Westlake sells $100M of subprime loans to HFC Acceptance

Westlake Financial offloaded $100 million in auto subprime loans to HFC Acceptance a week after issuing its first auto asset-backed securitization deal of the year. Westlake announced the sale of self-originated new and seasoned subprime auto loans to the yacht, aircraft and real estate financier at a 112% principal premium on Jan. 13, according to Westlake release. Principal premium refers to the difference in the value of loans that a lender originates versus what the loans are sold for, Franka Bicolli , managing director of treasury and capital markets securitization (ABS) at Westlake, told Auto Finance News . For the deal, the loans were worth $89.3 million at the time Westlake was underwriting them, but sold for $100 million, then HFC paid a $10.7 million premium, Bicolli said. Because seasoned loans will be paid off sooner than newer loans, from a risk adjusted perspective, it made sense for HFC to purchase the loans at a premium, she added. The loans in the deal were Westlake’s standard loans, which are subprime, and Westlake will continue to service them, Bicolli said. ‘First of its kind' Westlake calls the transaction a “first-of-its-kind structure for both organizations” that could serve as a template for additional transactions, according to the release. “We have never sold any standard loans before. We always have sold near prime and prime,” which are more common because of the lower APRs, Bicolli said. “On our side, we felt that was the first time that we could sell the standard loan at a price that we [thought was in line] with the effective true fair value of those assets,” she added. “The nature of this transaction is strategic because we intend to invite other buyers potentially to buy our standard loans for the price that we think is correct.” The sale provides Westlake with an “innovative balance sheet and capital optimization” as well as expands HFC Acceptance’s investment in consumer assets, according to the release. First subprime ABS upsized The loan sale closed approximately a week after Westlake came to market with its first ABS deal of 2026. The company issued a $1.3 billion subprime ABS transaction on Jan. 5, according to CreditFlow , which monitors securities. The transaction is a part of Westlake’s typical cadence of thre to four subprime ABS issuances a year and was upsized to $1.85 billion because of investor demand, Bicolli said. There was “very strong participation and [Westlake was] able to have a good execution on the deal,” unlike the lender’s third and last subprime transaction of 2025 in October, when demand was “slower,” Bicolli said. According to a Jan. 5 S&P Global presale report: Westlake’s portfolio was $18.8 billion through Nov. 30, 2025, up 13.3% year over year; Total delinquencies were 3.63%, down 64 basis points (bps) YoY; and Annualized net losses were 6.45%, down 6 bps YoY. “In general, the ABS market has felt stronger,” Bicolli said, noting that more investors are in the market for ABS deals. "The last quarter [of 2025] was a little bit softer in the light of Tricolor and all the headline news that was happening,” she said. “A lot of investors at the time [took] a wait and see approach. Fast forward in January, we saw a lot of investors put in a whole tranche and buying the whole class.” Future growth The capital raised from the ABS deal will be used to expand Westlake’s origination volume, dealer relationships and funding of high-quality assets, Bicolli said. “We borrow so we can lend,” she said. Westlake grew its issuance about 20% YoY to $5.9 billion in 2025 and issued six ABS transactions across its subsidiaries, Bicolli said. In 2026, “the plan is to continue growing 20%” and issue between six and eight transactions. “That will require a lot of capital,” she said. “That's why we think that justifies us being more present in the capital market.” Editor's note: A previous version of this article incorrectly stated that Westlake’s originations grew by 20% YoY in the second to last paragraph. It was, in fact, Westlake's ABS issuance that grew by 2 0% YoY. Franka B icolli's title was corrected to managing director of treasury and capital, from vice president. Auto Finance News will present multiple invaluable events for industry professionals in 2026, starting with Auto Finance Summit East and Auto Finance Capital Summit in May. To see event agendas and register, visit autofinance.live .

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