Consumer Portfolio Services, Inc. (NASDAQ: CPSS)

Consumer Portfolio Services, Inc. (CPS), a specialty finance company, operates primarily in the United States, providing indirect financing to sub-prime customers. The company's main business activities involve purchasing and servicing retail automobile contracts originated by franchised and independent dealers. CPS facilitates sales to customers who might not obtain financing from traditional sources, offering an alternative source of financing for dealers.

The company generates revenue by purchasing automobile contracts from dealers and servicing them for a fee. Its primary products are automobile contracts, which are fully amortizing and provide for level payments over the term of the contract. These contracts are secured by a first-priority lien on new or used automobiles, light trucks, or passenger vans. CPS operates in a highly fragmented market, with no single company having a dominant position. The company competes with other specialty finance companies and traditional lenders such as banks and credit unions.

CPS's direct lending platform serves sub-prime customers who are unable to obtain financing from traditional sources. This platform allows customers to apply for financing directly with CPS, which uses proprietary scoring models to evaluate creditworthiness. The platform offers a range of financing products, including first-time buyer, preferred, and super alpha programs. CPS's indirect lending platform involves purchasing automobile contracts from dealers, who are unable to obtain financing for their customers from traditional sources. The company purchases contracts from dealers and services them for a fee.

CPS's third segment, the securitization platform, involves pooling automobile contracts and selling them to investors. This platform provides a source of funding for CPS's lending activities. The company has completed 99 term securitizations of approximately $19.1 billion in automobile contracts.

CPS's customers are primarily sub-prime borrowers with limited credit histories or past credit problems. The company's financial performance has been strong, with a consistent record of profitability and a growing revenue stream driven by the growth of its direct lending and indirect lending platforms. CPS's revenue growth is also influenced by the credit quality of its portfolio, as the company uses a proprietary scoring model to evaluate creditworthiness and manage credit risk effectively.