DBRS Finalizes Provisional Ratings on United Auto Credit Securitization Trust 2016-1

DBRS, Inc. (DBRS) has today finalized the provisional ratings on the following classes issued by United Auto Credit Securitization Trust 2016-1:

-- Class A Notes at AAA (sf)
-- Class B Notes at AA (sf)
-- Class C Notes at A (sf)
-- Class D Notes at BBB (sf)
-- Class E Notes at BB (sf)

The finalized provisional ratings are based on a review by DBRS of the following analytical considerations:

-- Transaction capital structure, proposed ratings and form and sufficiency of available credit enhancement.
-- Credit enhancement is in the form of overcollateralization, subordination, amounts held in the reserve fund and excess spread. Credit enhancement levels are sufficient to support DBRS-projected expected cumulative net loss assumptions under various stress scenarios.
-- The ability of the transaction to withstand stressed cash flow assumptions and repay investors according to the terms in which they have invested. For this transaction, the ratings address the payment of timely interest on a monthly basis and principal by the legal final maturity date.
-- The transaction parties’ capabilities with regard to originations, underwriting and servicing and the existence of an experienced and capable backup servicer.
-- DBRS has performed an operational risk review of United Auto Credit Corporation (UACC or the Company) and considers the entity to be an acceptable originator and servicer of subprime automobile loan contracts with an acceptable backup servicer.
-- The UACC senior management team has considerable experience and a successful track record within the auto finance industry.
-- The Company successfully consolidated its business into a centralized servicing platform and has consolidated originations to two regional buying centers. UACC retained experienced managers and staff at the servicing center and buying centers, most of whom were associated with the Company prior to the reorganization.
-- UACC has tightened its underwriting standards and has implemented a risk management system, centralized oversight of all underwriting and improved its technology system to provide daily metrics on all originations, servicing and collections of loans.
-- The credit quality of the collateral and performance of UACC’s auto loan portfolio.
-- UACC’s origination of collateral, which has a shorter term, higher down payment, lower book value and higher income requirements.
-- The legal structure and presence of legal opinions, which address the true sale of the assets to the Issuer, the non-consolidation of the special-purpose vehicle with UACC, that the trust has a valid first-priority security interest in the assets and consistency with the “DBRS Legal Criteria for U.S. Structured Finance” methodology.

Notes:
The applicable methodology is Rating U.S. Retail Auto Loan Securitizations, which can be found on our website under Methodologies.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.

The full report providing additional analytical detail is available by clicking on the link or by contacting us at info@dbrs.com.

Please see the attached appendix for additional information regarding sensitivity of assumptions used in the rating process.