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10. Fair Value Measurements | 3 Months Ended
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Mar. 31, 2016
Fair Value Disclosures [Abstract] |
Fair Value Measurements | ASC 820, "Fair Value Measurements" clarifies the principle that fair value should be based on the assumptions market participants would use when pricing an asset or liability and establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. Under the standard, fair value measurements would be separately disclosed by level within the fair value hierarchy. ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a three-level valuation hierarchy for disclosure of fair value measurement and enhances disclosure requirements for fair value measurements. The three levels are defined as follows: level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets; level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument; and level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement. Repossessed vehicle inventory, which is included in Other assets on our unaudited condensed consolidated balance sheet, is measured at fair value using level 2 assumptions based on our actual loss experience on sale of repossessed vehicles. At March 31, 2016 the finance receivables related to the repossessed vehicles in inventory totaled $38.8 million. We have applied a valuation adjustment, or loss allowance, of $27.1 million, which is based on a recovery rate of approximately 30%, resulting in an estimated fair value and carrying amount of $11.7 million. The fair value and carrying amount of the repossessed inventory at December 31, 2015 was $12.8 million after applying a valuation adjustment of $26.9 million. There were no transfers in or out of level 1 or level 2 assets and liabilities for the three months ended March 31, 2016 and 2015. We have no level 3 assets that are measured at fair value on a non-recurring basis. The estimated fair values of financial assets and liabilities at March 31, 2016 and December 31, 2015, were as follows:
|  | As of March 31, 2016 |
Financial Instrument |  | (In thousands) |
|  | Carrying |  |  | Fair Value Measurements Using: |  |  |  |
|  | Value |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 16,191 |  |  | $ | 16,191 |  |  | $ | – |  |  | $ | – |  |  | $ | 16,191 |
Restricted cash and equivalents |  |  | 126,011 |  |  |  | 126,011 |  |  |  | – |  |  |  | – |  |  |  | 126,011 |
Finance receivables, net |  |  | 2,018,376 |  |  |  | – |  |  |  | – |  |  |  | 1,956,634 |  |  |  | 1,956,634 |
Finance receivables measured at fair value |  |  | 23 |  |  |  | – |  |  |  | – |  |  |  | 23 |  |  |  | 23 |
Accrued interest receivable |  |  | 30,617 |  |  |  | – |  |  |  | – |  |  |  | 30,617 |  |  |  | 30,617 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Warehouse lines of credit |  | $ | 172,252 |  |  | $ | – |  |  | $ | – |  |  | $ | 172,252 |  |  | $ | 172,252 |
Accrued interest payable |  |  | 3,545 |  |  |  | – |  |  |  | – |  |  |  | 3,545 |  |  |  | 3,545 |
Residual interest financing |  |  | 8,336 |  |  |  | – |  |  |  | – |  |  |  | 8,336 |  |  |  | 8,336 |
Securitization trust debt |  |  | 1,868,451 |  |  |  | – |  |  |  | – |  |  |  | 1,854,242 |  |  |  | 1,854,242 |
Subordinated renewable notes |  |  | 15,348 |  |  |  | – |  |  |  | – |  |  |  | 15,348 |  |  |  | 15,348 |
|  | As of December 31, 2015 |
Financial Instrument |  | (In thousands) |
|  | Carrying |  |  | Fair Value Measurements Using: |  |  |  |
|  | Value |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 19,322 |  |  | $ | 19,322 |  |  | $ | – |  |  | $ | – |  |  | $ | 19,322 |
Restricted cash and equivalents |  |  | 106,054 |  |  |  | 106,054 |  |  |  | – |  |  |  | – |  |  |  | 106,054 |
Finance receivables, net |  |  | 1,909,490 |  |  |  | – |  |  |  | – |  |  |  | 1,879,510 |  |  |  | 1,879,510 |
Finance receivables measured at fair value |  |  | 61 |  |  |  | – |  |  |  | – |  |  |  | 61 |  |  |  | 61 |
Accrued interest receivable |  |  | 31,547 |  |  |  | – |  |  |  | – |  |  |  | 31,547 |  |  |  | 31,547 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Warehouse lines of credit |  | $ | 196,461 |  |  | $ | – |  |  | $ | – |  |  | $ | 196,461 |  |  | $ | 196,461 |
Accrued interest payable |  |  | 3,260 |  |  |  | – |  |  |  | – |  |  |  | 3,260 |  |  |  | 3,260 |
Residual interest financing |  |  | 9,042 |  |  |  | – |  |  |  | – |  |  |  | 9,042 |  |  |  | 9,042 |
Securitization trust debt |  |  | 1,731,598 |  |  |  | – |  |  |  | – |  |  |  | 1,718,418 |  |  |  | 1,718,418 |
Subordinated renewable notes |  |  | 15,138 |  |  |  | – |  |  |  | – |  |  |  | 15,138 |  |  |  | 15,138 |
The following summary presents a description of the methodologies and assumptions used to estimate the fair value of our financial instruments. Much of the information used to determine fair value is highly subjective. When applicable, readily available market information has been utilized. However, for a significant portion of our financial instruments, active markets do not exist. Therefore, significant elements of judgment were required in estimating fair value for certain items. The subjective factors include, among other things, the estimated timing and amount of cash flows, risk characteristics, credit quality and interest rates, all of which are subject to change. Since the fair value is estimated as of March 31, 2016 and December 31, 2015, the amounts that will actually be realized or paid at settlement or maturity of the instruments could be significantly different. Cash, Cash Equivalents and Restricted Cash and Equivalents The carrying value equals fair value. Finance Receivables, net The fair value of finance receivables is estimated by discounting future cash flows expected to be collected using current rates at which similar receivables could be originated. Finance Receivables Measured at Fair Value The carrying value equals fair value. Accrued Interest Receivable and Payable The carrying value approximates fair value. Warehouse Lines of Credit, Residual Interest Financing, and Subordinated Renewable Notes The carrying value approximates fair value because the related interest rates are estimated to reflect current market conditions for similar types of secured instruments. Securitization Trust Debt The fair value is estimated by discounting future cash flows using interest rates that we believe reflect the current market rates.

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- Definition The entire disclosure of the fair value measurement of assets and liabilities, which includes financial instruments measured at fair value that are classified in shareholders' equity, which may be measured on a recurring or nonrecurring basis. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=66048111&loc=d3e19279-110258 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=66048111&loc=d3e19207-110258 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=66048111&loc=d3e19190-110258 + Details
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