KBRA assigns preliminary ratings to four classes of notes issued by ACM Auto Trust 2022-1 (“ACMAT 2022-1”), a subprime auto loan ABS transaction.

ACMAT 2022-1 represents the first rated ABS securitization sponsored by America’s Car Mart, Inc., an Arkansas corporation and subsidiary of America’s Car-Mart (“Car-Mart” or the “Company”), a publicly traded Texas corporation. ACMAT 2022-1 will issue four classes of notes totaling $400.00 million, collateralized by loans directly originated by America’s Car Mart, Inc. and Texas Car-Mart, Inc., also a subsidiary of Car-Mart. Credit enhancement consists of overcollateralization, subordination of junior note classes, a reserve account funded at closing, and excess spread.

Car-Mart is a used vehicle retailer headquartered in Rogers, Arkansas that focuses on both the sale and financing of vehicles to subprime borrowers whose FICO scores are 620 and below. The Company’s business model consists of vehicle acquisition, reconditioning, sales, underwriting, financing, loan servicing and after-sales support. Car-Mart primarily sells older-model used vehicles with an average age of 10 years, and is the sole provider of financing to its customers. Many of the Company’s borrowers have experienced prior credit difficulties or have limited credit bureau histories. As of February 28, 2022, the Company operates a network of 154 dealerships in twelve states, all of which are Company-owned. The Company’s primary geographical focus is on small cities with populations of 50,000 or less throughout the South-Central United States. Car-Mart launched its auto contract originations business in 1981 and completed its IPO in May 1999. The Company’s stock trades on the NASDAQ under the ticker symbol “CRMT”.

KBRA applied its Auto Loan ABS Global Rating Methodology, as well as its Global Structured Finance Counterparty Methodology and ESG Global Rating Methodology as part of its analysis of the transaction’s underlying collateral pool, the proposed capital structure and Car-Mart’s historical static pool data. KBRA considered its operational review of the Company, as well periodic due diligence calls. Operative agreements and legal opinions will be reviewed prior to closing.

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Related Publications

• Auto Loan ABS Global Rating Methodology
• Global Structured Finance Counterparty Methodology
• ESG Global Rating Methodology

Disclosures

Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority pursuant to the Temporary Registration Regime. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.

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