount of subsequent automobile loan contracts which may cause the revolving period to end early and you may therefore be exposed to reinvestment risk.]   

[The ability of the sponsor to originate sufficient subsequent automobile loan contracts may be affected by a variety of social and economic factors including:

 

•       interest rates;

 

•       unemployment levels;

 

•       the rate of inflation; and

 

•       consumer perception of economic conditions generally.

 

If the sponsor does not originate sufficient subsequent automobile loan contracts to purchase a sufficient amount of subsequent automobile loan contracts during the revolving period, the revolving period may end earlier than expected. If, with respect to                      consecutive distribution dates, funds are on deposit in the revolving account in an amount greater than     % of the initial pool balance as of the initial cutoff date, then at the end of [                    ] distribution dates, after taking into consideration the subsequent automobile loan contracts purchased by the issuing entity on each such distribution date, then an early amortization event will occur and the revolving period will terminate on that third distribution date and amounts will be distributable to holders of the notes as a principal prepayment as set forth in this prospectus. If you receive a principal prepayment on your notes, you will bear the risk of reinvesting any such prepayment and you may not be able to reinvest those amounts at a rate of return that is at least equal to the rate of return on your notes.

 

Amounts that are not used to purchase subsequent automobile loan contracts on any distribution date and that remain on deposit in the revolving account will earn interest at a rate lower than might otherwise accrue on a portfolio of automobile loan contracts with the same principal balance, which may reduce the amounts that are available to make distributions on the notes.]

 

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[The sponsor may be unable to originate enough automobile loan contracts to use all money on deposit in the pre-funding account and you may therefore be exposed to reinvestment risk.]   

[The ability of the sponsor to originate sufficient subsequent automobile loan contracts may be affected by a variety of social and economic factors including:

 

•       interest rates;

 

•       unemployment levels;

 

•       the rate of inflation; and

 

•       consumer perception of economic conditions generally.

 

If the sponsor does not originate sufficient subsequent automobile loan contracts to use all money on deposit in the pre-funding account by         , 20    , a mandatory redemption of a portion of the notes could result.

 

If a mandatory redemption occurs, you may receive a principal prepayment on your notes. You will bear the risk of reinvesting any prepayment and you may not be able to reinvest those amounts at a rate of return that is at least equal to the rate of return on your notes.]

We cannot predict the rate at which the notes will amortize.    Your notes may amortize more quickly than expected for a variety of reasons. First, obligors can prepay their automobile loan contracts without penalty. The rate of prepayments may be influenced by a variety of factors, including changes in economic and social conditions. The fact that consumer obligors generally may not sell or transfer their financed vehicles securing the automobile loan contracts without the servicer’s consent may also influence the rate of prepayments.
   Second, under certain circumstances, the depositor, the sponsor and the servicer are obligated to purchase automobile loan contracts as a result of breaches of representations, warranties and/or covenants. As a result of such a repurchase, the affected automobile loan contracts would be repurchased from the issuing entity, the outstanding principal balance of the affected automobile loan contracts would be paid to the issuing entity and those repurchase amounts would be available to make payments on your notes.
   Third, the notes contain an overcollateralization feature that could result in accelerated principal payments to noteholders [after the revolving period], which would cause faster amortization of the notes than of the automobile loan contract pool.

 

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Finally, the servicer or the depositor has the right to purchase the automobile loan contracts remaining in the automobile loan contract pool when the outstanding principal balance of the automobile loan contract pool is [10]% or less of the [initial] aggregate principal balance of the automobile loan contract pool as of the cutoff date. If this right is exercised by the servicer or the depositor, you may be paid principal of the notes earlier than you expected.

 

In any of these cases, you may be repaid principal of the notes at a different rate than you expect and you may not be able to reinvest the principal repaid to you at a rate of return that is at least equal to the rate of return on your notes.

[Risks associated with unknown aggregate initial principal balance of the notes.]    [Whether the issuing entity will offer notes with an aggregate initial principal balance of $         or $         is not expected to be known until the day of pricing. The sponsor will make the determination regarding the aggregate initial principal balance of the notes based on, among other considerations, market conditions at the time of pricing. The size of a class of notes may affect liquidity of that class, with smaller classes being less liquid than a larger class may be. In addition, if your class of notes is larger than you expected, then you will hold a smaller percentage of that class of notes and the voting power of your notes will be diluted.]
Your yield to maturity may be reduced by prepayments or slower than expected prepayments.    The pre-tax yield to maturity is uncertain and will depend on a number of factors including the following:
  

•       The rate of return of principal is uncertain. The amount of payments of principal of your notes and the time when you receive those payments depends on the amount and times at which obligors make principal payments on the automobile loan contracts. Those principal payments may be regularly scheduled payments or unscheduled payments resulting from prepayments or defaults on the automobile loan contracts. For example, the servicer may engage in marketing practices or promotions, including refinancing, which may indirectly result in faster than expected payments on the automobile loan contracts.

 

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•       You may be unable to reinvest distributions in comparable investments. Asset-backed notes, like the notes, usually produce a faster return of principal to investors if market interest rates fall below the interest rates on the related automobile loan contracts and produce a slower return of principal if market interest rates rise above the interest rates on the related automobile loan contracts. As a result, you are likely to receive a greater amount of money on your notes to reinvest at a time when other investments generally are producing a lower yield than that on your notes, and are likely to receive a lesser amount of money on your notes when other investments generally are producing a higher yield than that on your notes. You will bear the risk that the timing and amount of payments on your notes will prevent you from attaining your desired yield.

 

•       An optional redemption of the notes will shorten the life of your investment which may reduce your yield to maturity. If the automobile loan contracts are sold upon exercise of a “clean-up call,” the issuing entity will redeem all notes then outstanding and you will receive the remaining principal balance of your notes plus accrued interest through the related distribution date. Following payment to you of the remaining principal balance of your notes, plus accrued interest, your notes will no longer be outstanding and you will not receive the additional interest payments that you would have received had the notes remained outstanding. If you bought your notes at a premium, your yield to maturity will be lower than it would have been if the optional redemption had not been exercised. See “Description of the NotesOptional Redemption “ in this prospectus.

 

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Geographic concentrations of automobile loan contracts may increase concentration risks.    Adverse economic conditions or other factors affecting any state or region could increase the delinquency or loan loss experience of the automobile loan contracts originated in that state or region. [As of             , 20    ]/[If the issuing entity offers notes with an aggregate initial principal balance of $            , as of             , 20    ,] obligors with respect to approximately     %,     % and     % of the [initial] automobile loan contracts, based on the [initial] automobile loan contracts’ principal balance as of such date, were located in the states of                     ,                      and                     , respectively. [If the issuing entity offers notes with an aggregate initial principal balance of $            , as of             , 20    ,] obligors with respect to approximately     %,     % and     % of the [initial] automobile loan contracts, based on the [initial] automobile loan contracts’ principal balance as of such date, were located in the states of                     ,                      and                     , respectively]. No other state accounts for more than     % of the automobile loan contracts as of                     , 20    . [Insert further disclosure regarding indicated states if material.]
You may suffer a loss if the final maturity date of the notes is accelerated.    If a default occurs under the indenture and the maturity dates of the outstanding notes are accelerated, the indenture trustee may, under certain circumstances specified in the indenture, sell the automobile loan contracts and prepay those notes in advance of their final scheduled distribution dates. The proceeds from such a sale of the automobile loan contracts may be insufficient to pay the aggregate principal amount of the outstanding notes and accrued interest on those notes in full. If this occurs, you may suffer a loss due to such an acceleration.
The notes are asset-backed debt and the issuing entity has only limited assets.    The sole sources for repayment of the notes are payments on the trust property (which will principally consist of payments on the automobile loan contracts) and amounts (if any) on deposit in the cash accounts held by the indenture trustee. You may suffer a loss if these amounts are insufficient to pay amounts due on the notes.
   [The money in the [pre-funding account]/[revolving account] will be used solely to purchase subsequent automobile loan contracts and is not available to cover losses on the automobile loan contract pool. [Additionally, the capitalized interest account is designed to cover obligations of the issuing entity relating to that portion of its assets not invested in the automobile loan contract pool and is not designed to provide protection against losses on the automobile loan contract pool.]]

 

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The representations and warranties that the sponsor and the depositor will make about the automobile loan contracts, and the sponsor and the depositor’s obligations to repurchase automobile loan contracts with respect to which there is a breach of any such representation and warranty, are limited.   

The sponsor has made representations and warranties to the depositor about the automobile loan contracts and the depositor has made representations and warranties to the issuing entity about the automobile loan contracts. If there is a breach of any of the representations or warranties regarding the automobile loan contracts made by the sponsor to the depositor or by the depositor to the issuing entity, respectively, if the related breach is not cured and if the related breach materially and adversely affects the interest of the noteholders in such automobile loan contract, the sponsor or the depositor, respectively will be obligated to repurchase the affected automobile loan contract.

 

The sponsor and the depositor will each represent that each automobile loan contract is secured by a financed vehicle and that each automobile loan contract has been originated indirectly by the sponsor through dealers[and/or originated directly by the sponsor] in accordance with the sponsor’s customary origination practices[and/or purchased from other unaffiliated third party originators]. The sponsor and the depositor will also make representations and warranties with respect to the perfection and priority of the security interests in the financed vehicles (other than any statutory liens arising on or after the closing date which may have priority even over perfected security interests in the financed vehicles). Certain of the representations and warranties that the sponsor and the depositor will make about each automobile loan contract are subject to important qualifications or limitations, such as knowledge qualifiers, or relate to actions taken by a third-party, such as the related dealer [and/or the related unaffiliated third party originator]. Therefore, certain of these representations and warranties are included principally to allocate risk among the parties to the related agreements rather than to state matters of fact regarding the automobile loan contracts that the sponsor or the depositor, as applicable, is able to independently verify.

 

While the representations and warranties that are made by the sponsor and the depositor cover a number of potential defects with respect to each automobile loan contract, they may not cover every potential defect which may result in a realized loss on the automobile loan contracts. Furthermore, while the depositor and the sponsor are obligated to remove or repurchase any automobile loan contract if there is a breach of any of their respective representations and warranties regarding the eligibility of such automobile loan contract (and if such breach is not cured and materially and adversely affects the interest of the noteholders in such automobile loan contract), there can be no assurance given that the sponsor or the depositor, respectively, will financially be in a position to fund its repurchase obligation.

 

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There may be a conflict of interest among classes of notes.    As described elsewhere in this prospectus, the holders of the most senior class of notes then outstanding will make certain decisions with regard to treatment of defaults by the servicer, acceleration of payments on the notes in the event of a default under the indenture and certain other matters. Because the holders of different classes of notes may have varying interests when it comes to these matters, you may find that courses of action determined by other noteholders do not reflect your interests but that you are nonetheless bound by the decisions of these other noteholders.
Because the Class B Notes, the Class C Notes [and] the Class D Notes [and the Class E Notes] are subordinated to the Class A Notes, payments on those classes are more sensitive to losses on the automobile loan contracts.    Certain notes are subordinated, which means that (i) principal paid on those classes as part of monthly distributions or, in the event of a default, upon acceleration, will be made only once payments of principal have been made in full to all classes of notes senior to those classes and (ii) interest paid on those classes as part of monthly distributions or, in the event of a default, upon acceleration, will be made only once payments of interest have been made in full to all classes of notes senior to those classes. The Class A Notes have the highest priority of payment with respect to payments of principal and interest, followed in descending order of priority of payment by the Class B Notes, the Class C Notes, the Class D Notes [and[, except in certain circumstances where they are paid principal before classes senior to them,] the Class E Notes]. Therefore, if there are insufficient amounts available to pay all classes of notes the amounts they are owed on any distribution date or following acceleration, delays in payment or losses will be suffered by the most junior outstanding class or classes even as payment may be made in full to more senior classes.

 

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Principal may be paid on certain classes of notes before interest is paid on other classes.    If on any distribution date the outstanding principal amount of the notes exceeds the principal balance of the pool of automobile loan contracts, a payment of principal, to the extent available, will be made to the holders of the most senior outstanding class or classes of notes to eliminate that undercollateralization. Furthermore, if any class of notes has an outstanding principal amount on its final scheduled distribution date, a payment of principal, to the extent available, will be made to the holders of that class of notes on that distribution date to reduce their outstanding principal amount to zero. Certain of these principal payments will be made before interest payments are made on certain subordinated classes of notes on that distribution date. Furthermore, following certain events of default, payment of interest on certain subordinated classes of notes will be made only once payments of principal have been made in full to all classes of notes senior to those classes. As a result, there may not be enough cash available to pay the interest on certain subordinated classes of notes on that distribution date.
The failure to make principal payments on any class of notes will generally not result in an event of default under the indenture until the applicable final scheduled distribution date or redemption date.    The amount of principal required to be paid to investors prior to the applicable final scheduled distribution date will be limited to amounts available for those purposes. Therefore, the failure to pay principal of a note generally will not result in an event of default under the indenture until the applicable final scheduled distribution date or redemption date for that class of notes.

 

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[During periods of economic downturn, losses may increase and loans used to finance vehicles may incur greater losses.]   

[In the past few years, the United States has experienced periods of economic slowdown or recession and may experience similar periods in the future. Such periods of economic slowdown or recession may adversely affect the performance and market value of your notes. Continued high or rising unemployment and lack of available credit can lead to increased delinquencies, defaults, repossessions and losses on automobile loans. Such periods of slowdown or recession may also be accompanied by decreased consumer demand for automobiles and declining values of automobiles securing outstanding automobile loan contracts, which could weaken collateral coverage and increase the amount of a loss in the event of default. Also, any increases in the inventory of used automobiles during a period of economic slowdown or recession will typically depress the prices at which repossessed automobiles may be sold.

 

Additionally, higher gasoline prices, unstable real estate values and other factors can impact consumer confidence and disposable income. These conditions increased loss frequency, decreased consumer demand for automobiles and weakened collateral values on certain types of automobiles during the most recent economic slowdown or recession and may have similar effects in any future periods of economic slowdown or recession. Because the automobile loan contracts owned by the issuing entity were made predominately to sub-prime borrowers, the actual rates of delinquencies, defaults, repossessions and losses on these automobile loan contracts are higher than those experienced in the general automobile finance industry and may be impacted to a greater extent during an economic downturn. See “Delinquency and Loan Loss Information,” “Delinquency Experience” and “Loan Loss Experience” for delinquency, default, loan loss and repossession information regarding the automobile loans originated indirectly by the sponsor through dealers [and/or originated directly by the sponsor] [and/or purchased from unaffiliated third party originators] and serviced by the sponsor.

 

In addition to an economic slowdown or recession, the asset-backed securities market, along with credit markets in general, may experience disruptions. Such disruptions could result in a reduction in the general availability of credit which may slow the expected rate of prepayment of automobile loan contracts. If losses on the automobile loan contracts securing your notes increase, recovery rates on repossessed automobile loan contracts decrease or the expected rate of prepayment decreases then the yields on the notes will be relatively more sensitive to losses on the automobile loan contracts. If the actual rate and amount of losses exceed your expectations, the yield to maturity on your notes may be lower than anticipated, and you may suffer a loss on your investment.]

 

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A reduction, withdrawal or qualification of the ratings on your notes, or the issuance of unsolicited ratings on your notes, may adversely affect the market value of your notes and/or limit your ability to resell your notes [and may affect the eligibility of the Class A-1 Notes under Rule 2a-7].   

The sponsor has engaged [two] rating agencies and will pay them a fee to assign ratings on the notes. A rating agency may have a conflict of interest where, as is the industry standard and the case with the ratings of the notes, the sponsor, the depositor or the issuing entity pays the fees charged by the ratings agencies for their ratings services. The sponsor has not engaged any other nationally recognized statistical rating organization, or NRSRO, to assign ratings on the notes and is not aware that any other NRSRO has assigned ratings on the notes. However, under effective Commission rules, information provided by or on behalf of the sponsor to an engaged rating agency for the purpose of assigning or monitoring the ratings on the notes is required to be made available to all NRSROs in order to make it possible for non- engaged NRSROs to assign unsolicited ratings on the notes. An unsolicited rating could be assigned at any time, including prior to the closing date, and none of the depositor, the sponsor, the underwriters or any of their affiliates will have any obligation to inform you of any unsolicited ratings assigned after the date of this prospectus. NRSROs, including the engaged rating agencies, have different methodologies, criteria, models and requirements. If any non-engaged NRSRO assigns an unsolicited rating on the notes, there can be no assurance that such rating will not be lower than the ratings provided by the engaged rating agencies, which may adversely affect the market value of your notes and/or limit your ability to resell your notes. In addition, if the sponsor fails to make available to the non- engaged NRSROs any information provided to any engaged rating agency for the purpose of assigning or monitoring the ratings on the notes, an engaged rating agency could withdraw its ratings on the notes, which may adversely affect the market value of your notes and/or limit your ability to resell your notes.

 

[Furthermore, the Class A-1 Notes will be structured to be eligible for purchase by money market funds under Rule 2a-7 under the Investment Company Act of 1940, as amended. However, the Class A-1 Notes could fail to be “eligible securities” under Rule 2a-7 if any NRSRO reduces or withdraws its short-term ratings assigned to the Class A-1 Notes. Any determinations about the qualification of the Class A-1 Notes under, and compliance with, other applicable requirements of Rule 2a-7 are solely the responsibility of each money market fund that invests in the Class A-1 Notes.]

 

Potential investors in the notes are urged to make their own evaluation of the notes, including the credit enhancement on the notes, and not to rely solely on the ratings on the notes.

 

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The regulatory environment in which the consumer finance industry operates could have a material adverse effect on the sponsor’s business and operating results.    Compliance with applicable law may be or likely will be costly and can affect operating results. Compliance requires forms, processes, procedures, controls and the infrastructure to support these requirements. Compliance may create operational constraints and place limits on pricing. Laws in the financial services industry are designed primarily for the protection of consumers. The failure to comply could result in significant statutory civil and criminal penalties, monetary damages, attorneys’ fees and costs, possible revocation of licenses and damage to reputation, brand and valued customer relationships.
   Since September 2014, the sponsor has received civil subpoenas and civil investigative demands from various federal and state agencies, including from the U.S. Department of Justice under the Financial Institutions Reform, Recovery and Enforcement Act, the United States Securities and Exchange Commission, or the SEC, and several state attorneys general, requesting the production of documents and communications that, among other things, relate to the sponsor’s origination, underwriting and securitization of auto loans. Furthermore, in May 2015 the sponsor received a civil investigative demand from the U.S. Federal Trade Commission requesting information and documents related to specialized auto loan originations. The automobile loan contracts originated as part of that program represent less than 1.0% of the sponsor’s serviced portfolio and will not be included in either the receivables pool or in the receivables pool for any prior securitization. Finally, in November 2015, the sponsor received a civil investigative demand from the Consumer Financial Protection Bureau requesting information and documents related primarily to the sponsor’s servicing activities. In the future, the sponsor may be served with additional subpoenas or requests relating to similar or related topics. The sponsor is investigating all of these matters internally and believes it is cooperating with all requests. Such investigations could in the future result in the imposition of damages, fines or civil or criminal claims and/or penalties. No assurance can be given that the ultimate outcome of the investigations or any resulting proceedings would not materially and adversely affect the sponsor or any of its subsidiaries and affiliates, including the servicer, or the interests of the noteholders or the servicer’s ability to perform its duties under the transaction documents. Additionally, any such outcome could adversely affect the ratings, marketability or liquidity of your notes.

 

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Transaction parties may become subject to litigation or governmental proceedings.    Since the financial crisis, there has been an increase in litigation against, and governmental proceedings involving, sponsors, depositors and servicers of asset-backed securities. If a transaction party becomes subject to litigation or a governmental proceeding in connection with its business or the assets, it may incur costs and expenses that are payable by, or subject to reimbursement by, the issuing entity. In addition, if the servicer is subject to litigation or a governmental proceeding, this may affect the ability of the servicer to perform its servicing obligations, even if such litigation or a governmental proceeding is not related to the automobile loan contracts owned by the issuing entity. If the sponsor were to become subject to litigation or a governmental proceeding, this may affect the ability of the sponsor to perform any of its obligations to repurchase assets from the issuing entity with respect to which there has been a breach of representations and warranties and satisfaction of the conditions to repurchase. This could result in a delay in or reduction of payments on the notes. We cannot assure you as to the effect litigation, if any, may have on payments in respect of the assets or yield on the notes.
Federal financial regulatory reform could have a significant impact on the servicer, the sponsor, the depositor or the issuing entity.    Recent legislative initiatives and completed and pending regulatory implementation and any uncertainty about the nature and timing of the regulations, including the Dodd-Frank Act and related implementing regulations and recently adopted amendments to Regulation AB, may create uncertainty in the credit and other financial markets and create other unknown risks. Such uncertainty may in turn affect the performance of the transaction parties and may adversely affect the value or marketability of the notes.
   The Dodd-Frank Wall Street Reform and Consumer Protection Act (Pub. L. 111-203, H.R. 4173), or the Dodd-Frank Act, signed into law in July 2010, is extensive and significant legislation that, among other things:
  

•       creates a liquidation framework under which the Federal Deposit Insurance Corporation, or FDIC, may be appointed as receiver following a “systemic risk determination” by the Secretary of Treasury (in consultation with the President) for the resolution of certain nonbank financial companies and other entities, defined as “covered financial companies,” and commonly referred to as “systemically important entities,” in the event such a company is in default or in danger of default and the resolution of such a company under other applicable law would have serious adverse effects on financial stability in the United States, and also for the resolution of certain of their subsidiaries;

 

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•       creates a framework for the regulation of over-the-counter derivatives activities;

 

•       strengthens the regulatory oversight of securities and capital markets activities by the SEC;

 

•       creates the Consumer Financial Protection Bureau, an agency responsible for administering and enforcing the laws and regulations for consumer financial products and services; and

 

•       increases the regulation of the securitization markets through, among other things, a mandated risk retention requirement for securitizers and a direction to the SEC to regulate credit rating agencies and adopt regulations governing these organizations and their activities.

  The various requirements of the Dodd-Frank Act, including the many implementing regulations which have yet to be released, may substantially impact the origination, servicing and securitization program of the sponsor and its subsidiaries.
  With respect to the liquidation framework for systemically important entities, no assurances can be given that such framework would not apply to the sponsor or its subsidiaries, including the issuing entity and the depositor, although the expectation embedded in the Dodd-Frank Act is that the framework will be invoked only very rarely. Recent guidance from the FDIC indicates that such new framework will largely be exercised in a manner consistent with the existing bankruptcy laws, which is the insolvency regime which would otherwise apply to the sponsor, the depositor and the issuing entity.
  Many provisions of the Dodd-Frank Act are required to be implemented through rulemaking by the applicable federal regulatory agencies, and much of this rulemaking has yet to occur. Therefore, the full impact of financial regulatory reform on the financial markets and its participants and on the asset-backed securities market in particular will not be known for some time. We cannot assure you that the Dodd-Frank Act and its implementing regulations, or the imposition of additional regulations, will not have a significant adverse impact on the value of the notes, on the servicing of the assets or on the sponsor, the depositor, the issuing entity, the trustee or the servicer. Under some interpretations of these new provisions, the potential may exist for the performance of the notes to be negatively impacted.

 

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  The Consumer Financial Protection Bureau, or CFPB, and the Federal Trade Commission, or FTC, have recently become more active in investigating the products, services and operations of credit providers, including banks and other finance companies engaged in auto finance activities, such as the sponsor. The CFPB has recently indicated an intention to review the actions of indirect auto finance companies such as the sponsor with regard to pricing activities and issued a bulletin to such lenders on how to limit fair lending risk under the Equal Credit Opportunity Act. Additionally, the CFPB has also recently begun reviews concerning certain other automobile lending practices, including the sale of extended warranties, credit insurance and other add-on products. Both the FTC and the CFPB have announced various enforcement actions against lenders beginning in 2012 involving significant penalties, cease and desist orders, and similar remedies that, if applicable to auto finance providers and to products, services and operations of the nature offered by the sponsor, may require it to cease or alter certain business practices, which could have a material effect on its financial condition and results of operations.
  Furthermore, on June 10, 2015, the CFPB issued a rule that expands its supervisory and examination authority to now include the largest nonbank auto lenders such as the sponsor. This supervisory power over nonbank lenders such as the sponsor will allow the agency to conduct comprehensive and rigorous on-site examinations that could result in enforcement actions, fines, regulatory mandated process, procedure or product-related changes or consumer refunds if violations of law are found.
  In general, compliance with applicable law and regulations may be costly because new processes, forms, controls and additional infrastructure may be required to comply with new requirements. Any failure to comply with these laws and regulations could result in significant statutory civil and criminal penalties, monetary damages, attorneys’ fees and costs, possible revocation of licenses and damage to reputation, brand and valued customer relationships.

 

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   In addition, proposals to change the laws and regulations governing the banking and financial services industries have been proposed or adopted by, and are frequently introduced in, Congress, state legislatures and the various bank regulatory or financial regulatory agencies. Congress and the federal government have continued to evaluate and develop legislation, programs and initiatives designed to, among other things, stabilize the financial markets and prevent future financial crises by further regulating the financial services industry. As a result of the recent financial crisis and the challenging economic environment, additional regulatory scrutiny of the financial industry in general and a particularly high level of regulatory scrutiny of auto loan sponsors, depositors and servicers may be expected. This scrutiny may result in additional regulation that could adversely affect the timeliness and amount of collections that the servicer is able to realize on the assets. It is not clear whether and when the final form of proposed programs or initiatives or any related legislation or regulation will go into effect, or the impact they may have on the sponsor, the depositor, the issuing entity, the indenture trustee or the servicer or any successor servicer.
A receivables pool that includes substantially all automobile loan contracts that are the obligations of sub-prime obligors will have higher default rates than a pool comprised of the obligations of prime obligors.    The automobile loan contracts in the receivables pool are substantially all sub-prime automobile loan contracts and generally involve obligors who do not qualify for conventional motor vehicle financing as a result of, among other things, a lack of or adverse credit history, low income levels and/or the inability to provide adequate down payments. While the sponsor’s underwriting guidelines are designed to establish that, notwithstanding such factors, the obligor is a reasonable credit risk, the issuing entity will nonetheless experience higher default rates than would more traditional motor vehicle financiers. In the event of such defaults, generally, the most practical alternative is repossession of the financed vehicle. As a result, losses on the automobile loan contracts are anticipated from repossessions and foreclosure sales that do not yield sufficient proceeds to repay the automobile loan contracts in full. See “Material Legal Aspects of the Automobile Loan Contracts” in this prospectus.

 

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Potential new laws relating to auto loan origination or ownership could reduce or delay distributions on your notes and adversely affect the liquidity and market value of your notes.    Recent news reports have suggested that the CFPB is increasing its scrutiny of the sub-prime auto loan industry including, among other things, considering a set of regulations for subprime auto loans that would resemble its “qualified-mortgage” standards, with a particular focus on debt-to-income thresholds beyond which a loan to a sub-prime borrower would no longer be considered conforming. Such a regulation may result in a reduction in the availability of these types of loans in the future and may adversely affect the value and marketability of your notes. No assurances are given as to the effect of such a regulation on the value of your notes.
   Various state and local jurisdictions may adopt similar or more onerous provisions in the future. We are unable to predict how these laws and regulations may affect the market value of your notes. The proposed regulation may adversely affect the market generally for asset-backed securities if investors are not willing to invest in pools of loans that do not satisfy the related requirements.
Retention of some or all of one or more classes of notes by the depositor or an affiliate of the depositor may reduce the liquidity of the notes.    Some or all of one or more classes of notes may be retained by the depositor or an affiliate of the depositor. Accordingly, the market for such a retained class of notes may be less liquid than would otherwise be the case. In addition, if any retained notes are subsequently sold in the secondary market, demand and market price for notes already in the market could be adversely affected. Additionally, if any retained notes are subsequently sold in the secondary market, the voting power of the noteholders of the outstanding notes may be diluted.
Factors affecting the servicer’s information management systems may increase the risk of loss on your investment.    The success of your investment depends upon the ability of the servicer to store, retrieve, process and manage substantial amounts of information. If the servicer experiences any interruptions or losses in its information processing capabilities, its business, financial conditions, results of operations and, ultimately, your notes may suffer.

 

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Paying the servicer a fee based on a percentage of the receivables may result in the inability to obtain a successor servicer.    Because the servicer is paid its base servicing fee based on a percentage of the aggregate outstanding amount of the receivables, the fee the servicer receives each month will be reduced as the size of the pool decreases over time. [In the event that the sponsor is terminated as servicer, the backup servicer will be obligated to become the successor servicer.] If the need ever arises to obtain a successor servicer [other than the backup servicer] who is obligated to take over the servicing duties for the same servicing fee that the sponsor is paid, the fee that such successor servicer would earn might not be sufficient to induce a potential successor servicer to agree to service the remaining receivables in the pool. In this event, a higher servicing fee may need to be negotiated, resulting in less available funds that may be distributed to noteholders and certificateholder on a related distribution date. Also if there is a delay in obtaining a successor servicer, it is possible that normal servicing activities could be disrupted during this period, resulting in increased delinquencies and/or defaults on the receivables.
[This prospectus provides information regarding the characteristics of the automobile loan contracts in the statistical pool as of the statistical calculation date, which may differ from the characteristics of the automobile loan contracts as of the cutoff date that will be sold to the issuing entity on the closing date.]    [The automobile loan contracts sold to the issuing entity on the closing date may have characteristics that differ somewhat from the characteristics of the automobile loan contracts in the related statistical pool described in this prospectus. However, the characteristics of the automobile loan contracts as of the cutoff date are not expected to differ materially from the characteristics of the automobile loan contracts as of the statistical calculation date, and each automobile loan contract must satisfy the eligibility criteria described in “The Automobile Loan Contracts—Eligibility Criteria for [Initial] Automobile Loan Contracts.” If you purchase a note, you must not assume that the characteristics of the automobile loan contracts sold to the issuing entity on the closing date will be identical to the characteristics of the automobile loan contracts in the related statistical pool disclosed in this prospectus.]

 

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[The subsequent automobile loan contracts that the issuing entity acquires during the [pre-funding period]/[revolving period] may have characteristics that differ from the initial automobile loan contracts that are described in this prospectus.]    [The issuing entity will acquire subsequent automobile loan contracts during the [pre-funding period]/[revolving period] that may have characteristics that differ somewhat from the characteristics of the automobile loan contracts in the [statistical] pool described in this prospectus. However, the subsequent automobile loan contracts will also have been originated by the sponsor through dealers [and/or originated directly by the sponsor] [and/or purchased from unaffiliated third party originators] and then assigned to the sponsor or will have been originated directly with consumers by the sponsor and must meet the eligibility requirements described in “The Automobile Loan Contracts—Eligibility Criteria for Subsequent Automobile Loan Contracts.” If you purchase a note, you must not assume that the characteristics of the subsequent automobile loan contracts that are sold to the issuing entity will be identical to the characteristics of the initial automobile loan contracts in the [statistical] pool that are disclosed in this prospectus.]
[You may suffer a loss due to the floating interest rate on the Floating Rate Notes if interest rates rise because the issuing entity will not enter into interest rate hedges.]    [The pool of automobile loan contracts provide for level monthly payments and all classes of notes, except the Floating Rate Notes, will bear interest at a fixed rate. The Floating Rate Notes will bear interest at a floating rate based on one-month LIBOR plus a spread. Even though the issuing entity will issue the Floating Rate Notes, it will not enter into any interest rate hedges or other derivatives contracts to mitigate this interest rate risk.
   The issuing entity will make payments on the Floating Rate Notes out of amounts received on the pool of automobile loan contracts and not solely from any subset of collections that are dedicated to the Floating Rate Notes. Therefore, an increase in one-month LIBOR would increase the amount due as interest payments on the Floating Rate Notes without any corresponding increase in the amount of interest due on the automobile loan contracts or any additional source of funds that provide a source of payment for those increased interest payments.
   If the floating rate payable by the issuing entity increases to the point at which the amount of interest and principal due on the notes, together with other fees and expenses payable by the issuing entity, exceeds the amounts received on the pool of automobile contracts, the issuing entity may not have sufficient funds to make payments on the notes. If the issuing entity does not have sufficient funds to make these payments, you may experience delays or reductions in the interest and principal payments on your notes.]

 

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[We cannot predict the allocation of the principal amount of the Class A-2 Notes.    The allocation of the principal amount of the Class A-2 Notes between the Class A-2-A Notes and the Class A-2-B Notes may not be determined until the day of pricing. A higher allocation to the Floating Rate Notes will correspondingly increase the issuing entity’s exposure to increases in the interest rate payable on the Floating Rate Notes.]
[Payments on the notes may be affected by matters relating to the hedge agreement.]   

[The issuing entity will enter into an interest rate hedge transaction under either an interest rate swap transaction or an interest rate cap transaction because the automobile loan contracts owned by the issuing entity bear interest at fixed rates while the Class A-2-B Notes will bear interest at a floating rate and an additional source of funds may be necessary to ensure that all payments are made on the notes during periods when the floating rate of interest on the Class A-2-B Notes has risen. The issuing entity may use payments made by the hedge counterparty to make required payments on each distribution date.

 

During those periods in which the floating rate payable by the hedge counterparty is substantially greater than the fixed rates payable by the issuing entity under the interest rate swap transactions, if any, or the strike rate under the interest rate cap transactions, if any, the issuing entity will be more dependent on receiving payments from the hedge counterparty in order to make interest payments on the notes without using amounts that would otherwise be paid as principal on the notes. If the hedge counterparty fails to pay any required payment and collections on the automobile loan contracts and other assets on deposit in the reserve account are insufficient to make payments of interest on the notes, you may experience delays and/or reductions in the interest and principal payments on your notes.

 

During those periods in which the floating rate payable by the hedge counterparty under any interest rate swap transaction are less than the fixed rates payable by the issuing entity under the interest rate swap transaction, the issuing entity will be obligated to make a net swap payment to the hedge counterparty. The issuing entity’s obligation to pay a net swap payment to the hedge counterparty is secured by the trust property.

 

If any interest rate swap transactions are entered into by the issuing entity, the hedge counterparty’s claim for net swap payments will be higher in priority than all payments on the notes. If a net swap payment is due to the hedge counterparty on a distribution date and there are insufficient collections on the automobile loan contracts and insufficient funds on deposit in the reserve account to make payments of interest and principal on the notes, you may experience delays and/or reductions in the interest and principal payments on your notes.

 

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The hedge transactions generally may not be terminated except upon, among other things, failure of either party to the hedge transactions to make payments when due, insolvency of either party to the hedge transactions, illegality, the exercise of certain rights under the indenture, the issuing entity amends the transaction documents without the consent of the hedge counterparty if such consent is required, or failure of the hedge counterparty to post collateral, assign the swap agreement to an eligible counterparty or take other remedial action if the hedge counterparty’s credit ratings drop below the levels required by the hedge agreement. Depending on the timing of and reason for the termination, a termination payment may be due to the issuing entity or to the hedge counterparty. Any such termination payment could, if market interest rates and other conditions have changed materially, be substantial.

 

If the hedge counterparty fails to make a termination payment owed to the issuing entity under any hedge transaction, the issuing entity may not have sufficient funds available to enter into a replacement hedge transaction. If this occurs, the amount available to pay principal and interest on the notes will be reduced to the extent the interest rate on the Class A-2-B Notes exceeds the fixed rate the issuing entity would have been required to pay the hedge counterparty under the hedge transaction.

 

If the hedge transaction is terminated and no replacement hedge transaction is entered into and collections on the automobile loan contracts and funds on deposit in the reserve account are insufficient to make payments of interest and principal on your notes, you may experience delays and/or reductions in the interest and principal payments on your notes.]

You may not be able to sell your notes, and may have to hold your notes to maturity even though you may want to sell.    A secondary market for your notes may not be available. If it is available, it may not provide you with sufficient liquidity of investment or continue for the life of these notes. The underwriters may establish a secondary market in the notes, although no underwriter will be obligated to do so. The notes are not expected to be listed on any securities exchange or quoted in the automated quotation system of a registered securities association.

 

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The trust property consists mainly of automobile loan contracts made primarily to sub-prime borrowers.    The trust property consists of automobile loan contracts made primarily to sub-prime borrowers which are originated under lending programs of the sponsor designed to serve consumers who have limited access to traditional automobile financing. There is a high degree of risk associated with sub-prime borrowers. The typical sub-prime borrower may have had previous financial difficulties or may have a limited credit history. Because the sub-prime automobile loan contracts that are included in the trust property were made to consumers who are unable to meet the credit standards imposed by most traditional automobile financing services, the sponsor charges interest on the automobile loan contracts at higher rates than those charged by many traditional financing sources. Sub-prime automobile loan contracts such as those included in trust property therefore entail relatively higher risk and may be expected to experience higher levels of delinquencies, defaults and net losses than automobile loan contracts originated by traditional automobile financing sources.
Federal and state laws and other factors may limit the collection of payments on the automobile loan contracts and repossession of the automobiles.    Federal and state laws may prohibit, limit, or delay repossession and sale of the automobiles to recover losses on defaulted automobile loan contracts. As a result, you may experience delays in receiving payments and suffer losses.
   Additional factors that may affect the issuing entity’s ability to recoup the full amount due on an automobile loan contract include:
  

•       the sponsor’s failure to file amendments to the certificate of title relating to the related automobile;

  

•       the sponsor’s failure to file financing statements to perfect its security interest in the related automobile;

  

•       depreciation;

  

•       obsolescence;

  

•       damage or loss of the related vehicle; and

   Furthermore, proceeds from the sale of repossessed automobiles can fluctuate significantly based upon market conditions. A deterioration in general economic conditions could result in a greater loss in the sale of repossessed automobiles than the sponsor has historically experienced.
Insolvency of the sponsor may cause your payments to be reduced or delayed.    In some circumstances, a bankruptcy of the sponsor may reduce payments to you. A company with a relatively limited operating history, like the sponsor, may be subject to a greater

 

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  risk of bankruptcy than a more established company with a longer operating history. The sponsor has structured this transaction such that, in the event the sponsor were to become bankrupt, the automobile loan contracts sold to the issuing entity are not expected to be treated as property of the sponsor’s bankruptcy estate.
  The steps taken to guard the sold automobile loan contracts against bankruptcy include the creation of the depositor as a special-purpose subsidiary of the sponsor (the formation documents for which restrict the nature of its businesses and its ability to commence a voluntary bankruptcy case or proceeding) and the transfer of the automobile loan contracts to the depositor. The depositor, in turn, transfers the automobile loan contracts to the issuing entity and the issuing entity is also a special-purpose entity, the formation documents for which restrict the nature of its business and its ability to commence a voluntary bankruptcy case or proceeding. The depositor and the issuing entity are both required by their formative documents to be operated in such a manner as to minimize the risk that they would be consolidated with the sponsor in the event of the sponsor’s bankruptcy.
  The sponsor believes that its transfer of the automobile loan contracts to the depositor is structured so that it should be treated as an absolute and unconditional assignment and transfer under bankruptcy law and that the automobile loan contracts should not, in the event that the sponsor were to become bankrupt, become property of the sponsor’s bankruptcy estate. Furthermore, the sponsor believes that it, the depositor and the issuing entity are, and will be, operated in a manner that minimizes the likelihood that the assets of the depositor or the issuing entity would be consolidated with those of the sponsor in the event of the sponsor’s bankruptcy.
  However, in the event of an insolvency of the sponsor, a court or bankruptcy trustee could attempt to:
 

•       recharacterize the transfer of the automobile loan contracts by the sponsor to the depositor and/or by the depositor to the issuing entity as a borrowing by the sponsor from the depositor, the issuing entity or the noteholders, secured by a pledge of the automobile loan contracts; or

 

•       consolidate the assets of the depositor and/or the issuing entity with those of the sponsor.

  If a recharacterization attempt is successful, a court could elect to accelerate payment of the notes and liquidate the automobile loan contracts, in which case you may only be entitled to the outstanding principal amount and interest on the notes at the

 

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   interest rate on the date of payment. A recharacterization attempt, even if unsuccessful, could result in delays in payments to you.
   If either attempt were successful, an event of default would occur with respect to the notes, the notes would be accelerated and the indenture trustee’s recovery on your behalf could be limited to the then-current value of the automobile loan contracts. Consequently, you could lose the right to future payments and you may not receive your anticipated interest and principal on the notes.
Commingling of collections with the sponsor’s corporate funds may result in reduced or delayed payments to you.    While the sponsor is the servicer, cash collections remitted directly to the sponsor, rather than to the lockbox account, and held by the sponsor prior to deposit in the collection account as required by the transaction documents may be commingled with the sponsor’s corporate funds prior to each distribution date.
   If bankruptcy proceedings are commenced with respect to the sponsor while it is acting as the servicer, the issuing entity or the indenture trustee may not have a perfected security interest in those collections and any funds then held by the servicer may be unavailable to noteholders.
Losses and delinquencies on the automobile loan contracts may differ from the sponsor’s historical loss and delinquency levels.    The delinquency and loss levels of the automobile loan contracts owned by the issuing entity may not correspond to the historical levels the sponsor experienced on its automobile loan contract and vehicle portfolio. There is a risk that delinquencies and losses could increase or decline significantly for various reasons, including changes in the local, regional or national economies.
Noteholders have no recourse against the sponsor for losses.    The depositor, the issuing entity and the noteholders will have no recourse against the sponsor other than (i) for breaches of certain representations and warranties with respect to the automobile loan contracts and (ii) for certain breaches of the sponsor’s obligations, in its capacity as servicer, under the transaction documents. The notes represent obligations solely of the issuing entity. The notes are not guaranteed, in whole or in part, by the sponsor, the servicer, the indenture trustee or any other party. Consequently, if payments on the automobile loan contracts and the credit enhancement are insufficient to pay the notes in full, you will have no rights to obtain payment from the sponsor.

 

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Defaulted automobile loan contracts may result in a delay in payments to noteholders and a loss of your investment.    In the event that the servicer must repossess and dispose of automobiles to recover scheduled payments due on defaulted automobile loan contracts, the issuing entity may not realize the full amount due on an automobile loan contract, or may not realize the full amount on a timely basis. Other factors that may affect the ability of the issuing entity to realize the full amount due on an automobile loan contract include whether endorsements or amendments to certificates of title relating to the automobiles had been filed or such certificates have been delivered to the indenture trustee; whether financing statements to perfect the security interest in the automobile loan contracts had been filed; depreciation, obsolescence, damage or loss of any vehicle; a market deterioration for recoveries from repossessed automobiles; and the application of federal and state bankruptcy and insolvency laws. As a result, you may be subject to delays in receiving payments and suffer loss of your investment in the notes.
Transfer of servicing may delay payments to you.    The transaction documents contain provisions that could result in the termination of the sponsor’s servicing rights. If the sponsor were to cease servicing the automobile loan contracts, delays in processing payments on the automobile loan contracts and information regarding automobile loan contract payments could occur. This could delay payments to you. There is no guarantee that a replacement servicer would be able to service the automobile loan contracts with the same capability and degree of skill as the sponsor. See “Description of the Transaction DocumentsServicer Termination Event” for more information about servicer termination events and servicing transfers.
Inability of the sponsor to reacquire automobile loan contracts which breach a representation or warranty may cause your payments to be reduced or delayed.    The transaction documents require the sponsor to reacquire automobile loan contracts from the trust property if representations and warranties concerning the automobile loan contracts’ eligibility for sale to the issuing entity have been breached. If the sponsor is unable to reacquire the automobile loan contracts, no other party is obligated to perform or satisfy these obligations, and you may experience delays in receiving payments and suffer losses on your investment in the notes as a result.

 

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Inadequate insurance on automobiles may cause losses on your investment.    Each automobile loan contract requires the obligor to maintain insurance covering physical damage to the financed vehicle in an amount not less than the unpaid principal balance of the automobile loan contracts, with the sponsor named as a loss payee. The obligors select their own insurers to provide the required coverage, so the specific terms and conditions of their insurance policies vary.
   In addition, although each automobile loan contract generally gives the sponsor the right to obtain force-placed insurance coverage in the event the required physical damage insurance on a vehicle is not maintained by an obligor, neither the sponsor nor the servicer is obligated to obtain force-placed coverage and neither is in the practice of obtaining force-placed insurance coverage. In most cases, the sponsor does not typically obtain forced-placed insurance on the automobile loan contracts. In the event insurance coverage is not maintained by obligors and coverage is not force-placed, then insurance recoveries may be limited in the event of losses or casualties to financed automobiles related to the automobile loan contracts included in the trust property, and you could suffer a loss on your investment.
Limitations on interest payments and repossessions may cause losses on your investment.    Generally, under the terms of the Servicemembers Civil Relief Act and similar state legislation, a lender may not charge an obligor who enters military service after the origination of the automobile loan contract interest, including fees and charges, above an annual rate of 6% during the period of the obligor’s active duty status, unless a court orders otherwise upon application of the lender. It is possible that this action could affect the servicer’s ability to collect full amounts of interest on some of the automobile loan contracts. In addition, this legislation imposes limitations that would impair the servicer’s ability to repossess an affected automobile loan contract during the obligor’s period of active duty status. Thus, in the event that these automobile loan contracts go into default, there may be delays in receiving payments and losses on your investment in the notes.

 

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The sponsor’s cashflow could be adversely affected by any negative performance of automobile loan contracts in the sponsor’s servicing portfolio.   

The sponsor is the holder of the residual interest in the depositor and the depositor will initially be the holder of the residual interest in the issuing entity. For so long as the depositor is the holder of the residual interest in the issuing entity, the sponsor will be the ultimate recipient of excess cash flow received by the issuing entity. The amount of such excess cash flow released to the sponsor will be dependent on the performance of the trust property.

 

In cases where there is no excess cash flow because of the performance of the trust property or where excess cash flow does not flow to the sponsor and is instead used to increase credit enhancement, the sponsor will nonetheless continue to receive servicing fees, subject to the priority of payments, and will continue to receive those fees for so long as it remains the servicer under the transaction.

Failure to amend or reissue the certificates of title to the financed vehicles may cause you to experience delays in payments or losses.    None of the sponsor, the depositor, the issuing entity, the indenture trustee or any other party will amend or reissue the certificates of title to the financed vehicles to note their sale to the issuing entity or the grant of a security interest in the vehicles to the indenture trustee by the issuing entity. Because the certificates of title will not be amended or reissued, the issuing entity may not have a perfected security interest in the financed vehicles securing the automobile loan contracts originated in some states. In the event that an automobile loan contract originated in any such state goes into default, you may experience delays in receiving payments and losses on your investment in the notes.

 

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Use of Proceeds

The issuing entity will use the proceeds from issuing the notes to:

 

    pay the depositor the purchase price for the automobile loan contracts (and the depositor will, in turn, pay the sponsor the purchase price for the automobile loan contracts);

 

  [• deposit the pre-funded amount into the pre-funding account;] and

 

    fund the initial deposit to the reserve account.

The sponsor or its affiliates will use the net proceeds from the issuance of the notes to pay their debt, including “warehouse” debt secured by some or all of the automobile loan contracts prior to their sale to the issuing entity. This “warehouse” debt may be owed to one or more of the underwriters or their affiliates, so a portion of the proceeds that is used to pay “warehouse” debt may be paid to the underwriters or their affiliates.

The Sponsor and the Servicer

The sponsor and servicer for the notes will be Exeter Finance Corp., or Exeter. Exeter was incorporated in Texas on April 24, 2006. Exeter’s executive offices are located at 222 West Las Colinas Boulevard, Suite 1800 N, Irving, Texas 75039; and its main telephone number is (214) 572-8276.

The sponsor originated     % of the automobile loan contracts included in this transaction indirectly through automobile dealers [and/or originated directly by the sponsor]. The sponsor purchases automobile loan contracts that are assigned to it by automobile dealers. [The sponsor purchased     % of the automobile loan contracts included in this transaction from unaffiliated third party originators.]

The sponsor services all automobile loan contracts that it originates indirectly through dealers [and/or originated directly by the sponsor] [and/or purchases from unaffiliated third party originators] according to the sponsor’s servicing policies as described below. As of [quarter end date], the sponsor serviced a portfolio of approximately                      automobile loan contracts with an aggregate outstanding balance of approximately $        . See “The Sponsor’s Automobile Financing Program” for more information regarding the sponsor’s business and “The Sponsor’s Securitization Program” for information regarding the sponsor’s securitization program.

The sponsor will sell and assign the pool of [initial automobile loan contracts and the subsequent] automobile loan contracts to the depositor pursuant to the purchase agreement [and supplements thereto]. If it is discovered that the sponsor has breached a representation or warranty under the purchase agreement with respect to an automobile loan contract, the sponsor will be obligated to repurchase the affected automobile loan contract from the depositor if the interests of the noteholders therein are materially and adversely affected by such breach. See “The Automobile Loan Contracts—Repurchase Obligations” for more information regarding the representations and warranties that the sponsor will make regarding the automobile loan contracts and its repurchase obligations under the purchase agreement.

[Insert recent, material corporate developments regarding the sponsor. Insert information regarding the sponsor’s financial condition to the extent that there is a material risk that the effect on its ability to comply with the repurchase obligations resulting from its financial condition could have a material impact on performance of the automobile loan contracts or the notes.]

 

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The transaction documents for prior pools of automobile loan contracts that were securitized by the sponsor also contain covenants requiring the repurchase of automobile loan contracts for the breach of a related representation or warranty. In the past three years, none of the sponsor, the depositor, the indenture trustee or the owner trustee for any of those prior securitizations, received a demand to repurchase any automobile loan contracts underlying a securitization sponsored by the sponsor, and there was no activity with respect to any demand made prior to such period. The sponsor, as securitizer, discloses all fulfilled and unfulfilled repurchase requests for automobile loan contracts that were the subject of a demand to repurchase on SEC Form ABS-15G. The sponsor filed its most recent Form ABS-15G with the SEC on             , 20    . The sponsor’s CIK number is 0001541713. A copy of the report may be obtained by any noteholder by request to the sponsor.

Under the sale and servicing agreement, the sponsor will service the automobile loan contracts and will be compensated for acting as the servicer. The servicer’s activities consist primarily of collecting and processing customer payments, responding to customer inquiries, initiating contact with customers who are delinquent in payment of an installment, maintaining the security interests in the financed vehicles and arranging for the repossession of the financed vehicles, liquidating collateral and pursuing of deficiencies when necessary. See “The Sponsor’s Automobile Financing Program—Loan Servicing” for more information regarding the sponsor’s general servicing procedures. See “Description of the Transaction Documents—Servicing Compensation” for more information regarding the servicer’s duties under the sale and servicing agreement.

As long as the sponsor is the servicer, the certificates of title of the financed vehicles will not be amended or reissued to note the sale of the automobile loan contracts by the sponsor to the depositor or the sale of the automobile loan contracts by the depositor to the issuing entity or the grant of a security interest in the automobiles to the indenture trustee by the issuing entity. Because the certificates of title are not amended or reissued, the issuing entity may not have a perfected security interest in the financed vehicles originated in some states. See “Material Legal Aspects of the Automobile Loan Contracts” for more information regarding the certificates of title relating to the automobile loan contracts.

The sponsor will be the initial servicer, but as described under “Description of the Transaction Documents—Servicer Termination Event” there are circumstances where the sponsor may be removed as servicer. Information regarding the manner in which the sponsor may be removed as servicer following the occurrence of a Servicer Termination Event and the manner in which the [backup servicer or other] successor servicer may be appointed is described under “—Rights Upon Servicer Termination Event.

[Information on the servicer’s financial condition to the extent that there is a material risk that the effect on one or more aspects of servicing resulting from such financial condition could have a material impact on pool performance of the securities for assets of the same type will be disclosed here.]

The Depositor

EFCAR, LLC, the sponsor’s wholly-owned subsidiary, is a Delaware limited liability company, formed on November 16, 2011. The principal place of business of the depositor is at 222 West Las Colinas Boulevard, Suite 1800 N, Irving, Texas 75039 and its main telephone number is (214) 572-8276.

The depositor is a special-purpose entity that was formed for the limited purpose of purchasing automobile loan contracts from the sponsor and transferring the automobile loan contracts to third parties and any activities incidental or necessary for this purpose.

The depositor will purchase the pool of [initial automobile loan contracts and the subsequent] automobile loan contracts from the sponsor pursuant to the purchase agreement and [supplements thereto and] will sell the [initial automobile loan contracts and the subsequent] automobile loan contracts to the

 

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issuing entity pursuant to the sale and servicing agreement [and supplements thereto]. If it is discovered that the depositor has breached a representation or warranty under the sale and servicing agreement with respect to an automobile loan contract, the depositor will be required to repurchase the affected automobile loan contract from the issuing entity if the interests of the noteholders therein are materially and adversely affected by such breach. In this case, the sponsor will be obligated to repurchase the affected automobile loan contract from the depositor pursuant to the purchase agreement. See “The Automobile Loan Contracts—Repurchase Obligations” for more information regarding the representations and warranties that the depositor will make regarding the automobile loan contracts and its repurchase obligations under the sale and servicing agreement.

The depositor has furnished or will furnish a Form ABS-15G to the SEC pursuant to Rule 15Ga-2 of the Exchange Act, which is available on the SEC’s Internet site under the depositor’s CIK number, which is 0001654238. The Form ABS-15G is not incorporated by reference into this prospectus.

The sponsor and the depositor have structured this transaction so that the bankruptcy of the sponsor is not expected to result in the consolidation of the depositor’s assets and liabilities with those of the sponsor. On the closing date, the depositor will receive a legal opinion, subject to various facts, assumptions and qualifications, opining that if the sponsor were adjudged bankrupt, it would not be a proper exercise of a court’s equitable discretion to disregard the separate corporate existence of the depositor and to require the consolidation of the depositor’s assets and liabilities with those of the sponsor. However, there can be no assurance that a court would not conclude that the assets and liabilities of the depositor should be consolidated with those of the sponsor. Delays in distributions on the notes and possible reductions in distribution amounts could occur if a court decided to consolidate the depositor’s assets with those of the sponsor, or if a filing were made under any bankruptcy or insolvency law by or against the depositor, or if an attempt were made to litigate any of those issues.

In connection with the offering of the notes, the chief executive officer of the depositor will make the certifications required under the Securities Act about this prospectus, the disclosures made about the characteristics of the automobile loan contracts and the structure of this securitization transaction, the risks of owning the notes and whether the securitization transaction will produce sufficient cash flows to make interest and principal payments on the notes when due. This certification will be filed by the depositor with the SEC at the time of filing of this prospectus. Despite the fact that the chief executive officer will make these certifications, this does not reduce or eliminate the risks of investing in the notes.

[The Backup Servicer]

[[Backup Servicer] will be the backup servicer under the sale and servicing agreement. The backup servicer is a                      banking corporation and its principal offices are located at                     .

[Insert additional backup servicer disclosure regarding the backup servicer’s prior experience serving as a backup servicer for asset-backed securities transactions. (Regulation AB Item 1108)]

In the event that the servicer is terminated or resigns as servicer pursuant to the terms of the sale and servicing agreement, the backup servicer will be the successor in all respects, except as expressly set forth in the sale and servicing agreement, to the servicer under the transaction documents and shall be subject to all the rights, responsibilities, restrictions, duties, liabilities and termination provisions relating thereto placed on the servicer by the terms and provisions of the sale and servicing agreement.

Under the sale and servicing agreement, the backup servicer will perform backup servicing duties including receiving the monthly pool data, confirming the pool balance, conducting periodic on-site visits, confirming certain data on the monthly servicer reports and becoming successor servicer if the servicer is terminated as servicer for any reason.

 

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For information regarding the transfer of servicing duties to the backup servicer see “Description of the Transaction Documents—Rights Upon Servicer Termination Event” below in this prospectus. For information regarding the expenses associated with a servicing transfer and any additional fees charged by a successor servicer see “Description of the Transaction Documents—Rights Upon Servicer Termination Event” below in this prospectus. For information regarding the backup servicer’s resignation, removal and replacement see “Description of the Transaction DocumentsReplacement of Backup Servicer” below in this prospectus.]

The Issuing Entity

Exeter Automobile Receivables Trust 20    -    , the issuing entity, is a Delaware statutory trust formed under a trust agreement to consummate the transactions described in this prospectus. The issuing entity’s principal offices are in [                    ], Delaware, in care of the owner trustee at the address listed under “The Owner Trustee.

The depositor will, on or prior to the closing date, transfer to the issuing entity an amount equal to $1.00 as the initial capitalization of the trust. In addition, the depositor will pay organizational expenses of the trust as they may arise.

The issuing entity will not engage in any activities other than:

 

    acquiring, holding and managing the automobile loan contracts and its other assets and proceeds from its assets;

 

    selling automobile loan contracts from time to time, as directed by the servicer, in accordance with the provisions of the sale and servicing agreement;

 

    issuing the notes and the residual certificate (which represents the residual interest in the issuing entity);

 

    making payments on the notes and the certificate;

 

    entering into and performing its obligations under the transaction documents to which it is a party; and

 

    engaging in other activities that are necessary, suitable or convenient to accomplish these activities.

Modifications to the trust agreement, including to the foregoing permissible activities, may be made by the depositor and the owner trustee, upon notice by the depositor to the engaged rating agencies and with the consent of, in certain cases, the certificateholder and holders of a majority of the then-Outstanding Principal Balance (as defined in the Glossary) of the notes [and the hedge counterparty], in all cases subject to the limitations set forth in the trust agreement.

The issuing entity will use the proceeds from the initial sale of the notes to purchase the [initial] automobile loan contracts from the depositor and to fund the initial deposit to the reserve account[ and to fund deposits to the pre-funding account and the capitalized interest account]. In addition to the automobile loan contracts, the issuing entity will own the trust property, described in “The Trust Property.

 

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[The/Each] sale of the automobile loan contracts by the depositor to the issuing entity will be treated as a financing rather than as a sale for accounting purposes. The depositor will represent and warrant that the indenture trustee, acting on behalf of the noteholders, will have a first priority perfected security interest in the automobile loan contracts by reason of the indenture and the filing of a UCC-1 financing statement by the issuing entity in the State of Delaware which will give notice of the security interest in favor of the indenture trustee. The issuing entity will be required to maintain such perfected security interest.

The issuing entity may not, without the prior written consent of the owner trustee: (a) institute any proceedings to be adjudicated as bankrupt or insolvent; (b) consent to the institution of bankruptcy or insolvency proceedings against it; (c) file a petition seeking or consenting to reorganization or relief under any applicable federal or state law relating to bankruptcy with respect to it; (d) consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the issuing entity or a substantial part of its property; (e) make any assignment for the benefit of the issuing entity’s creditors; (f) admit in writing its inability to pay its debts generally as they become due; or (g) take any action in furtherance of any of the foregoing (any of the foregoing, a bankruptcy action). In considering whether to give or withhold written consent to any of these actions by the issuing entity, the owner trustee, with the consent of the certificateholder, shall consider the interest of the noteholders in addition to the interests of the issuing entity and whether the issuing entity is insolvent. The owner trustee will have no duty to give written consent to any of these actions by the issuing entity if the owner trustee has not been furnished a letter from an independent accounting firm of national reputation stating that in the opinion of such firm the issuing entity is then insolvent.

The owner trustee (as such and in its individual capacity) will not be personally liable to any person on account of the owner trustee’s good faith reliance on the provisions of the trust agreement regarding a bankruptcy action or in connection with the owner trustee’s giving prior written consent to a bankruptcy action by the issuing entity in accordance with the trust agreement, or withholding such consent, in good faith, and neither the issuing entity nor any certificateholder will have any claim for breach of fiduciary duty or otherwise against the owner trustee (as such and in its individual capacity) for giving or withholding its consent to any such bankruptcy action. No certificateholder of the issuing entity has power to commence any bankruptcy actions on behalf of the issuing entity or to direct the owner trustee to take any such actions on the part of the issuing entity. To the extent permitted by applicable law, the consent of the indenture trustee must be obtained prior to taking any bankruptcy action by the issuing entity.

Furthermore, the issuing entity has structured this transaction so that the bankruptcy of the depositor or the sponsor is not expected to result in the consolidation of the issuing entity’s assets and liabilities with those of the depositor or the sponsor. On the closing date, the issuing entity will receive a legal opinion, subject to various facts, assumptions and qualifications, opining that if the depositor or the sponsor were adjudged bankrupt, it would not be a proper exercise of a court’s equitable discretion to disregard the separate corporate existence of the issuing entity and to require the consolidation of the issuing entity’s assets and liabilities with those of the depositor or the sponsor, as applicable. However, there can be no assurance that a court would not conclude that the assets and liabilities of the issuing entity should be consolidated with those of the depositor or sponsor, as appropriate.

[The residual certificate (which represents the residual interest in the issuing entity) will be issued pursuant to the trust agreement and will initially be held by the depositor, the entity that formed the issuing entity. The residual certificate will constitute an “eligible horizontal residual interest” under Regulation RR of the Securities Act because it is an interest in the issuing entity (i) with respect to which on any distribution date on which the issuing entity has insufficient funds to satisfy its obligation to pay all contractual interest or principal due, any resulting shortfall will reduce amounts payable to the residual certificate prior to any reduction in the amounts payable to any class of notes and (ii) that has the most subordinated claim to payments of both principal and interest by the issuing entity.]

 

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Capitalization and Liabilities of the Issuing Entity

[The following table illustrates]/[If the aggregate initial principal balance of the publicly offered notes is $        ,] the expected assets of the issuing entity as of the closing date [will be as follows]:

 

Aggregate Principal Balance of the [Initial] Automobile Loan Contracts

   $                    

[Pre-Funding Account

   $                 

[Capitalized Interest Account

   $                 

Reserve Account

   $                    

[The following table illustrates]/[If the aggregate initial principal balance of the publicly offered notes is $        ,] the expected liabilities of the issuing entity as of the closing date [will be as follows]:

 

Class A-1 Notes

   $                    

Class A-2 Notes

   $                    

Class A-3 Notes

   $                    

Class B Notes

   $                    

Class C Notes

   $                    

Class D Notes

   $                    

[Class E Notes]

   $                    
  

 

 

 

Total

   $                    

[If the aggregate initial principal balance of the publicly offered notes is $        , the expected assets of the issuing entity as of the closing date will be as follows:]

 

[Aggregate Principal Balance of the [Initial] Automobile Loan Contracts

   $                    

[Pre-Funding Account

   $                 

[Capitalized Interest Account

   $                 

Reserve Account

   $                 

[If the aggregate initial principal balance of the publicly offered notes is $        , the expected liabilities of the issuing entity as of the closing date will be as follows:]

 

[Class A-1 Notes

   $                    

Class A-2 Notes

   $                    

Class A-3 Notes

   $                    

Class B Notes

   $                    

Class C Notes

   $                    

Class D Notes

   $                    

[Class E Notes]

   $                    
  

 

 

 

Total

   $                 

The issuing entity’s fiscal year ends on December 31.

 

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The Owner Trustee

[Owner Trustee], the owner trustee, is a                      banking corporation with trust powers incorporated in                     . [Owner Trustee’s] principal place of business is located at                     . [Owner Trustee] has served as owner trustee in numerous asset-backed securities transactions involving automobile loan contracts.

[Insert additional trustee disclosure regarding the owner trustee’s prior experience serving as a trustee for asset-backed securities transactions. (Regulation AB Item 1109)]

[Owner Trustee] has provided the above information for purposes of complying with Regulation AB. Other than the above [two] paragraphs, [Owner Trustee] has not participated in the preparation of, and is not responsible for, any other information contained in this prospectus.

Pursuant to the trust agreement, the owner trustee will perform limited administrative functions of the issuing entity including the execution and delivery of the transaction documents and any related certificate or other document to which the issuing entity is a party. The owner trustee will also direct the indenture trustee to authenticate and deliver the notes and will be authorized but not obligated to take all other actions required of the issuing entity pursuant to the transaction documents.

The depositor will indemnify the owner trustee and its officers, directors, successors, assigns, agents and servants against any and all loss, liability or expense incurred by the owner trustee in connection with the performance of its duties under the transaction documents, except that the depositor shall not be liable for or required to indemnify the owner trustee from any loss, liability or expense that results from the owner trustee’s willful misconduct, bad faith or gross negligence. The owner trustee is obligated to perform only those duties that are specifically assigned to it in the trust agreement. The owner trustee will not be liable for any action taken at the direction of the servicer or the certificateholder in accordance with the transaction documents. The owner trustee will not be required to expend its own funds or incur any financial liability in respect of any of its actions as owner trustee if the owner trustee has reasonable grounds to believe that reimbursement to it of such funds or for such liabilities is not reasonably assured. The owner trustee is not liable for any error of judgment made by it in good faith.

[Owner Trustee] will be the owner trustee initially, but there are certain conditions under which the owner trustee may be removed or may resign, in which case a successor owner trustee will be appointed. See “Description of the Transaction Documents—Replacement of Owner Trustee” for information regarding the owner trustee’s removal, resignation and replacement.

The Indenture Trustee

[Indenture Trustee] will be the indenture trustee under the indenture. [Indenture Trustee] is a                      banking association and a wholly-owned subsidiary of                     . Its corporate trust office is located at                     . A diversified financial services company with approximately $         in assets,                      million customers and                      employees as of [quarter end date], [Indenture Trustee] provides [banking, insurance, trust, mortgage and consumer finance services throughout the United States and internationally]. [Indenture Trustee] provides [retail and commercial banking services and corporate trust, custody, securities lending, securities transfer, cash management, investment management and other financial and fiduciary services]. The servicer, the depositor and their respective affiliates may maintain normal commercial banking relationships with [Indenture Trustee] and its affiliates. The fees and expenses of the indenture trustee will be paid by the servicer under the sale and servicing agreement.

 

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[Indenture Trustee] has provided corporate trust services since                     . As of         , 20    , [Indenture Trustee] was acting as indenture trustee on more than                      series of automobile loan contracts backed securities with an original aggregate principal balance of approximately $        .

[Insert additional indenture trustee disclosure regarding the indenture trustee’s prior experience serving as a trustee for asset-backed securities transactions. (Regulation AB Item 1109)]

The issuing entity will cause the servicer to indemnify the indenture trustee and its respective officers, directors, employees and agents against any and all loss, liability or expense (including attorneys’ fees and expenses) incurred by each of them in connection with the acceptance or the administration of the issuing entity and the performance of its duties under the transaction documents. Neither the issuing entity nor the depositor will be required to indemnify against any loss, liability or expense incurred by the indenture trustee through the indenture trustee’s own willful misconduct, gross negligence or bad faith. The indenture trustee is obligated to perform only those duties that are specifically assigned to it in the indenture and the sale and servicing agreement. The indenture trustee may conclusively rely on certificates and opinions furnished to it in accordance with the indenture. [The indenture does not require the indenture trustee to expend or risk its own funds or otherwise incur financial liability if it has reasonable grounds to believe that repayment of such funds or adequate indemnity against such risk is not reasonably assured to it.] The indenture trustee is not liable for any error of judgment made by it in good faith. The indenture trustee will not be liable with respect to any action it takes or omits to take pursuant to directions from the noteholders in accordance with the indenture. See “Description of the Notes” for more information regarding the indenture trustee’s duties under the indenture.

[Indenture Trustee] will be the indenture trustee initially, but there are certain conditions under which the indenture trustee may be removed or may resign, in which case a successor indenture trustee will be appointed. See “Description of the Transaction Documents—Replacement of Indenture Trustee” for information regarding the indenture trustee’s removal, resignation and replacement.

The Custodian

[Custodian] is the custodian under the custodian agreement. The custodian is a                      and its principal offices are located at                                          .

In its capacity as custodian, [Custodian] will hold the automobile loan contracts on behalf of the indenture trustee and will clearly identify the automobile loan contracts as being separate from all other records maintained by the custodian at the same location. See “Material Legal Aspects of the Automobile Loan Contracts—Security Interests in the Financed Vehicles—Perfection” in this prospectus.

The Asset Representations Reviewer

                    , a                     , will act as the “asset representations reviewer” under the asset representations review agreement. [Insert description of asset representations reviewer, including prior experience as asset representations reviewer for ABS transactions involving similar assets as required by Item 1109(b)(2) of Regulation AB].

The asset representations reviewer is an “eligible asset representations reviewer,” meaning that (i) it is not affiliated with the sponsor, the depositor, the servicer, the indenture trustee, the owner trustee or any of their affiliates, (ii) neither it nor any of its affiliates has been hired by the sponsor or the underwriters to perform pre-closing due diligence work on the automobile loan contracts and (iii) it is not responsible for reviewing the automobile loan contracts for compliance with the representations under the transaction documents, except in connection with a review under the asset representations review agreement, or for determining whether noncompliance with any representation is a breach of the transaction documents.

 

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The asset representations reviewer’s main duties will be:

 

    reviewing certain automobile loan contracts following receipt of a review notice from the indenture trustee, and

 

    providing a report on the results of the review to the issuing entity, the servicer and the indenture trustee.

See “Description of the Transaction Documents—Asset Representations Review Triggers and Procedures—Asset Representations Review Procedure” for a description of the nature of the review to be performed by the asset representations reviewer.

The asset representations reviewer will not be liable for any action, omission or error in judgment unless it is due to willful misconduct, bad faith or negligence by the asset representations reviewer. The asset representations reviewer will not be liable for any errors in any review materials relied on by it to perform a review or for the noncompliance or breach of any representation made about the automobile loan contracts.

The issuing entity and the servicer will indemnify the asset representations reviewer for liabilities and damages resulting from the asset representations reviewer’s performance of its duties under the asset representations review agreement unless caused by the willful misconduct, bad faith or negligence (other than errors in judgment) of the asset representations reviewer or as a result of any breach of representations made by the asset representations reviewer in the asset representations review agreement.

The issuing entity will pay the upfront and annual fees and review fees of the asset representations reviewer and pay any indemnities due to the asset representations reviewer, to the extent those amounts are not paid or reimbursed by the servicer. The issuing entity will pay these amounts to the asset representations reviewer on each distribution date, along with similar amounts owed to the indenture trustee, the owner trustee[, the backup servicer] and the custodian and expenses incurred by the issuing entity under the transaction documents, up to the limit of $         [per year]/[per month]/[per institution] before the trust makes any other payments to items with a lower payment priority.

The asset representations reviewer may not resign, unless (i) it ceases to be an eligible asset representations reviewer, (ii) it becomes legally unable to act or (iii) the issuing entity consents to the resignation. The issuing entity may remove the asset representations reviewer if the asset representations reviewer becomes legally unable to act or becomes subject to a bankruptcy and will be required to remove the asset representations reviewer if it no longer is an eligible asset representations reviewer. No resignation or removal of the asset representations reviewer will be effective until a successor asset representations reviewer is in place. Any successor asset representations reviewer must be an eligible asset representations reviewer.

If during any collection period the asset representations reviewer resigns or is removed, replaced or substituted, or if a new asset representations reviewer is appointed, the date on which the event occurred and the circumstances surrounding the change will be indicated on the distribution report filed on Form 10-D relating to that collection period. Additionally, if a new asset representations reviewer has been appointed, information regarding that party will also be provided in the Form 10-D.

[The Hedge Counterparty]

[Information in this section will be provided by each individual hedge counterparty on a deal by deal basis]

 

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[Include:

 

    The name of the hedge counterparty;

 

    The organizational form of the hedge counterparty; and

 

    The general character of the business of the hedge counterparty.

 

    Financial information: If the aggregate significance percentage related to the hedge counterparty is (i) 10% or more, but less than 20%, financial data required by Item 301 of Regulation S-K will be provided for the hedge counterparty or (ii) 20% or more, financial statements meeting the requirements of Regulation S-X (§§210.1-01 through 210.12-29), except §210.3-05 and Article 11, will be provided for the hedge counterparty.]

See “ Description of the Transaction Documents—The Hedge Agreement” below, in this prospectus for a description of the hedge agreement.]

[The Originator[s]]

[Insert disclosure regarding identity of any unaffiliated third party originator that originated 10% or more of the automobile loan contracts. Insert additional disclosure regarding any unaffiliated third party originator that originated 20% or more of the automobile loan contracts, including form of organization, origination program and how long such originator has been engaged in originating assets. (Regulation AB Item 1110)]

The Sponsor’s Automobile Financing Program

General

The sponsor is a Texas corporation that has been operating in the automobile finance business since April 2006. As of [quarter end date], the sponsor had approximately                      employees, operations in                      states and a dealer network of approximately                      automobile dealerships. As of [quarter end date], the sponsor had total assets of approximately $        . In August 2011, three investment funds affiliated with The Blackstone Group acquired an indirect majority interest in the sponsor. Goldman Sachs Asset Management (GSAM), which is separated by regulatory and operational walls from the Investment Banking Division of Goldman Sachs & Co., manages and owns an interest in funds which own a portion of the sponsor’s outstanding equity securities. As of [quarter end date] GSAM-managed and GSAM-owned funds held less than     % of Exeter’s outstanding equity securities, but this position may increase or decrease at any time.

The sponsor purchases automobile loan contracts from dealers [and/or unaffiliated third party originators] [and/or directly originates automobile loan contracts], generally without recourse to the dealers [and/or the third parties], that are secured by new and used vehicles purchased by consumers from predominantly franchised automobile dealerships.

The sponsor primarily offers financing to consumers who are unable to obtain financing from traditional financing sources such as banks, credit unions and captive automobile finance companies. The sponsor funds its automobile lending activities with its equity capital and by utilizing warehouse lines of credit that it maintains with syndicated groups of banks. The sponsor additionally expects to fund its automobile lending activities by regularly sponsoring term ABS issuances.

The sponsor services all automobile loan contracts that it purchases. As of [quarter end date], the sponsor serviced a portfolio of approximately                      automobile loan contracts with an aggregate outstanding balance of approximately $        . The sponsor services its loan portfolio primarily through the use of automated loan servicing and collections systems

 

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As a consumer finance company, the sponsor is subject to various consumer claims and litigation seeking damages and statutory penalties, based upon, among other things, usury, disclosure inaccuracies, wrongful repossession, violations of bankruptcy stay provisions, certificate of title disputes, fraud, breach of contract, improper collection practices, credit bureau reporting and discriminatory treatment of credit applicants. Some litigation against the sponsor and its affiliates could take the form of class action complaints by consumers. As the assignee of automobile loan contracts originated by dealers [and/or unaffiliated third party originators], the sponsor and its affiliates may also be named as a co-defendant in lawsuits filed by consumers principally against dealers [and/or unaffiliated third party originators]. The damages and penalties claimed by consumers in these types of matters can be substantial. The relief requested by the plaintiffs varies but can include requests for compensatory, statutory and punitive damages. The sponsor believes that it has taken prudent steps to address and mitigate the litigation risks associated with its business activities. [As of the date of this prospectus, the sponsor is not subject to litigation that individually or in the aggregate would materially adversely affect the noteholders.]

Target Market

The sponsor’s automobile lending program is designed to serve customers who have limited access to automobile financing through traditional sources. The sponsor’s typical borrower has experienced prior credit difficulties or has a limited credit history and generally will have credit bureau scores ranging from 470 to 670. Because the sponsor serves customers who are often unable to meet the credit standards imposed by most traditional lending sources, the sponsor generally charges higher interest rates than those charged by such sources. Since the sponsor provides financing in a relatively high risk market, the sponsor also expects to sustain a higher level of delinquencies and credit losses than traditional automobile financing sources.

Dealer and Origination Networks

The sponsor services and develops business with the dealers in its network, and establishes relationships with new dealers and in new markets, through local marketing representatives. The majority of the dealers through which the sponsor indirectly originates automobile loan contracts are franchised dealerships.

The sponsor enters into a dealer agreement with each dealer from which it will purchase automobile loan contracts. These dealer agreements generally provide that if any representation or warranty that is made by the dealer to the sponsor regarding a particular automobile loan contract is breached, the dealer will be required to repurchase the automobile loan contract from the sponsor for a price equal to the amount advanced to the dealer at the time of funding. The representations and warranties that the dealer makes to the sponsor regarding the contracts typically relate to the manner in which an automobile loan contract was originated and the security interest that is granted in the related financed vehicle. Dealers typically do not make representations and warranties to the sponsor regarding the collectability of any automobile loan contract or the creditworthiness of the related obligor.

From 2006 until 2014, the sponsor originated loans either through branch offices or through its centralized buying center. In January 2015, the sponsor announced that it was closing its branch offices and would thereafter originate all loans through its two centralized buying centers, located in Irving, Texas and Clearfield, Utah. The sponsor completed this process in April 2015.

Credit Underwriting

Dealers submit electronic applications to the sponsor for processing at one of the sponsor’s centralized buying centers. A credit bureau report for the proposed obligor is automatically received along with the application. Before July 2013, loan applications were reviewed by the sponsor’s underwriters

 

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utilizing a centralized credit policy. In July 2013, the sponsor also began to utilize an automated credit underwriting system to analyze application information submitted by dealers and to automatically approve or decline applications based on a systemic, table-driven credit policy. Beginning in October 2014, all of the sponsor’s credit underwriting decisions are made through this automated credit underwriting system. The sponsor’s origination process does not allow credit underwriters or other personnel to apply judgmental or subjective criteria or assessments to override the decisions made by the automated credit underwriting system.

When the sponsor receives an application, a proprietary credit score is derived for the application as part of the credit approval process. This proprietary credit score is used to identify credit risk, rank order risk and assign the relevant risk-adjusted pricing for an application, including the interest rate and other terms that will be offered to the prospective obligor. A higher proprietary credit score indicates a lower risk of default, and will generally lead to better pricing terms being offered to the potential obligor; a lower proprietary score indicates a higher risk of default, and will generally lead either to less favorable pricing terms being offered to the potential obligor or to the application being declined.

All applications that the sponsor receives are assessed based on (i) the related proprietary credit score, (ii) identification and assessment of the applicant’s repayment willingness and capacity, including consideration of credit history and performance on past and existing obligations; (iii) credit bureau data; (iv) collateral identification and valuation; (v) payment structure and debt ratios; (vi) employment, income and residency data; (vii) in certain cases, the creditworthiness of a co-obligor; and (viii) other information provided by third-party data sources, when available. The criteria that the automated credit decisioning system utilizes to approve or decline applications and to set loan terms are modified by the sponsor from time to time and may differ across markets and regions.

Certain credit applications may receive conditional approvals, indicating that an application would be approved if certain characteristics of the requested loan, such as the type of underlying vehicle or the loan payment terms, were modified. If a credit application receives a conditional approval, the related dealer will be informed of the decision and the dealer and proposed obligor may resubmit the application for reprocessing with the appropriate modified terms.

[If a material amount of electronically originated automobile loan contracts are included in a pool of automobile loan contracts to be sold to an issuing entity, describe the manner in which those automobile loan contracts were originated and the manner in which the related service provider will maintain the electronic automobile loan contracts.]

If a loan application is approved and the related dealer indicates that it will sell the automobile loan contract to the sponsor, prior to purchasing the contract the sponsor will verify that the items set forth in the related application are correct and that the terms of the automobile loan contract that is presented to the sponsor are identical to those that were approved during the underwriting process. This verification occurs at one of the sponsor’s centralized buying centers. If the verification process reveals that any items in a contract or the related application were incorrect, the sponsor will generally refuse to purchase the loan unless the related dealer corrects the identified errors. However, in limited cases, where the sponsor determines that the loan would have been approved by the automated credit underwriting system on materially similar contract terms even with the modified application terms, a loan may be purchased by the sponsor notwithstanding the identified errors.

Loan Servicing

[Loan servicing policies and procedures to be updated periodically.]

 

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The sponsor’s servicing operations are centrally managed in Irving, Texas and additionally managed in Clearfield, Utah and three off-shore locations. The sponsor may choose to open additional servicing operations in other locations or close existing ones. When an automobile loan contract is purchased by the sponsor, the appropriate central funding team is responsible for verifying that contract disclosures comply with federal and state requirements, contract terms and disclosures are complete and correct, all contract documentation is mathematically accurate, all contract documentation is signed (by electronic, facsimile and/or manual signatures) by all required parties and the contract is assigned to Exeter Finance Corp. This department also ensures receipt and accuracy of documents that are related to the automobile loan contracts, such as title applications and other title documents, odometer statements, credit bureau data matches and/or ancillary product documentation, and it ensures that all data has been uploaded correctly within the origination and servicing platform.

Funded automobile loan contracts are uploaded to the sponsor’s servicing platform. All necessary documents are electronically imaged and paper copies are stored in a fireproof location. Insurance is required at funding and tracked for the life of the loan.

Account statements, which include payment instructions, are processed and sent to obligors monthly (either via regular mail or, if preferred, emailed), approximately      days prior to the monthly due date. Obligors submit payments on their automobile loan contracts in the form of ACH or debit card payments or checks mailed directly to a [lockbox account]/[a designated account controlled by the sponsor]. All obligor payments are directed by the sponsor to a [collections lockbox account]/[a designated account controlled by the sponsor].

If an obligor does not pay his or her monthly payment amount on the contractual due date, the account will be routed to a queue for collections activity. The collection process generally begins as early as an account becoming      days past due. Collections are focused on maintaining service-driven contact with customers while controlling losses. Collectors are trained to maintain a respectful tone, but control the conversation with the obligor.

Delinquent accounts are segmented into three primary groups: early-stage, mid-stage and late-stage collections. Early-stage collections manages accounts that are      to      days past due. These accounts are then primarily contacted using a predictive dialer. Mid-stage collections manages accounts that are      to      days past due. These accounts are primarily contacted using a mix of the preview dialer and predictive system. Late-stage collections manages accounts that are      to      days past due. These accounts are primarily contacted using the preview dialer system. The sponsor outsources servicing on a portion of accounts at various stages of delinquency in accordance with its credit and collection policy. Additional work queues exist within the sponsor’s loss mitigation department for accounts that require special handling, such as skip tracing, insurance total losses, impounds and repossessions.

In order to maximize recoveries on automobile loan contracts, the sponsor may employ due date changes, loan extensions, modifications, amendments and repossessions in accordance with its credit and collection policy, which may be modified from time to time without notice to the noteholders. The sponsor uses repossession as a last resort. The decision to repossess is primarily based on the customer’s delinquency status, capacity to bring the account up to date, whether or not the asset is in jeopardy, and the customer’s willingness to continue to maintain contact with collections staff. Throughout the repossession process, state required notification(s) are sent to the obligor(s). Management reviews the account in detail and approves the assignment. If the obligor foregoes the opportunity to redeem or reinstate the vehicle, it is transported to an auction for disposal. In addition to in-house asset remarketing, the sponsor utilizes external vendor(s) for repossession. The sponsor looks to quickly realize the highest value for any individual vehicle after repossession. Proceeds from the sale, net of auction fee, reconditioning and other costs, are then applied to the account. At times, the sponsor will charge-off accounts in accordance with its credit and collection policy and will, in its sole discretion, sell any account’s deficiency balance in accordance with its credit and collection policy.

 

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Under the sale and servicing agreement, the servicer will covenant not to (i) release the financed vehicle securing each automobile loan contract from the security interest granted by the automobile loan contract, except upon payment in full of the automobile loan contract or as otherwise contemplated therein; (ii) impair the rights of the issuing entity or the noteholders in the automobile loan contract and related documents; (iii) extend or otherwise amend the terms of any automobile loan contract except as provided for therein or in its credit and collection policy; and (iv) either (a) create, incur or suffer to exist any lien or restriction on the transferability of the automobile loan contract except for a lien in favor of the indenture trustee for the benefit of the noteholders, or (b) sign or file under the UCC of any jurisdiction any financing statement which names the servicer as a debtor, or sign any security instrument authorizing any secured party thereunder to file such financing statement with respect to the automobile loan contract, except in each case any such instrument solely securing the rights and preserving the lien of the indenture trustee, for the benefit of the noteholders. Under the sale and servicing agreement, the initial servicer will be required to repurchase the related automobile loan contract if the covenants are breached, unless such breach has been cured in all material aspects.

Risk Management

The sponsor’s risk management department is responsible for maintaining systematic control over credit policy, credit performance and profitability. This is accomplished through the management of the automated credit underwriting platform, ongoing reporting and analysis related to originations data, credit performance, dealer performance, pricing execution and the evaluation of company level shifts in credit trends. Risk management also produces a statistically-based model that is used to optimize origination. Loss forecasting is also performed within risk management. This function includes projecting pool performance, producing static pool delinquency and loss reporting and estimating the loan loss reserve.

The Sponsor’s Securitization Program

This is the                      securitization of sub-prime automobile loans that Exeter has sponsored under the Exeter Automobile Receivables Trust, or EART, program. [As of the date of this prospectus, the previous securitizations sponsored by Exeter have not experienced an event of default or servicer termination event.] Exeter expects that in the future it will from time to time sponsor additional securitizations of sub-prime automobile loans in which the depositor will serve as depositor and newly-formed Delaware statutory trusts will serve as issuing entities for such securitizations

The Sponsor’s [Vintage Origination and] Static Pool Information

[Vintage origination information for automobile loan contracts originated by dealers [and/or unaffiliated third party originators] for assignment to the sponsor [and/or originated directly by the sponsor] is contained in Annex A to this prospectus and] static pool information for the EART program is contained in Annex B to this prospectus. The characteristics of the automobile loan contracts included in Annex A [and Annex B] may vary from the characteristics of the automobile loan contracts included in this pool. For additional details regarding this pool, please refer to “The Automobile Loan Contracts – Composition” in this prospectus. These differences may make it unlikely that the automobile loan contracts described in this prospectus will perform in the same way that any automobile loan contracts described in Annex A [or Annex B] have performed. There can be no assurance that the performance of automobile loan contracts [in prior periods as described in Annex A or ] in prior securitizations transactions as described in Annex B will correspond to or be an accurate predictor of automobile loan contracts included in this pool.

 

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Static pool information contained in Annex B to this prospectus includes summary information for original pool characteristics, pool factors, delinquency information and loss information.

[In accordance with Item 1105(a)(3)(ii) of Regulation AB, the information provided in Annex A [and Annex B] will be of a date no later than 135 days from the date of the first use of the related prospectus.]

The Trust Property

The trust property will include, among other things:

 

    a pool consisting of primarily sub-prime automobile loan contracts, which are secured by new and used automobiles, light duty trucks, minivans and sports utility vehicles;

 

    moneys received [(a)] with respect to the [initial] automobile loan contracts, after the [initial] cutoff date [and (b) with respect to the subsequent automobile loan contracts, after the related cutoff date];

 

    amounts that are held in [the lockbox account,] [the revolving account,][the pre-funding account,] the collection account, the note distribution account and the reserve account;

 

    the security interests in the financed vehicles granted by obligors;

 

    an assignment of the rights of the depositor against dealers under agreements between the sponsor and dealers;

 

    [an assignment of the rights of the depositor against unaffiliated third party originators under agreements between the sponsor and such other unaffiliated third parties;]

 

    an assignment of the right to receive proceeds from claims on physical damage, credit life and disability insurance policies covering the financed vehicles or the obligors;

 

    an assignment of all rights to proceeds from liquidating the automobile loan contracts;

 

    the automobile loan contract files;

 

    moneys received pursuant to the hedge transaction;

 

    other rights under the transaction documents, including an assignment of the depositor’s rights against the servicer for breaches of representations and warranties under the purchase agreement; and

 

    all proceeds from the items described above.

The [initial] automobile loan contracts will be purchased by the depositor from the sponsor under the purchase agreement, and will then be purchased by the issuing entity from the depositor under the sale and servicing agreement, in each case on or about             , 20    . [[The issuing entity will purchase subsequent automobile loan contracts and related property from the depositor during the revolving period with collections on the automobile loan contracts that have been reserved for that purpose.][The issuing entity will use funds on deposit in the pre-funding account to purchase subsequent automobile loan contracts and related property from the depositor under one or more subsequent transfer agreements on or before             20    .] These subsequent automobile loan contracts will be purchased by the depositor from the sponsor pursuant to one or more subsequent purchase agreements between the depositor and the sponsor and then purchased by the issuing entity.]

 

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The [initial] automobile loan contracts were originated indirectly by the sponsor through dealers[and/or originated directly by the sponsor] according to the sponsor’s credit policies [and/or purchased by the sponsor from unaffiliated third party originators]. The automobile loan contracts originated by dealers have been assigned to the sponsor and evidence the indirect financing made to the obligor. [The subsequent automobile loan contracts have been, or will be, originated indirectly by the sponsor through dealers[and/or originated directly by the sponsor] according to the sponsor’s credit policies [and/or purchased by the sponsor from unaffiliated third party originators]. The subsequent automobile loan contracts that have been, or will be, originated by dealers and have been, or will be, assigned to the sponsor and evidence, or will evidence, the indirect financing made to the obligor.] The sponsor’s agreements with the dealers [and/or unaffiliated third party originators] who originate the automobile loan contracts may provide for repurchase by or recourse against the dealer [and/or the unaffiliated third party originators] if there is a breach of a representation or warranty under the relevant agreement.

Under the indenture, the issuing entity will grant a security interest in the trust property to the indenture trustee for the benefit of the noteholders [and, if the hedge agreement is a swap agreement, for the benefit of the hedge counterparty in support of the issuing entity’s obligations owed to the hedge counterparty]. Any proceeds of the trust property will be distributed according to the indenture.

Depositor Review of Automobile Loan Contracts

In connection with the offering of the notes, the depositor has performed a review of the receivables in the pool [as of the initial cutoff date (and will perform such review with respect to any subsequent receivables as of the applicable subsequent cutoff date)] and the disclosure regarding the receivables required to be included in this prospectus by Item 1111 of Regulation AB (such disclosure, the “Rule 193 Information”). This review was designed and effected to provide the depositor with reasonable assurance that the Rule 193 Information is accurate in all material respects.

As part of the review, Exeter identified the Rule 193 Information to be covered and identified the review procedures for each portion of the Rule 193 Information. Descriptions consisting of factual information were reviewed and approved by Exeter senior management to ensure the accuracy of such descriptions. Exeter also reviewed the Rule 193 Information consisting of descriptions of portions of the transaction documents and compared that Rule 193 Information to the related transaction documents to ensure the descriptions were accurate. Exeter officers also consulted with internal regulatory personnel and counsel, as well as external counsel, with respect to the description of the legal and regulatory provisions that may materially and adversely affect the performance of the receivables or payments on the notes.

In addition, Exeter employees performed a review of the Rule 193 Information to confirm that the receivables in the pool [as of the initial cutoff date (and will perform such review with respect to any subsequent receivables as of the applicable subsequent cutoff date)] satisfied the criteria set forth in “The Automobile Loan Contracts— Eligibility Criteria for [Initial] Automobile Loan Contracts” in this prospectus. Statistical information relating to the receivables was recalculated using data tapes containing information from Exeter’s information systems, which includes databases containing certain attributes of the receivables, as well as originations data. The review of Rule 193 Information relating to credit approvals and exceptions to credit policies consisted of the application of Exeter’s internal control procedures, which include regular quality assurance and information technology internal audits on origination, funding and data systems to ensure accuracy of data and that previously originated receivables complied with underwriting guidelines. In addition, [                    ] receivable files [relating to the

 

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initial receivables [and receivables with characteristics similar to the initial receivables]] were randomly selected in order to compare certain receivable characteristics selected by the depositor to the applicable information on the data tapes.

Portions of the review of legal matters and the review of statistical information were performed with the assistance of third parties engaged by the depositor. The depositor determined the nature, extent and timing of the review and the level of assistance provided by the third parties. The depositor had ultimate authority and control over, and assumes all responsibility for, the review and the findings and conclusions of the review. The depositor attributes all findings and conclusions of the review to itself.

After undertaking the review described above, the depositor has found and concluded that it has reasonable assurance that the Rule 193 Information in this prospectus is accurate in all material respects.

[As of the [initial] cutoff date, underwriting data is unavailable for approximately [    ]% of the principal balance of the automobile loan contracts, comprising the automobile loan contracts acquired by the sponsor from certain unaffiliated third party originators. These automobile loan contracts were acquired by the sponsor after the automobile loan contracts had been originated by the related originator. At the time of these acquisitions, the sponsor performed the procedures described under “The Originator[s].” However, with respect to these acquired automobile loan contracts, [the sponsor does not have]/[the unaffiliated third party originators did not give the sponsor] the detailed information necessary to determine whether the related automobile loan contracts in the pool had been originated in compliance with the originator’s underwriting guidelines or whether they were originated with exceptions. This information is not known or reasonably available to the sponsor as of the date of this prospectus[, as the information rests peculiarly within the knowledge of those certain unaffiliated third party originators and the sponsor is not affiliated with those certain third party originators. The sponsor was unable to obtain the underwriting data related to the acquired receivables after requesting it from those third party originators. The sponsor did not re-underwrite the acquired automobile loan contracts originated by unaffiliated third party originators in connection with the related acquisition.]

[The sponsor determined that the automobile loan contracts described above should be included in the pool, despite the lack of available underwriting data or having been originated as an exception to the credit policies. The sponsor elected to include those automobile loan contracts because the sponsor’s practice is to securitize all eligible assets in its portfolio using selection procedures that were not known or intended by the sponsor to be adverse to the issuing entity. [In addition, the information relating to delinquency, repossession and loss experience set forth in “Yield and Prepayment Considerations – Delinquency and Loan Loss Information” and static pool information contained in Annex B to this prospectus is reflective of all automobile loan contracts originated and acquired by the sponsor.]]

[All of the systems utilized by the sponsor or depositor that are described above and all of the internal reviews and oversight that are described above as being performed by personnel of the sponsor or depositor will also be utilized to ensure the accuracy of the disclosure made in this prospectus as it relates to the subsequent automobile loan contracts.]

[For offerings after November 22, 2016, description of review of asset level data filed on Form ABS-EE to be included.]

The Automobile Loan Contracts

Eligibility Criteria for [Initial] Automobile Loan Contracts

The automobile loan contracts were or will be selected according to several criteria. In addition, as of the [initial] [statistical] calculation date, the automobile loan contracts were, and on the cutoff date will be, selected from the sponsor’s portfolio of sub-prime automobile loan contracts based on the following criteria:

 

  (a) each [initial] automobile loan contract had a remaining maturity of not more than      months;

 

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  (b) each [initial] automobile loan contract had an original maturity of not more than      months;

 

  (c) each [initial] automobile loan contract had a remaining Principal Balance (as defined in the Glossary) of at least $        and not more than $        ;

 

  (d) each [initial] automobile loan contract has an annual percentage rate of at least     % and not more than     %;

 

  (e) no [initial] automobile loan contract was more than      days past due, [except for certain [initial] automobile loan contracts which may have been between      and      days past due and that have an aggregate Principal Balance of up to     % of the initial principal amount of the notes];

 

  (f) no automobile loan contract was a Liquidated Receivable;

 

  (g) none of the sponsor, any dealer [and/or any unaffiliated third party originator] or anyone acting on their behalf advanced funds to cause any [initial] automobile loan contract to qualify under clause (e) above;

 

  (h) each obligor had a United States billing address as of the date of origination of the [initial] automobile loan contract;

 

  (i) each [initial] automobile loan contract is denominated in, and each automobile loan contract provides for payment in, United States dollars;

 

  (j) each automobile loan contract is identified on the servicer’s master servicing records as a retail installment sales contract;

 

  (k) each automobile loan contract arose under a contract that is assignable without the consent of, or notice to, the obligor thereunder, and does not contain a confidentiality provision that purports to restrict the ability of the servicer to exercise its rights under the sale and servicing agreement, including, without limitation, its right to review the contract;

 

  (l) each automobile loan contract arose under a contract with respect to which the sponsor has performed all obligations required to be performed by it thereunder, and, in the event such contract is a retail installment sales contract, delivery of the financed vehicle to the related obligor has occurred;

 

  (m) no automobile related to an automobile loan contract was held in repossession;

 

  (n) no obligor was in bankruptcy; and

 

  (o) neither the sponsor nor the depositor has selected the automobile loan contracts in a manner that either of them believes is adverse to the interests of the noteholders.

 

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Automobile loan contracts representing more than 10% of the aggregate Principal Balance of the automobile loan contracts as of                      were originated in the State[s] of                     , and                     . The performance of the automobile loan contracts in the aggregate could be adversely affected in particular by the development of adverse economic conditions in such states.

[Eligibility Criteria for Subsequent Automobile Loan Contracts

[No transfer of subsequent automobile loan contracts to the issuing entity during the [revolving period][pre-funding period] will be made unless:

 

  (a) as of each subsequent cutoff date, each subsequent automobile loan contract and/or the subsequent automobile related to that subsequent automobile loan contract satisfies the automobile loan contract eligibility criteria specified in clauses                      above regarding the initial automobile loan contracts;

 

  (b) neither the sponsor nor the depositor has selected the subsequent automobile loan contracts in a manner that either of them believes is adverse to the interests of the noteholders; and

 

  (c) the sponsor and the depositor shall have delivered certain opinions of counsel regarding the validity of the subsequent automobile loan contract transfers on those subsequent transfer dates on which such opinions are required.]

The issuing entity’s obligation or right to purchase the subsequent automobile loan contracts during the [revolving period][pre-funding period], as described in “Description of the Transaction Documents—The Revolving Period,” is subject to the condition that all of the subsequent automobile loan contracts transferred to the issuing entity, including the subsequent automobile loan contracts to be transferred, meet the following criteria after the transfer of the subsequent automobile loan contracts (based on the characteristics of the initial automobile loan contracts as of the initial cutoff date and the subsequent automobile loan contracts as of the related subsequent cutoff date):

 

  (a) the automobile loan contracts’ weighted average annual percentage rate is not less than     %; and

 

  (b) [the automobile loan contracts’ weighted average custom score is not less than     %.]

[Following the transfer of subsequent automobile loan contracts to the issuing entity, the aggregate characteristics of the entire pool of automobile loan contracts held by the issuing entity may vary from the initial pool of automobile loan contracts in a number of respects, including:

 

    composition of the automobile loan contracts;

 

    geographic distribution of the automobile loan contracts;

 

    distribution by remaining Principal Balance;

 

    distribution by APR;

 

    distribution by original term;

 

    distribution by wholesale loan-to-value ratio;

 

    distribution by vehicle make;

 

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    distribution by vehicle segment;

 

    distribution of the automobile loan contracts secured by new and used vehicles; and

 

    distribution of the automobile loan contracts by custom score and credit bureau score.]

Composition

The [statistical] information presented in this prospectus is based on [a] [statistical] pool[s] of automobile loan contracts as of [the statistical calculation date]/[the [initial] cutoff date], which is         , 20    . [The pool of automobile loan contracts that will be sold to by the sponsor to the depositor and by the depositor to the issuing entity on the closing date will be selected on the [initial] cutoff date, which is         , 20    .]

 

    [As of the statistical calculation date, the [initial] automobile loan contracts in the statistical pool [relating to the publicly offered notes with an aggregate initial note principal balance of $        ] had an aggregate Principal Balance of $        .]

 

    As of the [initial] cutoff date, [if the aggregate initial principal balance of the publicly offered notes is $        ,] the [initial] automobile loan contracts [had]/[are expected to have] an aggregate Principal Balance of approximately $        .

 

    [As of the statistical calculation date, the [initial] automobile loan contracts in the statistical pool [relating to the publicly offered notes with an aggregate initial note principal balance of $        ] had an aggregate Principal Balance of $        .]

 

    [As of the [initial] cutoff date, [if the aggregate initial principal balance of the publicly offered notes is $        ,] the [initial] automobile loan contracts [had]/[are expected to have] an aggregate Principal Balance of approximately $        .]

[The sponsor will acquire [additional] automobile loan contracts after the statistical calculation date but prior to the [initial] cutoff date, which is         , 20    . The actual pool of automobile loan contracts sold to the issuing entity on the closing date will be selected from the statistical pool and from other automobile loan contracts owned by the sponsor. Additionally, some automobile loan contracts that were included [in one or both of the statistical pools] as of the statistical calculation date will have prepaid in full by the [initial] cutoff date or will no longer meet the eligibility requirements regarding automobile loan contracts as of the [initial] cutoff date and therefore will not be included in the automobile loan contract pool. As a result of these factors, the pool of automobile loan contracts that is included in the statistical pool will not be identical to the pool of automobile loan contracts that is selected on the [initial] cutoff date and the statistical distribution of the characteristics of the [two pools]/[related statistical pool and the cutoff date pool] will vary somewhat. However, these variances in the composition of the pools and in the statistical distribution of the characteristics of the pools is not expected to be material.]

[As of         , 20    , automobile loan contracts representing approximately     % of the total aggregate principal balance of the automobile loan contracts in the [pool]/[statistical pool relating to the publicly offered notes with an aggregate initial note principal balance of $        and approximately     % of the total aggregate principal balance of the automobile loan contracts in the statistical pool relating to the publicly offered notes with an aggregate initial note principal balance of $        ] were included in previous securitizations sponsored by Exeter and were repurchased by Exeter in connection with optional redemptions of those securitizations. The [statistical] pool[s] of automobile loan contracts about which pool information is presented in this prospectus includes information about those repurchased automobile contracts.]

 

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The automobile loan contract pool’s composition and distribution by credit score; APR, geographic concentration, wholesale loan-to-value ratio, vehicle make, original term to maturity, remaining term to maturity, model year and quarter of origination as of the [statistical calculation date]/[[initial] cutoff date]; and the automobile loan contract pool’s historical delinquency experience are detailed in the following tables:

Composition of the [Initial] Automobile Loan Contracts

as of [Statistical Calculation Date]/[[Initial] Cutoff Date][for the [Statistical] Pool Related to Offered

Notes with an Initial Note Principal Balance of $        ]

 

    New     Used     Total  

Aggregate Principal Balance(1)

  $ [               $ [               $ [            

Number of Automobile Loan Contracts

    [                 [                 [            

Percent of Aggregate Principal Balance

    [    ]     [    ]     [    ]

Average Principal Balance

  $ [               $ [               $ [            

Range of Principal Balances

  ($ [            ] to $[            ]   ($ [            ] to $[            ]   ($ [            ] to $[            ]

Weighted Average APR(1)

    [    ]     [    ]         ]

Range of APRs

    ([    ]% to [    ]%     ([    ]% to [    ]%     ([            ]% to [    ]%

Weighted Average Remaining Term

    [            ] months        [            ] months        [            ] months   

Range of Remaining Terms

    ([            ] to [            ] months     ([            ] to [            ] months     ([            ] to [            ] months

Weighted Average Original Term

    [            ] months        [            ]months        [            ]months   

Range of Original Terms

    ([            ] to [            ] months     ([            ] to [            ] months     ([            ] to [            ] months

 

(1) Aggregate Principal Balance includes some portion of accrued interest. As a result, the Weighted Average APR of the automobile loan contracts may not be equivalent to the automobile loan contracts’ aggregate yield on the aggregate Principal Balance.

 

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Proprietary Credit Score Distribution of the [Initial] Automobile Loan Contracts

as of the [Statistical Calculation Date]/[[Initial] Cutoff Date] [for the [Statistical] Pool Related to

Offered Notes with an Initial Note Principal Balance of $        ]

 

     Proprietary Credit
Score(1)
     % of
Aggregate
Principal
Balance(2)
    Credit Bureau Score(3)      % of
Aggregate
Principal
Balance(2)
 
     [                  [             ]%      [                  [             ]% 
     [                  [             ]%      [                  [             ]% 
     [                  [             ]%      [                  [             ]% 
     [                  [             ]%      [                  [             ]% 
     [                  [             ]%      [                  [             ]% 
  

 

 

    

 

 

   

 

 

    

 

 

 

Weighted Average Score

     [                    [               

 

(1) Proprietary credit score developed and utilized by the sponsor to support the credit approval and pricing process. The scale of the proprietary score is not comparable to a credit bureau score.
(2) Percentages may not add to 100% because of rounding.
(3) A statistically based score (sometimes referred to as FICO® score) generated by credit reporting agencies. The sponsor utilizes     ,         , or          credit reports depending on the location of the obligor. Credit Bureau Scores are unavailable for some accounts and those accounts are not included in the Credit Bureau Score table above. Since these accounts are not included in the percentages above, the aggregate Principal Balance of the accounts based on Credit Bureau Score may be less than the [statistical] pool. FICO® is a federally registered trademark of Fair, Isaac & Company.

 

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Distribution of the [Initial] Automobile Loan Contracts by APR

as of the [Statistical Calculation Date]/[[Initial] Cutoff Date] [for the [Statistical] Pool Related to

Offered Notes with an Initial Note Principal Balance of $        ]

 

Distribution

by APR

   Aggregate
Principal
Balance
     % of Aggregate
Principal
Balance(1)
    Number of
Automobile
Loan
Contracts
     % of Total
Number of
Automobile Loan
Contracts(1)
 

6.000% to 6.999%

   $ [                  [     ]%      [                  [     ]% 

7.000% to 7.999%

     [                  [     ]%      [                  [     ]% 

8.000% to 8.999%

     [                  [     ]%      [                  [     ]% 

9.000% to 9.999%

     [                  [     ]%      [                  [     ]% 

10.000% to 10.999%

     [                  [     ]%      [                  [     ]% 

11.000% to 11.999%

     [                  [     ]%      [                  [     ]% 

12.000% to 12.999%

     [                  [     ]%      [                  [     ]% 

13.000% to 13.999%

     [                  [     ]%      [                  [     ]% 

14.000% to 14.999%

     [                  [     ]%      [                  [     ]% 

15.000% to 15.999%

     [                  [     ]%      [                  [     ]% 

16.000% to 16.999%

     [                  [     ]%      [                  [     ]% 

17.000% to 17.999%

     [                  [     ]%      [                  [     ]% 

18.000% to 18.999%

     [                  [     ]%      [                  [     ]% 

19.000% to 19.999%

     [                  [     ]%      [                  [     ]% 

20.000% to 20.999%

     [                  [     ]%      [                  [     ]% 

21.000% to 21.999%

     [                  [     ]%      [                  [     ]% 

22.000% to 22.999%

     [                  [     ]%      [                  [     ]% 

23.000% to 23.999%

     [                  [     ]%      [                  [     ]% 

24.000% to 24.999%

     [                  [     ]%      [                  [     ]% 

25.000% to 25.999%

     [                  [     ]%      [                  [     ]% 

26.000% to 26.999%

     [                  [     ]%      [                  [     ]% 
  

 

 

    

 

 

   

 

 

    

 

 

 

TOTAL:

   $ [                  100.00     [                  100.00
  

 

 

    

 

 

   

 

 

    

 

 

 

 

(1) Percentages may not add to 100% because of rounding.

 

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Distribution of the [Initial] Automobile Loan Contracts by Geographic Location

of Obligor as of the [Statistical Calculation Date]/[[Initial] Cutoff Date] [for the [Statistical] Pool

Related to Offered Notes with an Initial Note Principal Balance of $        ]

 

Geographic Location

   Aggregate
Principal
Balance
     % of Aggregate
Principal
Balance(1)
    Number of
Automobile
Loan Contracts
     % of Total
Number of
Automobile
Loan Contracts(1)
 

[Alabama]

   $ [                  [     ]%      [                  [     ]% 

[Alaska]

     [                  [     ]%      [                  [     ]% 

[Arizona]

     [                  [     ]%      [                  [     ]% 

[Arkansas]

     [                  [     ]%      [                  [     ]% 

[California]

     [                  [     ]%      [                  [     ]% 

[Colorado]

     [                  [     ]%      [                  [     ]% 

[Connecticut]

     [                  [     ]%      [                  [     ]% 

[Delaware]

     [                  [     ]%      [                  [     ]% 

[District of Columbia]

     [                  [     ]%      [                  [     ]% 

[Florida]

     [                  [     ]%      [                  [     ]% 

[Georgia]

     [                  [     ]%      [                  [     ]% 

[Hawaii]

     [                  [     ]%      [                  [     ]% 

[Idaho]

     [                  [     ]%      [                  [     ]% 

[Illinois]

     [                  [     ]%      [                  [     ]% 

[Indiana]

     [                  [     ]%      [                  [     ]% 

[Iowa]

     [                  [     ]%      [                  [     ]% 

[Kansas]

     [                  [     ]%      [                  [     ]% 

[Kentucky]

     [                  [     ]%      [                  [     ]% 

[Louisiana]

     [                  [     ]%      [                  [     ]% 

[Maine]

     [                  [     ]%      [                  [     ]% 

[Maryland]

     [                  [     ]%      [                  [     ]% 

[Massachusetts]

     [                  [     ]%      [                  [     ]% 

[Michigan]

     [                  [     ]%      [                  [     ]% 

[Minnesota]

     [                  [     ]%      [                  [     ]% 

[Mississippi]

     [                  [     ]%      [                  [     ]% 

[Missouri]

     [                  [     ]%      [                  [     ]% 

[Montana]

     [                  [     ]%      [                  [     ]% 

[Nebraska]

     [                  [     ]%      [                  [     ]% 

[Nevada]

     [                  [     ]%      [                  [     ]% 

[New Hampshire]

     [                  [     ]%      [                  [     ]% 

[New Jersey]

     [                  [     ]%      [                  [     ]% 

[New Mexico]

     [                  [     ]%      [                  [     ]% 

[New York]

     [                  [     ]%      [                  [     ]% 

[North Carolina]

     [                  [     ]%      [                  [     ]% 

[North Dakota]

     [                  [     ]%      [                  [     ]% 

[Ohio]

     [                  [     ]%      [                  [     ]% 

[Oklahoma]

     [                  [     ]%      [                  [     ]% 

[Oregon]

     [                  [     ]%      [                  [     ]% 

[Pennsylvania]

     [                  [     ]%      [                  [     ]% 

[Rhode Island]

     [                  [     ]%      [                  [     ]% 

[South Carolina]

     [                  [     ]%      [                  [     ]% 

[South Dakota]

     [                  [     ]%      [                  [     ]% 

[Tennessee]

     [                  [     ]%      [                  [     ]% 

[Texas]

     [                  [     ]%      [                  [     ]% 

[Utah]

     [                  [     ]%      [                  [     ]% 

[Vermont]

     [                  [     ]%      [                  [     ]% 

[Virginia]

     [                  [     ]%      [                  [     ]% 

[Washington]

     [                  [     ]%      [                  [     ]% 

[West Virginia]

     [                  [     ]%      [                  [     ]% 

[Wisconsin]

     [                  [     ]%      [                  [     ]% 

[Wyoming]

     [                  [     ]%      [                  [     ]% 

Other (2)

     [                  [     ]%      [                  [     ]% 
  

 

 

    

 

 

   

 

 

    

 

 

 

Total:

   $ [                  100.00     [                  100.00
  

 

 

    

 

 

   

 

 

    

 

 

 

 

(1) Percentages may not add to 100% because of rounding.
(2) States and Territories with aggregate Principal Balances less than 1.00% of the aggregate Principal Balance of the[statistical] pool.

 

69


Table of Contents

Distribution of the [Initial] Automobile Loan Contracts by Wholesale LTV

as of the [Statistical Calculation Date]/[[Initial] Cutoff Date] [for the [Statistical] Pool Related to

Offered Notes with an Initial Note Principal Balance of $        ]

 

Wholesale LTV (1) Range   

% of Aggregate

Principal Balance (2)

 

[Less than     ]

     [             ]% 

[    -    ]

     [             ]% 

[    -    ]

     [             ]% 

[    -    ]

     [             ]% 

[    -    ]

     [             ]% 

[    -    ]

     [             ]% 

[     and greater]

     [             ]% 

Weighted Average Wholesale LTV

     [             ]% 

 

(1) Wholesale LTV is calculated using the total amount financed, which may include taxes, title fees and ancillary products over the wholesale auction value of the financed vehicle at the time the vehicle is financed. The vehicle value at origination is determined by using NADA or “Kelley Blue Book Trade-in” prices for used vehicles or dealer invoice/dealer wholesale price for new vehicles.
(2) Percentages may not add to 100% because of rounding.

 

70


Table of Contents

Distribution of the [Initial] Automobile Loan Contracts by Vehicle Make

as of the [Statistical Calculation Date]/[[Initial] Cutoff Date] [for the [Statistical] Pool Related to

Offered Notes with an Initial Note Principal Balance of $        ]

 

Vehicle Make

   Aggregate Principal
Balance
     % of Aggregate
Principal Balance (1)
    Number of
Automobile Loan
Contracts
     % of Total Number of
Automobile Loan
Contracts
(1)
 

[            ]

   $ [                  [     ]%      [                  [     ]% 

[            ]

     [                  [     ]%      [                  [     ]% 

[            ]

     [                  [     ]%      [                  [     ]% 

[            ]

     [                  [     ]%      [                  [     ]% 

[            ]

     [                  [     ]%      [                  [     ]% 

[            ]

     [                  [     ]%      [                  [     ]% 

[            ]

     [                  [     ]%      [                  [     ]% 

[            ]

     [                  [     ]%      [                  [     ]% 

[            ]

     [                  [     ]%      [                  [     ]% 

[            ]

     [                  [     ]%      [                  [     ]% 

[            ]

     [                  [     ]%      [                  [     ]% 

[            ]

     [                  [     ]%      [                  [     ]% 

[            ]

     [                  [     ]%      [                  [     ]% 

[            ]

     [                  [     ]%      [                  [     ]% 

[            ]

     [                  [     ]%      [                  [     ]% 

[            ]

     [                  [     ]%      [                  [     ]% 

[            ]

     [                  [     ]%      [                  [     ]% 

[            ]

     [                  [     ]%      [                  [     ]% 

[Other (2)]

     [                  [     ]%      [                  [     ]% 
  

 

 

    

 

 

   

 

 

    

 

 

 

[Total]

   $ [                  100.00     [                  100.00
  

 

 

    

 

 

   

 

 

    

 

 

 

 

(1) Percentages may not add to 100% because of rounding.
(2) Vehicle Makes with aggregate Principal Balances less than 1.00% of the aggregate Principal Balance of the [statistical] pool.

 

71


Table of Contents

Distribution of the [Initial] Automobile Loan Contracts by Original Term to Scheduled Maturity

as of the [Statistical Calculation Date]/[[Initial] Cutoff Date] [for the [Statistical] Pool Related to

Offered Notes with an Initial Note Principal Balance of $        ]

 

Original Term to

Scheduled Maturity

(Number of Months)

   Aggregate
Principal
Balance
     % of Aggregate
Principal
Balance(1)
    Number of
Automobile
Loan
Contracts
     % of Total
Number of
Automobile Loan
Contracts(1)
 

[     –    ]

   $ [                  [     ]%      [                  [     ]% 

[     –    ]

     [                  [     ]%      [                  [     ]% 

[     –    ]

     [                  [     ]%      [                  [     ]% 

[     –    ]

     [                  [     ]%      [                  [     ]% 

[     –    ]

     [                  [     ]%      [                  [     ]% 
  

 

 

    

 

 

   

 

 

    

 

 

 

Total

   $ [                  100.00     [                  100.00
  

 

 

    

 

 

   

 

 

    

 

 

 

 

(1) Percentages may not add to 100% because of rounding.

 

72


Table of Contents

Distribution of the [Initial] Automobile Loan Contracts by Remaining Term to Scheduled Maturity

as of the [Statistical Calculation Date]/[[Initial] Cutoff Date] [for the [Statistical] Pool Related to

Offered Notes with an Initial Note Principal Balance of $        ]

 

Remaining Term to

Scheduled Maturity

(Number of Months)

   Aggregate
Principal
Balance
     % of Aggregate
Principal
Balance(1)
    Number of
Automobile
Loan
Contracts
     % of Total
Number of
Automobile Loan
Contracts(1)
 

[     –    ]

   $ [                  [     ]%[(2)]      [                  [     ]% 

[     –    ]

     [                  [     ]%      [                  [     ]% 

[     –    ]

     [                  [     ]%      [                  [     ]% 

[     –    ]

     [                  [     ]%      [                  [     ]% 

[     –    ]

     [                  [     ]%      [                  [     ]% 

[     –    ]

     [                  [     ]%      [                  [     ]% 
  

 

 

    

 

 

   

 

 

    

 

 

 

Total

   $ [                  100.00     28,933         100.00
  

 

 

    

 

 

   

 

 

    

 

 

 

 

(1) Percentages may not add to 100% because of rounding.
[(2) Greater than 0.00% but less than 0.01%.]

 

73


Table of Contents

Distribution of the [Initial] Automobile Loan Contracts by Model Year

as of the [Statistical Calculation Date]/[[Initial] Cutoff Date] [for the [Statistical] Pool Related to Offered

Notes with an Initial Note Principal Balance of $        ]

 

Model Year

   Aggregate
Principal
Balance
     % of Aggregate
Principal
Balance(1)
    Number of
Automobile
Loan
Contracts
     % of Total
Number of
Automobile Loan
Contracts(1)
 

[20    ]

   $ [                  [     ]%      [                  [     ]% 

[20    ]

     [                  [     ]%      [                  [     ]% 

[20    ]

     [                  [     ]%      [                  [     ]% 

[20    ]

     [                  [     ]%      [                  [     ]% 

[20    ]

     [                  [     ]%      [                  [     ]% 

[20    ]

     [                  [     ]%      [                  [     ]% 

[20    ]

     [                  [     ]%      [                  [     ]% 

[20    ]

     [                  [     ]%      [                  [     ]% 

[20    ]

     [                  [     ]%      [                  [     ]% 

[20    ]

     [                  [     ]%      [                  [     ]% 

[20    ]

     [                  [     ]%      [                  [     ]% 

[20    ]

     [                  [     ]%      [                  [     ]% 

[20    ]

     [                  [     ]%      [                  [     ]% 
  

 

 

    

 

 

   

 

 

    

 

 

 

Total

   $ [                  100.00     [                  100.00
  

 

 

    

 

 

   

 

 

    

 

 

 

 

(1) Percentages may not add to 100% because of rounding.

 

74


Table of Contents

Distribution of the [Initial] Automobile Loan Contracts by Quarter of Origination

as of the [Statistical Calculation Date]/[[Initial] Cutoff Date] [for the [Statistical] Pool Related to

Offered Notes with an Initial Note Principal Balance of $        ]

 

Quarter of Origination

   Aggregate
Principal
Balance
     % of Aggregate
Principal
Balance(1)
    Number of
Automobile
Loan
Contracts
     % of Total
Number of
Automobile Loan
Contracts(1)
 

Q  20    

   $ [                  [     ]%[(2)]      [                  [     ]% 

Q  20    

     [                  [     ]%      [                  [     ]% 

Q  20    

     [                  [     ]%      [                  [     ]% 

Q  20    

     [                  [     ]%      [                  [     ]% 

Q  20    

     [                  [     ]%      [                  [     ]% 

Q  20    

     [                  [     ]%      [                  [     ]% 

Q  20    

     [                  [     ]%      [                  [     ]% 

Q  20    

     [                  [     ]%      [                  [     ]% 

Q  20    

     [                  [     ]%      [                  [     ]% 

Q  20    

     [                  [     ]%      [                  [     ]% 

Q  20    

     [                  [     ]%      [                  [     ]% 

Q  20    

     [                  [     ]%      [                  [     ]% 

Q  20    

     [                  [     ]%      [                  [     ]% 

Q  20    

     [                  [     ]%      [                  [     ]% 

Q  20    

     [                  [     ]%      [                  [     ]% 
  

 

 

    

 

 

   

 

 

    

 

 

 

Total

   $ [                  100.00     [                  100.00
  

 

 

    

 

 

   

 

 

    

 

 

 

 

(1) Percentages may not add to 100% because of rounding.
(1) Greater than 0.00% but less than 0.01%.

 

75


Table of Contents

[Composition of the [Initial] Automobile Loan Contracts

as of [Statistical Calculation Date]/[[Initial] Cutoff Date]for the [Statistical] Pool Related to Offered

Notes with an Initial Note Principal Balance of $        ]

 

    New     Used     Total  

Aggregate Principal Balance(1)

  $ [               $ [               $ [            

Number of Automobile Loan Contracts

    [                 [                 [            

Percent of Aggregate Principal Balance

    [    ]     [    ]     [    ]

Average Principal Balance

  $ [               $ [               $ [            

Range of Principal Balances

  ($ [            ] to $[            ]   ($ [            ] to $[            ]   ($ [            ] to $[            ]

Weighted Average APR(1)

    [    ]     [    ]     [    ]

Range of APRs

    ([    ]% to [    ]%     ([    ]% to [    ]%     ([    ]% to [    ]%

Weighted Average Remaining Term

    [            ] months        [    ] months        [            ] months   

Range of Remaining Terms

    ([            ] to [            ] months     ([            ] to [            ] months     ([            ] to [            ] months

Weighted Average Original Term

    [            ] months        [            ]months        [            ]months   

Range of Original Terms

    ([            ] to [            ] months     ([            ] to [            ] months     ([            ] to [            ] months

 

(1) Aggregate Principal Balance includes some portion of accrued interest. As a result, the Weighted Average APR of the automobile loan contracts may not be equivalent to the automobile loan contracts’ aggregate yield on the aggregate Principal Balance.

 

76


Table of Contents

[Proprietary Credit Score Distribution of the [Initial] Automobile Loan Contracts

as of the [Statistical Calculation Date]/[[Initial] Cutoff Date] for the [Statistical] Pool Related to

Offered Notes with an Initial Note Principal Balance of $        ]

 

     Proprietary Credit
Score(1)
     % of
Aggregate
Principal
Balance(2)
    Credit Bureau Score(3)      % of
Aggregate
Principal
Balance(2)
 
     [                  [     ]%      [                  [     ]% 
     [                  [     ]%      [                  [     ]% 
     [                  [     ]%      [                  [     ]% 
     [                  [     ]%      [                  [     ]% 
     [                  [     ]%      
  

 

 

    

 

 

   

 

 

    

 

 

 

Weighted Average Score

     [                    [               

 

(1) Proprietary credit score developed and utilized by the sponsor to support the credit approval and pricing process. The scale of the proprietary score is not comparable to a credit bureau score.
(2) Percentages may not add to 100% because of rounding.
(3) A statistically based score (sometimes referred to as FICO® score) generated by credit reporting agencies. The sponsor utilizes         ,     , or          credit reports depending on the location of the obligor. Credit Bureau Scores are unavailable for some accounts and those accounts are not included in the Credit Bureau Score table above. Since these accounts are not included in the percentages above, the aggregate Principal Balance of the accounts based on Credit Bureau Score may be less than the [statistical] pool. FICO® is a federally registered trademark of Fair, Isaac & Company.

 

77


Table of Contents

[Distribution of the [Initial] Automobile Loan Contracts by APR

as of the [Statistical Calculation Date]/[[Initial] Cutoff Date] for the [Statistical] Pool Related to

Offered Notes with an Initial Note Principal Balance of $            ]

 

Distribution
by APR

   Aggregate
Principal
Balance
     % of Aggregate
Principal
Balance(1)
    Number of
Automobile
Loan
Contracts
     % of Total
Number of
Automobile Loan
Contracts(1)
 

6.000% to 6.999%

   $ [                  [     ]%      [                  [     ]% 

7.000% to 7.999%

     [                  [     ]%      [                  [     ]% 

8.000% to 8.999%

     [                  [     ]%      [                  [     ]% 

9.000% to 9.999%

     [                  [     ]%      [                  [     ]% 

10.000% to 10.999%

     [                  [     ]%      [                  [     ]% 

11.000% to 11.999%

     [                  [     ]%      [                  [     ]% 

12.000% to 12.999%

     [                  [     ]%      [                  [     ]% 

13.000% to 13.999%

     [                  [     ]%      [                  [     ]% 

14.000% to 14.999%

     [                  [     ]%      [                  [     ]% 

15.000% to 15.999%

     [                  [     ]%      [                  [     ]% 

16.000% to 16.999%

     [                  [     ]%      [                  [     ]% 

17.000% to 17.999%

     [                  [     ]%      [                  [     ]% 

18.000% to 18.999%

     [                  [     ]%      [                  [     ]% 

19.000% to 19.999%

     [                  [     ]%      [                  [     ]% 

20.000% to 20.999%

     [                  [     ]%      [                  [     ]% 

21.000% to 21.999%

     [                  [     ]%      [                  [     ]% 

22.000% to 22.999%

     [                  [     ]%      [                  [     ]% 

23.000% to 23.999%

     [                  [     ]%      [                  [     ]% 

24.000% to 24.999%

     [                  [     ]%      [                  [     ]% 

25.000% to 25.999%

     [                  [     ]%      [                  [     ]% 

26.000% to 26.999%

     [                  [     ]%      [                  [     ]% 
  

 

 

    

 

 

   

 

 

    

 

 

 

TOTAL:

   $ [                  100.00     [                  100.00
  

 

 

    

 

 

   

 

 

    

 

 

 

 

(1) Percentages may not add to 100% because of rounding.

 

78


Table of Contents

[Distribution of the [Initial] Automobile Loan Contracts by Geographic Location

of Obligor as of the [Statistical Calculation Date]/[[Initial] Cutoff Date] for the [Statistical] Pool

Related to Offered Notes with an Initial Note Principal Balance of $            ]

 

Geographic Location

   Aggregate
Principal
Balance
     % of Aggregate
Principal
Balance(1)
    Number of
Automobile

Loan Contracts
     % of Total
Number of
Automobile
Loan Contracts(1)
 

[Alabama]

   $ [                  [     ]%      [                  [     ]% 

[Alaska]

     [                  [     ]%      [                  [     ]% 

[Arizona]

     [                  [     ]%      [                  [     ]% 

[Arkansas]

     [                  [     ]%      [                  [     ]% 

[California]

     [                  [     ]%      [                  [     ]% 

[Colorado]

     [                  [     ]%      [                  [     ]% 

[Connecticut]

     [                  [     ]%      [                  [     ]% 

[Delaware]

     [                  [     ]%      [                  [     ]% 

[District of Columbia]

     [                  [     ]%      [                  [     ]% 

[Florida]

     [                  [     ]%      [                  [     ]% 

[Georgia]

     [                  [     ]%      [                  [     ]% 

[Hawaii]

     [                  [     ]%      [                  [     ]% 

[Idaho]

     [                  [     ]%      [                  [     ]% 

[Illinois]

     [                  [     ]%      [                  [     ]% 

[Indiana]

     [                  [     ]%      [                  [     ]% 

[Iowa]

     [                  [     ]%      [                  [     ]% 

[Kansas]

     [                  [     ]%      [                  [     ]% 

[Kentucky]

     [                  [     ]%      [                  [     ]% 

[Louisiana]

     [                  [     ]%      [                  [     ]% 

[Maine]

     [                  [     ]%      [                  [     ]% 

[Maryland]

     [                  [     ]%      [                  [     ]% 

[Massachusetts]

     [                  [     ]%      [                  [     ]% 

[Michigan]

     [                  [     ]%      [                  [     ]% 

[Minnesota]

     [                  [     ]%      [                  [     ]% 

[Mississippi]

     [                  [     ]%      [                  [     ]% 

[Missouri]

     [                  [     ]%      [                  [     ]% 

[Montana]

     [                  [     ]%      [                  [     ]% 

[Nebraska]

     [                  [     ]%      [                  [     ]% 

[Nevada]

     [                  [     ]%      [                  [     ]% 

[New Hampshire]

     [                  [     ]%      [                  [     ]% 

[New Jersey]

     [                  [     ]%      [                  [     ]% 

[New Mexico]

     [                  [     ]%      [                  [     ]% 

[New York]

     [                  [     ]%      [                  [     ]% 

[North Carolina]

     [                  [     ]%      [                  [     ]% 

[North Dakota]

     [                  [     ]%      [                  [     ]% 

[Ohio]

     [                  [     ]%      [                  [     ]% 

[Oklahoma]

     [                  [     ]%      [                  [     ]% 

[Oregon]

     [                  [     ]%      [                  [     ]% 

[Pennsylvania]

     [                  [     ]%      [                  [     ]% 

[Rhode Island]

     [                  [     ]%      [                  [     ]% 

[South Carolina]

     [                  [     ]%      [                  [     ]% 

[South Dakota]

     [                  [     ]%      [                  [     ]% 

[Tennessee]

     [                  [     ]%      [                  [     ]% 

[Texas]

     [                  [     ]%      [                  [     ]% 

[Utah]

     [                  [     ]%      [                  [     ]% 

[Vermont]

     [                  [     ]%      [                  [     ]% 

[Virginia]

     [                  [     ]%      [                  [     ]% 

[Washington]

     [                  [     ]%      [                  [     ]% 

[West Virginia]

     [                  [     ]%      [                  [     ]% 

[Wisconsin]

     [                  [     ]%      [                  [     ]% 

[Wyoming]

     [                  [     ]%      [                  [     ]% 

Other (2)

     [                  [     ]%      [                  [     ]% 
  

 

 

    

 

 

   

 

 

    

 

 

 

Total:

   $ [                  100.00     [                  100.00
  

 

 

    

 

 

   

 

 

    

 

 

 

 

(1) Percentages may not add to 100% because of rounding.
(2) States and Territories with aggregate Principal Balances less than 1.00% of the aggregate Principal Balance of the[statistical] pool.

 

79


Table of Contents

[Distribution of the [Initial] Automobile Loan Contracts by Wholesale LTV

as of the [Statistical Calculation Date]/[[Initial] Cutoff Date] for the [Statistical] Pool Related to

Offered Notes with an Initial Note Principal Balance of $        ]

 

Wholesale LTV (1) Range   

% of Aggregate

Principal Balance (2)

 

[Less than     ]

     [     ]% 

[    -    ]

     [     ]% 

[    -    ]

     [     ]% 

[    -    ]

     [     ]% 

[    -    ]

     [     ]% 

[    -    ]

     [     ]% 

[     and greater]

     [     ]% 

Weighted Average Wholesale LTV

     [     ]% 

 

(1) Wholesale LTV is calculated using the total amount financed, which may include taxes, title fees and ancillary products over the wholesale auction value of the financed vehicle at the time the vehicle is financed. The vehicle value at origination is determined by using NADA or “Kelley Blue Book Trade-in” prices for used vehicles or dealer invoice/dealer wholesale price for new vehicles.
(2) Percentages may not add to 100% because of rounding.

 

80


Table of Contents

[Distribution of the [Initial] Automobile Loan Contracts by Vehicle Make

as of the [Statistical Calculation Date]/[[Initial] Cutoff Date] for the [Statistical] Pool Related to

Offered Notes with an Initial Note Principal Balance of $        ]

 

Vehicle Make

   Aggregate Principal
Balance
     % of Aggregate
Principal Balance (1)
    Number of
Automobile Loan
Contracts
     % of Total Number of
Automobile Loan
Contracts
(1)
 

[            ]

   $ [                  [     ]%      [                  [     ]% 

[            ]

     [                  [     ]%      [                  [     ]% 

[            ]

     [                  [     ]%      [                  [     ]% 

[            ]

     [                  [     ]%      [                  [     ]% 

[            ]

     [                  [     ]%      [                  [     ]% 

[            ]

     [                  [     ]%      [                  [     ]% 

[            ]

     [                  [     ]%      [                  [     ]% 

[            ]

     [                  [     ]%      [                  [     ]% 

[            ]

     [                  [     ]%      [                  [     ]% 

[            ]

     [                  [     ]%      [                  [     ]% 

[            ]

     [                  [     ]%      [                  [     ]% 

[            ]

     [                  [     ]%      [                  [     ]% 

[            ]

     [                  [     ]%      [                  [     ]% 

[            ]

     [                  [     ]%      [                  [     ]% 

[            ]

     [                  [     ]%      [                  [     ]% 

[            ]

     [                  [     ]%      [                  [     ]% 

[            ]

     [                  [     ]%      [                  [     ]% 

[            ]

     [                  [     ]%      [                  [     ]% 

[Other (2)]

     [                  [     ]%      [                  [     ]% 
  

 

 

    

 

 

   

 

 

    

 

 

 

[Total]

   $ [                  100.00     [                  100.00
  

 

 

    

 

 

   

 

 

    

 

 

 

 

(3) Percentages may not add to 100% because of rounding.
(4) Vehicle Makes with aggregate Principal Balances less than 1.00% of the aggregate Principal Balance of the [statistical] pool.

 

81


Table of Contents

[Distribution of the [Initial] Automobile Loan Contracts by Original Term to Scheduled Maturity

as of the [Statistical Calculation Date]/[[Initial] Cutoff Date] for the [Statistical] Pool Related to

Offered Notes with an Initial Note Principal Balance of $        ]

 

Original Term to

Scheduled Maturity

(Number of Months)

   Aggregate
Principal
Balance
     % of Aggregate
Principal
Balance(1)
    Number of
Automobile
Loan
Contracts
     % of Total
Number of
Automobile Loan
Contracts(1)
 

[     –    ]

   $ [                  [     ]%      [                  [     ]% 

[     –    ]

     [                  [     ]%      [                  [     ]% 

[     –    ]

     [                  [     ]%      [                  [     ]% 

[     –    ]

     [                  [     ]%      [                  [     ]% 

[     –    ]

     [                  [     ]%      [                  [     ]% 
  

 

 

    

 

 

   

 

 

    

 

 

 

Total

   $ [                  100.00     [                  100.00
  

 

 

    

 

 

   

 

 

    

 

 

 

 

(1) Percentages may not add to 100% because of rounding.

 

82


Table of Contents

[Distribution of the [Initial] Automobile Loan Contracts by Remaining Term to Scheduled

Maturityas of the [Statistical Calculation Date]/[[Initial] Cutoff Date] for the [Statistical] Pool

Related to Offered Notes with an Initial Note Principal Balance of $        ]

 

Remaining Term to

Scheduled Maturity

(Number of Months)

   Aggregate
Principal

Balance
     % of Aggregate
Principal
Balance(1)
    Number of
Automobile
Loan
Contracts
     % of Total
Number of
Automobile Loan
Contracts(1)
 

[     –    ]

   $ [                  [     ]%[(2)]      [                  [     ]% 

[     –    ]

     [                  [     ]%      [                  [     ]% 

[     –    ]

     [                  [     ]%      [                  [     ]% 

[     –    ]

     [                  [     ]%      [                  [     ]% 

[     –    ]

     [                  [     ]%      [                  [     ]% 

[     –    ]

     [                  [     ]%      [                  [     ]% 
  

 

 

    

 

 

   

 

 

    

 

 

 

Total

   $ [                  100.00     28,933         100.00
  

 

 

    

 

 

   

 

 

    

 

 

 

 

(1) Percentages may not add to 100% because of rounding.
[(2) Greater than 0.00% but less than 0.01%.]

 

83


Table of Contents

[Distribution of the [Initial] Automobile Loan Contracts by Model Year

as of the [Statistical Calculation Date]/[[Initial] Cutoff Date] for the [Statistical] Pool Related to Offered

Notes with an Initial Note Principal Balance of $        ]

 

Model Year

   Aggregate
Principal
Balance
     % of Aggregate
Principal
Balance(1)
    Number of
Automobile
Loan
Contracts
     % of Total
Number of
Automobile Loan
Contracts(1)
 

[20    ]

   $  [                  [     ]%      [                  [     ]% 

[20    ]

     [                  [     ]%      [                  [     ]% 

[20    ]

     [                  [     ]%      [                  [     ]% 

[20    ]

     [                  [     ]%      [                  [     ]% 

[20    ]

     [                  [     ]%      [                  [     ]% 

[20    ]

     [                  [     ]%      [                  [     ]% 

[20    ]

     [                  [     ]%      [                  [     ]% 

[20    ]

     [                  [     ]%      [                  [     ]% 

[20    ]

     [                  [     ]%      [                  [     ]% 

[20    ]

     [                  [     ]%      [                  [     ]% 

[20    ]

     [                  [     ]%      [                  [     ]% 

[20    ]

     [                  [     ]%      [                  [     ]% 

[20    ]

     [                  [     ]%      [                  [     ]% 
  

 

 

    

 

 

   

 

 

    

 

 

 

Total

   $  [                  100.00     [                  100.00
  

 

 

    

 

 

   

 

 

    

 

 

 

 

(1) Percentages may not add to 100% because of rounding.

 

84


Table of Contents

[Distribution of the [Initial] Automobile Loan Contracts by Quarter of Origination

as of the [Statistical Calculation Date]/[[Initial] Cutoff Date] for the [Statistical] Pool Related to

Offered Notes with an Initial Note Principal Balance of $        ]

 

Quarter of Origination

   Aggregate
Principal
Balance
     % of Aggregate
Principal
Balance(1)
    Number of
Automobile

Loan
Contracts
     % of Total
Number of
Automobile Loan
Contracts(1)
 

Q    20    

   $ [                  [     ]%[(2)]      [                  [     ]% 

Q    20    

     [                  [     ]%      [                  [     ]% 

Q    20    

     [                  [     ]%      [                  [     ]% 

Q    20    

     [                  [     ]%      [                  [     ]% 

Q    20    

     [                  [     ]%      [                  [     ]% 

Q    20    

     [                  [     ]%      [                  [     ]% 

Q    20    

     [                  [     ]%      [                  [     ]% 

Q    20    

     [                  [     ]%      [                  [     ]% 

Q    20    

     [                  [     ]%      [                  [     ]% 

Q    20    

     [                  [     ]%      [                  [     ]% 

Q    20    

     [                  [     ]%      [                  [     ]% 

Q    20    

     [                  [     ]%      [                  [     ]% 

Q    20    

     [                  [     ]%      [                  [     ]% 

Q    20    

     [                  [     ]%      [                  [     ]% 

Q    20    

     [                  [     ]%      [                  [     ]% 
  

 

 

    

 

 

   

 

 

    

 

 

 

Total

   $ [                  100.00     [                  100.00
  

 

 

    

 

 

   

 

 

    

 

 

 

 

(1) Percentages may not add to 100% because of rounding.
(1) Greater than 0.00% but less than 0.01%.

 

85


Table of Contents

Historical Delinquency Experience of the [Initial] Automobile Loan Contracts

as of the [[Statistical Calculation Date]/[Initial] Cutoff Date]

The following tables set forth the historical delinquency experience of the [statistical] pool of automobile loan contracts. The servicer considers an automobile loan contract to become delinquent on a due date if the obligor fails to pay more than     % of the contractual payment that is due on that due date. Once at least     % of the contractual payment that was due on a due date has been received, the automobile loan contract will no longer be considered delinquent as of the due date on which the original shortfall occurred. Payments by obligors are first applied by the servicer against any outstanding past due amount from a prior due date and are then applied against amounts due on the current due date. The periods of delinquency described below reflect the number of days that more than     % of the contractual payment that was due on an automobile loan contract on a prior due date remained unpaid after that due date.

Because the pool of automobile loan contracts includes automobile loan contracts that were made to primarily subprime borrowers, a relatively high percentage of the accounts become delinquent at some point in the life of the automobile loan contract and there is a relatively high rate of account movement between current and delinquent status in the portfolio.

[As of the [statistical] calculation date, none of the automobile loan contracts in the [statistical] pool [relating to offered notes with an aggregate initial note principal balance of $        ] were more than 30 days delinquent.] [As of the [statistical] calculation date,                      automobile loan contracts, or approximately     % of the number of automobile loan contracts in [the]/[such] [statistical] pool, have been delinquent between 31 and 60 days one or more times,                      automobile loan contracts, or approximately     % of the number automobile loan contracts in [the]/[such] [statistical] pool, have been delinquent between 61 and 90 days one or more times, and                      automobile loan contract, or approximately     % of the number of automobile loan contracts in [the]/[such] [statistical] pool, have been delinquent more than 90 days one or more times. As of the [statistical] calculation date,                      automobile loan contracts, or approximately     % of the number of automobile loan contracts in [the]/[such] [statistical] pool, have received one or more monthly payment extensions.] [The three following tables relate to the statistical pool relating to the publicly offered notes with an initial note principal balance of $        .]

 

Maximum Number

of Times Ever 31 to

60 Days Delinquent

   Aggregate Principal
Balance
     % of Aggregate
Principal Balance(1)
    Number of
Automobile Loan
Contracts
     % of Total Number of
Automobile Loan
Contracts(1)
 

0

   $ [                  [     ]%      [                  [     ]% 

1

     [                  [     ]%      [                  [     ]% 

2+

     [                  [     ]%      [                  [     ]% 
  

 

 

    

 

 

   

 

 

    

 

 

 

Total

   $ [                  [     ]%      [                  [     ]% 
  

 

 

    

 

 

   

 

 

    

 

 

 

 

(1) Percentages may not add to 100% because of rounding.

 

Maximum Number

of Times Ever 61 to

90 Days Delinquent

   Aggregate Principal
Balance
     % of Aggregate
Principal Balance(1)
    Number of
Automobile Loan
Contracts
     % of Total Number of
Automobile Loan
Contracts(1)
 

0

   $ [                  [     ]%      [                  [     ]% 

1

     [                  [     ]%      [                  [     ]% 

2+

     [                  [     ]%      [                  [     ]% 
  

 

 

    

 

 

   

 

 

    

 

 

 

Total

   $ [                  [     ]%      [                  [     ]% 
  

 

 

    

 

 

   

 

 

    

 

 

 

 

(1) Percentages may not add to 100% because of rounding.

 

86


Table of Contents

Maximum Number

of Times Ever

Greater Than 90

Days Delinquent

   Aggregate Principal
Balance
     % of Aggregate
Principal Balance(1)
    Number of
Automobile Loan
Contracts
     % of Total Number of
Automobile Loan
Contracts(1)
 

0

   $ [                  [     ]%      [                  [     ]% 

1

     [                  [     ]%      [                  [     ]% 

2+

     [                  [     ]%      [                  [     ]% 
  

 

 

    

 

 

   

 

 

    

 

 

 

Total

   $ [                  [     ]%      [                  [     ]% 
  

 

 

    

 

 

   

 

 

    

 

 

 

 

(1) Percentages may not add to 100% because of rounding.

[[As of the [statistical] calculation date, none of the automobile loan contracts in the [statistical] pool [relating to offered notes with an aggregate initial note principal balance of $        ] were more than 30 days delinquent.] [As of the [statistical] calculation date,                      automobile loan contracts, or approximately     % of the number of automobile loan contracts in [the]/[such] [statistical] pool, have been delinquent between 31 and 60 days one or more times,                      automobile loan contracts, or approximately     % of the number automobile loan contracts in [the]/[such] [statistical] pool, have been delinquent between 61 and 90 days one or more times, and                      automobile loan contract, or approximately     % of the number of automobile loan contracts in [the]/[such] [statistical] pool, have been delinquent more than 90 days one or more times. As of the [statistical] calculation date,                      automobile loan contracts, or approximately     % of the number of automobile loan contracts in [the]/[such] [statistical] pool, have received one or more monthly payment extensions.] [The three following tables relate to the statistical pool relating to the publicly offered notes with an initial note principal balance of $        .]

 

Maximum Number

of Times Ever 31 to

60 Days Delinquent

   Aggregate Principal
Balance
     % of Aggregate
Principal Balance(1)
    Number of
Automobile Loan
Contracts
     % of Total Number of
Automobile Loan
Contracts(1)
 

0

   $ [                  [     ]%      [                  [     ]% 

1

     [                  [     ]%      [                  [     ]% 

2+

     [                  [     ]%      [                  [     ]% 
  

 

 

    

 

 

   

 

 

    

 

 

 

Total

   $ [                  [     ]%      [                  [     ]% 
  

 

 

    

 

 

   

 

 

    

 

 

 

 

(1) Percentages may not add to 100% because of rounding.

 

Maximum Number

of Times Ever 61 to

90 Days Delinquent

   Aggregate Principal
Balance
     % of Aggregate
Principal Balance(1)
    Number of
Automobile Loan
Contracts
     % of Total Number of
Automobile Loan
Contracts(1)
 

0

   $ [                  [     ]%      [                  [     ]% 

1

     [                  [     ]%      [                  [     ]% 

2+

     [                  [     ]%      [                  [     ]% 
  

 

 

    

 

 

   

 

 

    

 

 

 

Total

   $ [                  [     ]%      [                  [     ]% 
  

 

 

    

 

 

   

 

 

    

 

 

 

 

(1) Percentages may not add to 100% because of rounding.

 

87


Table of Contents

Maximum Number

of Times Ever

Greater Than 90

Days Delinquent

   Aggregate Principal
Balance
     % of Aggregate
Principal Balance(1)
    Number of
Automobile Loan
Contracts
     % of Total Number of
Automobile Loan
Contracts(1)
 

0

   $ [                  [     ]%      [                  [     ]% 

1

     [                  [     ]%      [                  [     ]% 

2+

     [                  [     ]%      [                  [     ]% 
  

 

 

    

 

 

   

 

 

    

 

 

 

Total

   $ [                  [     ]%      [                  [     ]% 
  

 

 

    

 

 

   

 

 

    

 

 

 

 

(1) Percentages may not add to 100% because of rounding.]

 

88


Table of Contents

The obligor under each automobile loan contract is required to pay a specified total amount of payments, in substantially equal monthly installments on each due date under the automobile loan contract. Each obligor’s total payment amount equals the amount financed plus interest charges for the related automobile loan contract’s entire term. The interest charges on the automobile loan contracts are generally determined by the simple interest method.

Under a simple interest automobile loan, the amount of an obligor’s fixed level installment payment which is allocated to interest is equal to the product of the fixed interest rate on the automobile loan contract (which is typically the APR) multiplied by the elapsed time period (which is expressed as a fraction of a year) multiplied by the remaining principal balance after the preceding automobile loan contract payment. The remainder of the obligor’s payment amount is allocated to reduce the principal amount financed.

[If a material number of automobile loan contracts included as trust property are not simple interest automobile loan contracts, or have materially different payment terms than described above, a further description will be provided for other types of automobile loan contracts that are included.]

If an automobile loan contract is prepaid in full by the obligor, the amount of the payment that is greater than the sum of the outstanding Principal Balance of the automobile loan contract plus accrued interest on that automobile loan contract will be refunded to such obligor.

Repurchase Obligations

The sponsor and the depositor each will make representations and warranties regarding the automobile loan contracts pursuant to the purchase agreement and the sale and servicing agreement, respectively. These representations and warranties pertain to specific aspects of the automobile loan contracts, including the manner in which the automobile loan contracts were originated; the obligors of the automobile loan contracts; the accuracy and legality of the records, computer tapes and schedules containing information regarding the automobile loan contracts; the financed vehicles securing the automobile loan contracts; the security interests in the automobile loan contracts granted to the depositor, issuing entity and the indenture trustee; specific characteristics of the automobile loan contracts; and others. Upon the breach of one of these representations or warranties by the sponsor or the depositor that materially and adversely affects the noteholders’ interest in any automobile loan contract, each party’s repurchase obligation will be triggered under the applicable agreement.

Certain of the representations and warranties that the sponsor and the depositor will make about the automobile loan contracts are subject to important qualifications or limitations, such as knowledge qualifiers, or relate to actions taken by a third-party, such as the related dealer [and/or the related unaffiliated third party originator]. Therefore, the sponsor and the depositor may not be able to independently verify the facts underlying certain of the representations and warranties that they make with respect to the automobile loan contracts.

The servicer has covenanted to service the automobile loan contracts in accordance with the standards set forth in the sale and servicing agreement. Those covenants include the servicer’s obligations (i) regarding the maintenance and safekeeping of the automobile loan contract files, (ii) to maintain the perfection created by each automobile loan contracts in the related financed vehicle, (iii) not to release the lien in any financed vehicle except in accordance with the sale and servicing agreement, (iv) not to create, or allow to be created, any lien on the automobile loan contracts other than the liens created under the transaction documents and (v) not to modify any automobile loan contract (except in the manner and circumstances described under “Description of the Transaction Documents—Modifications and Amendments of Automobile Loan Contracts.” If any of the foregoing covenants is breached and the breach is not cured, then the servicer will be obligated to purchase the affected automobile loan contracts from the issuing entity, but only if the breach materially and adversely affects the noteholders’ interest in the affected automobile loan contract or related financed vehicle.]

 

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The servicer is also obligated under the sale and servicing agreement to ensure that lien certificates indicating its security interest in each financed vehicle are obtained. [The servicer will be obligated to purchase from the issuing entity automobile loan contracts with respect to which no such lien certificates have yet been obtained, but only to the extent necessary to cause the aggregate Principal Balance of automobile loan contracts with respect to which no such lien certificates have yet to be obtained to be below a particular level as of a specified number of days after the closing date as specified in the sale and servicing agreement.]

[Asset-Level Data About the Automobile Loan Contracts [To be added for offerings after November 22, 2016:]

The depositor prepared asset-level data for the automobile loan contracts and filed it with the SEC on Form ABS-EE. The Form ABS-EE is incorporated by reference into this prospectus. The asset data file contains detailed information for each automobile loan contract about its identification, origination, contract terms, financed vehicle, obligor, contract activity, servicing and status. Investors should carefully review the asset-level data. The depositor will prepare updated asset level data on a monthly basis and will file it with the SEC on Form ABS-EE. For more details about the monthly asset-level data, you should read “Description of the Transaction Documents—Statements to Noteholders.”]

Yield and Prepayment Considerations

Prepayments can be made on any of the automobile loan contracts at any time. If prepayments are received on the automobile loan contracts, their actual weighted average life may be shorter than their weighted average life would be if all payments were made as scheduled and no prepayments were made. Prepayments on the automobile loan contracts may include moneys received from liquidations due to default and proceeds from credit life, credit disability, and casualty insurance policies. Weighted average life means the average amount of time during which any principal is outstanding on an automobile loan contract.

The rate of prepayments on the automobile loan contracts may be influenced by a variety of economic, social and other factors, including the fact that no obligor under an automobile loan contract may sell or transfer that automobile loan contract without the consent of the servicer. Any risk resulting from faster or slower prepayments of the automobile loan contracts will be borne solely by the noteholders.

The rate of payment of principal of the notes will depend on the rate of payment, and the rate of prepayments, of principal of the automobile loan contracts [and the amount applied to purchase subsequent automobile loan contracts during the revolving period]. It is possible that the final payment on any class of notes could occur significantly earlier than the date on which the final distribution for that class of notes is scheduled to be paid. Any risk resulting from early payment of the notes will be borne solely by the noteholders.

Prepayments on automobile loan contracts can be measured against prepayment standards or models. The model used in this prospectus, the Absolute Prepayment Model, or ABS, assumes a rate of prepayment each month which is related to the original number of automobile loan contracts in a pool of automobile loan contracts. ABS also assumes that all of the automobile loan contracts in a pool are the same size, that all of those automobile loan contracts amortize at the same rate, and that for every month that any individual automobile loan contract is outstanding, payments on that particular automobile loan contract will either be made as scheduled or the automobile loan contract will be prepaid in full. For example, in a pool of automobile loan contracts originally containing 10,000 automobile loan contracts, if a 1% ABS were used, that would mean that 100 automobile loan contracts would prepay in full each month. The percentage of prepayments that is assumed for ABS is not a historical description of prepayment experience on pools of automobile loan contracts or a prediction of the anticipated rate of prepayment on either the pool of automobile loan contracts involved in this

 

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transaction or on any pool of automobile loan contracts. It should not be assumed that the actual rate of prepayments on the automobile loan contracts will be in any way related to the percentage of prepayments that are assumed for ABS in this prospectus.

The tables below which are captioned “Percent of Initial Note Principal Balance at Various ABS Percentages [($        )” and “Percent of Initial Note Principal Balance at Various ABS Percentages ($        )]” are based on ABS and were prepared using the following assumptions:

 

  The [initial] trust property includes                      pools of automobile loan contracts with the characteristics set forth in the following table;

 

  [the subsequent automobile loan contracts purchased on each distribution date during the [prefunding period]/[revolving period] are assumed to have a gross APR equal to the [statistical] pool gross APR of     %, an original term to maturity equal to the [statistical] pool original term to maturity of      months and                      months of seasoning;]

 

  all prepayments on the automobile loan contracts each month are made in full at the specified constant percentage of ABS and there are no defaults, losses or repurchases;

 

  each scheduled monthly payment on the automobile loan contracts is made on the last day of each month commencing in              20     and each month has 30 days;

 

  [the initial principal amount of the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class B Notes, the Class C Notes and the Class D Notes is equal to the initial principal amount set forth on the front cover of this prospectus and the initial principal amount of the Class E Notes is $        ;]

 

  [interest accrues on the Class A-1 Notes at     % per annum [and the Class A-2-B Notes at a fixed rate of     % per annum,] on an [“actual/360” basis];]

 

  [interest accrues on the Class A-2-A Notes at     % per annum, the Class A-3 Notes at     % per annum, the Class B Notes at     % per annum, the Class C Notes at     % per annum, the Class D Notes at     % per annum and the Class E Notes at     % per annum, in each case, on a [“30/360” basis];]

 

  payments on the notes are made on the      day of each month commencing in              20    ;

 

  the notes are purchased on             , 20    ;

 

  the scheduled monthly payment for each automobile loan contract was calculated on the basis of the characteristics described in the following table and in such a way that each automobile loan contract would amortize in a manner that will be sufficient to repay the Principal Balance of that automobile loan contract by its indicated remaining term to maturity;

 

  the servicer or the depositor exercises its redemption option to purchase the automobile loan contracts at the earliest opportunity;

 

  [during the revolving period, the revolving account money is used to purchase the subsequent automobile loan contracts at their respective initial Principal Balances on each distribution date to build and maintain a target level of overcollateralization and there are no funds in the revolving account at the end of any distribution date;]

 

  [all of the pre-funding account money is used to purchase the subsequent automobile loan contracts;]

 

  principal will be paid on each class of the notes on each distribution date as necessary to build and maintain the required overcollateralization;

 

  the servicer receives a monthly servicing fee equal to the product of 1/12 times     % times the aggregate Principal Balance of the automobile loan contracts [plus     % times the aggregate Principal Balance of all subsequent automobile loan contracts sold to the issuing entity];

 

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  the only other fees payable from the trust property are payable to the owner trustee, the asset representations reviewer, the custodian[, the backup servicer] and the indenture trustee in the amount of $[        ] per month in the aggregate.

[The tables below which are captioned “Percent of Initial Note Principal Balance at Various ABS Percentages ($            )” are based on ABS and were prepared using the following assumptions:]

 

  [the initial principal amount of the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class B Notes, the Class C Notes and the Class D Notes is equal to the initial principal amount set forth on the front cover of this prospectus and the initial principal amount of the Class E Notes is $            ;]

 

  [interest accrues on the Class A-1 Notes at     % per annum [and the Class A-2-B Notes at a fixed rate of     % per annum,] on an [“actual/360” basis];]

 

  [interest accrues on the Class A-2-A Notes at     % per annum, the Class A-3 Notes at     % per annum, the Class B Notes at     % per annum, the Class C Notes at     % per annum, the Class D Notes at     % per annum and the Class E Notes at     % per annum, in each case, on a [“30/360” basis];]

 

Pool

   Aggregate Principal
Balance
    Gross APR     Next Payment
Date
     Original
Term to
Maturity
(in Months)
    Remaining
Term to
Maturity
(in Months)
 

1

   $ [                 [     ]%          /    /                 [                 [            

2

   $ [                 [     ]%          /    /                 [                 [            

3

   $ [                 [     ]%          /    /                 [                 [            

4

   $ [                 [     ]%          /    /                 [                 [            

[The tables below which are captioned “Percent of Initial Note Principal Balance at Various ABS Percentages ($        )” are based on ABS and were prepared using the following assumptions:]

 

  [the initial principal amount of the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class B Notes, the Class C Notes and the Class D Notes is equal to the initial principal amount set forth on the front cover of this prospectus and the initial principal amount of the Class E Notes is $        ;]

 

  [interest accrues on the Class A-1 Notes at     % per annum [and the Class A-2-B Notes at a fixed rate of     % per annum,] on an [“actual/360” basis];]

 

  [interest accrues on the Class A-2-A Notes at     % per annum, the Class A-3 Notes at     % per annum, the Class B Notes at     % per annum, the Class C Notes at     % per annum, the Class D Notes at     % per annum and the Class E Notes at     % per annum, in each case, on a [“30/360” basis];]

 

[Pool

   Aggregate Principal
Balance
    Gross APR     Next Payment
Date
     Original
Term to
Maturity
(in Months)
    Remaining
Term to
Maturity
(in Months)
 

1

   $ [                 [     ]%          /    /                 [                 [            

2

   $ [                 [     ]%          /    /                 [                 [            

3

   $ [                 [     ]%          /    /                 [                 [            

4

   $ [                 [     ]%          /    /                 [                 [             ]] 

 

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The following tables were created relying on the [applicable] assumptions listed above. The tables below indicate the percentages of the initial principal amount of each class of publicly offered notes that would be outstanding after each of the listed distribution dates if certain percentages of ABS are assumed. The tables below also indicate the corresponding weighted average lives of each class of publicly offered notes if the same percentages of ABS are assumed.

The assumptions used to construct the tables are hypothetical and have been provided only to give a general sense of how the principal cash flows might behave under various prepayment scenarios. The actual characteristics and performance of the automobile loan contracts will differ from the assumptions used to construct the tables. For example, it is very unlikely that the automobile loan contracts will prepay at a constant level of ABS each monthly period until maturity or that each of the automobile loan contracts will prepay at the same level of ABS. Moreover, the automobile loan contracts have diverse terms and that fact alone could produce slower or faster principal distributions than indicated in the tables at the various constant percentages of ABS, even if the original and remaining terms to maturity of the automobile loan contracts are as assumed. Any difference between the assumptions used to construct the tables and the actual characteristics and performance of the automobile loan contracts, including actual prepayment experience or losses, will affect the percentages of initial balances outstanding on any given date and the weighted average lives of each class of notes.

The percentages in the tables have been rounded to the nearest whole number. As used in the tables which follow, the weighted average life of a class of notes is determined by:

 

  multiplying the amount of each principal payment on a note by the number of years from the date of the issuance of the note to the related distribution date;

 

  adding the results; and

 

  dividing the sum by the related initial principal amount of the note.

 

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Percent of Initial Note Principal Balance at Various ABS Percentages [($        )]

 

     Class A-1 Notes     Class A-2 Notes  

Distribution Date

   0.50%     1.00%     1.50%     2.00%     0.50%     1.00%     1.50%     2.00%  

Closing Date

     100     100     100     100     100     100     100     100

    /    /        

     [     ]%      [     ]%      [     ]%      [     ]%      [     ]%      [     ]%      [     ]%      [     ]% 

    /    /        

     [     ]%      [     ]%      [     ]%      [     ]%      [     ]%      [     ]%      [     ]%      [     ]% 

    /    /        

     [     ]%      [     ]%      [     ]%      [     ]%      [     ]%      [     ]%      [     ]%      [     ]% 

    /    /        

     [     ]%      [     ]%      [     ]%      [     ]%      [     ]%      [     ]%      [     ]%      [     ]% 

    /    /        

     [     ]%      [     ]%      [     ]%      [     ]%      [     ]%      [     ]%      [     ]%      [     ]% 

    /    /        

     [     ]%      [     ]%      [     ]%      [     ]%      [     ]%      [     ]%      [     ]%      [     ]% 

    /    /        

     [     ]%      [     ]%      [     ]%      [     ]%      [     ]%      [     ]%      [     ]%      [     ]% 

    /    /        

     [     ]%      [     ]%      [     ]%      [     ]%      [     ]%      [     ]%      [     ]%      [     ]% 

    /    /        

     [     ]%      [     ]%      [     ]%      [     ]%      [     ]%      [     ]%      [     ]%      [     ]% 

    /    /        

     [     ]%      [     ]%      [     ]%      [     ]%      [     ]%      [     ]%      [     ]%      [     ]%