Finance receivables consist of Contracts and Direct Loans, each of which comprise a portfolio segment. Each portfolio segment consists of smaller balance homogeneous loans which are collectively evaluated for impairment.

The Company purchases individual Contracts from used and new automobile dealers in its markets. There is no relationship between the Company and the dealer with respect to a given Contract once the assignment of that Contract is complete. The dealer has no vested interest in the performance of any Contract the Company purchases. Beginning February 2019, the Company charges-off receivables when an individual account becomes 121 days contractually delinquent or is in Chapter 13 bankruptcy. In the event of repossession, the charge-off will occur in the month in which the vehicle was repossessed. Prior to February 2019, an individual account was charged-off at 181 days contractually delinquent.

Contracts and Direct Loans included in finance receivables are detailed as follows as of fiscal years ended March 31:

	(In thousands)
	2019			2018
Finance receivables	$	228,994		$	301,065
Accrued interest receivable		2,889			2,732
Unearned dealer discounts		(10,083	)		(13,655	)
Unearned insurance and fee commissions		(2,826	)		(3,303	)
Finance receivables, net of unearned		218,974			286,839
Allowance for credit losses		(16,932	)		(20,266	)
Finance receivables, net	$	202,042		$	266,573

The Company purchases Contracts from automobile dealers at a negotiated price that is less than the original principal amount being financed by the purchaser of the automobile. The Contracts are predominantly for used vehicles. As of March 31, 2019, the average model year of vehicles collateralizing the portfolio was a 2010 vehicle. The terms of the Contracts range from 12 to 60 months and bear an average contractual interest rate of 22.7% and 22.6% as of March 31, 2019 and 2018, respectively.

Direct Loans are typically for amounts ranging from $1,000 to $15,000 and are generally secured by a lien on an automobile, watercraft or other permissible tangible personal property. The majority of Direct Loans are originated with current or former customers under the Company’s automobile financing program. The typical Direct Loan represents a better credit risk than Contracts due to the customer’s historical payment history with the Company; however, the underlying collateral is less valuable. In deciding whether or not to make a loan, the Company considers the individual’s credit history, job stability, income, and impressions created during a personal interview with a Company loan officer. Additionally, because most of the Direct Loans made by the Company to date have been made to borrowers under Contracts previously purchased by the Company, the payment history of the borrower under the Contract is a significant factor in making the loan decision. As of March 31, 2019, loans made by the Company pursuant to its Direct Loan program constituted approximately 3% of the aggregate principal amount of the Company’s loan portfolio. The terms of the Direct Loans range from 12 to72 months and bear an average contractual interest rate of 26.0% and 26.1% as of March 31, 2019 and 2018, respectively.

During the first quarter of the fiscal year ended March 31, 2019, the Company began using the trailing six-month charge-offs, annualized, to calculate the allowance for credit losses. This change was made to reflect changes in the Company’s lending policies and underwriting standards, which were a result of the Company changing its business strategies. The Company changed its focus to financing primary transportation to and from work for the subprime borrower.

In addition, the Company takes into consideration the composition of the portfolio, current economic conditions, the estimated net realizable value of the underlying collateral, historical loan loss experience, delinquency, non-performing assets, and bankrupt accounts when determining management’s estimate of probable credit losses and adequacy of the allowance for credit losses. If the allowance for credit losses is determined to be inadequate, then an additional charge to the provision would be recorded to maintain adequate reserves based on management’s evaluation of the risk inherent in the loan portfolio.

Prior to June 30, 2018, the Company calculated the allowance for credit losses by reference to static pools, which each pool consisted of Contracts purchased during a three-month period for each branch location as management considers these pools to have similar risk characteristics and were considered smaller-balance homogenous loans. The Company analyzed each consolidated static pool at specific points in time to estimate losses that were probable of being incurred as of the reporting date. The Company maintained historical write-off information for over 10 years with respect to every consolidated static pool and segregated such static pool by liquidation, thereby creating snapshots or buckets of each pool’s historical write-off-to liquidation ratio at five different points in each vintage pool’s liquidation cycle. These snapshots were then used to assist in determining the allowance for credit losses. The five snapshots were tracked at liquidation levels of 20%, 40%, 60%, 80%, and 100%.

	For the year ended March 31, 2019
	(In thousands)
	Indirect			Direct			Total
Balance at beginning of year	$	19,433		$	833		$	20,266
Provision for credit losses		32,715			121			32,836
Charge-offs		(37,514	)		(638	)		(38,152	)
Recoveries		1,941			41			1,982
Balance at end of year	$	16,575		$	357		$	16,932

	For the year ended March 31, 2018
	(In thousands)
	Indirect			Direct			Total
Balance at beginning of year	$	16,885		$	773		$	17,658
Provision for credit losses		36,890			560			37,450
Charge-offs		(36,183	)		(536	)		(36,719	)
Recoveries		1,841			36			1,877
Balance at end of year	$	19,433		$	833		$	20,266

A performing account is defined as an account that is less than 61 days past due. The Company defines an automobile contract as delinquent when more than 25% of a payment contractually due by a certain date has not been paid by the immediately following due date, which date may have been extended within limits specified in the servicing agreements or as a result of a deferral. The period of delinquency is based on the number of days payments are contractually past due, as extended where applicable.

In certain circumstances, the Company will grant obligors one-month payment extensions. The only modification of terms in those circumstances is to advance the obligor’s next due date by one month and extend the maturity date of the receivable. There are no other concessions, such as a reduction in interest rate, forgiveness of principal or of accrued interest. Accordingly, the Company considers such extensions to be insignificant delays in payments rather than troubled debt restructurings.

A non-performing account is defined as an account that is contractually delinquent for 61 days or more or is a Chapter 13 bankruptcy account, and the accrual of interest income is suspended. As of February 2019, the Company changed the charge-off policy from 181 days contractually delinquent to 121 days contractually delinquent. This change aligned the Company’s charge-off policy with practices within the subprime auto financing segment. See “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations” for more details. Also, as of February 2019, upon notification of a Chapter 13 bankruptcy, an account is charged-off. The Company recorded a $4.9 million increase to the provision for credit losses, resulting from this change.

In the event an account is dismissed from bankruptcy, the Company will decide, based on several factors, to begin repossession proceedings or to allow the customer to begin making regularly scheduled payments.

The following table is an assessment of the credit quality by creditworthiness as of March 31:

	(In thousands)
	2019						2018
	Contracts		Direct Loans		Total		Contracts		Direct Loans		Total
Performing accounts	$	213,542	$	7,889	$	221,431	$	279,688	$	7,528	$	287,216
Non-performing accounts		7,453		110		7,563		9,503		217		9,720
Total		220,995		7,999		228,994		289,191		7,745		296,936
Chapter 13 bankruptcy		—		—		—		4,073		56		4,129
Finance receivables	$	220,995	$	7,999	$	228,994	$	293,264	$	7,801	$	301,065

The following tables present certain information regarding the delinquency rates experienced by the Company with respect to Contracts and Direct Loans, excluding any Chapter 13 bankruptcy accounts:

	(In thousands)
Contracts	Balance Outstanding		30 – 59 days			60 –89 days			90-119 days			120+ days			Total
March 31, 2019	$	220,995	$	14,897		$	5,155		$	2,288		$	10		$	22,350
				6.74	%		2.33	%		1.04	%		0.00	%		10.11	%
March 31, 2018	$	289,191	$	15,828		$	5,711		$	2,124		$	1,668		$	25,331
				5.47	%		1.97	%		0.73	%		0.58	%		8.76	%

Direct Loans	Balance Outstanding		30 – 59 days			60 –89 days			90-119 days			120+ days			Total
March 31, 2019	$	7,999	$	197		$	79		$	31			—		$	307
				2.46	%		0.99	%		0.39	%		0.00	%		3.84	%
March 31, 2018	$	7,745	$	189		$	77		$	62		$	78		$	406
				2.44	%		0.99	%		0.80	%		1.01	%		5.24	%