Morningstar DBRS Assigns Provisional Credit Ratings to United Auto Credit Securitization Trust 2025-1

DBRS, Inc. (Morningstar DBRS) assigned provisional credit ratings to the following classes of notes to be issued by United Auto Credit Securitization Trust 2025-1 (UACST 2025-1 or the Issuer):

-- $145,583,000 Class A Notes at (P) AAA (sf)
-- $53,110,000 Class B Notes at (P) AA (high) (sf)
-- $34,380,000 Class C Notes at (P) A (high) (sf)
-- $53,490,000 Class D Notes at (P) BBB (sf)
-- $37,440,000 Class E Notes at (P) BB (high) (sf)

CREDIT RATING RATIONALE/DESCRIPTION

The provisional credit ratings are based on Morningstar DBRS' review of the following analytical considerations:

(1) Transaction capital structure, proposed credit ratings, and form and sufficiency of available credit enhancement.
-- Credit enhancement is in the form of overcollateralization (OC), subordination, amounts held in the reserve fund, and excess spread. Credit enhancement levels are sufficient to support the Morningstar DBRS-projected cumulative net loss (CNL) assumption 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 credit ratings address the payment of timely interest on a monthly basis and principal by the legal final maturity date.

(2) The Morningstar DBRS CNL assumption is 21.60% based on the expected Cut-off Date pool composition.
-- The pool includes collateral originated by UACC as well as Vroom collateral.

(3) The Transaction parties' capabilities with regards to originations, underwriting, and servicing, and the existence of an experienced and capable backup servicer.
-- Morningstar DBRS has performed an operational risk review of UACC and considers the entity to be an acceptable originator and servicer of subprime automobile loan contracts. Additionally, the Transaction has an acceptable backup servicer.
-- The UACC senior management team has considerable experience and a successful track record within the auto finance industry.

(4) The credit quality of the collateral and performance of UACC's auto loan portfolio.
--UACC originates collateral which generally has shorter terms, higher down payments, lower book values, and higher borrower income requirements than some other subprime auto loan originators.

(5) The transaction assumptions consider Morningstar DBRS' baseline macroeconomic scenarios for rated sovereign economies, available in its commentary Baseline Macroeconomic Scenarios For Rated Sovereigns December 2024 Update, published on December 19, 2024. These baseline macroeconomic scenarios replace Morningstar DBRS' moderate and adverse coronavirus pandemic scenarios, which were first published in April 2020.

(6) The legal structure and presence of legal opinions, which are expected to address the true sale of the assets to the Issuer, the nonconsolidation of the special-purpose vehicle with UACC, that the trust has a valid first-priority security interest in the assets, and the consistency with Morningstar DBRS' Legal Criteria for U.S. Structured Finance methodology.

UACC is a specialty finance company that has been engaged in the subprime automobile finance business since 1996. UACC purchases motor vehicle retail installment sales contracts from franchise and independent automobile dealerships throughout the U.S.

UACST 2025-1 will represent the 24th asset-backed securities transaction completed in UACC's history and will offer both senior and subordinate rated securities. The receivables securitized in UACST 2025-1 will be subprime automobile loan contracts secured primarily by used automobiles, light-duty trucks, and vans.

The credit rating on the Class A Notes reflects 63.40% of initial hard credit enhancement provided by the subordinated notes in the pool (46.70%), the reserve fund (1.50% as a percentage of the initial collateral balance), and OC (15.20% of the initial pool balance). The credit ratings on the Class B, C, D, and E Notes reflect 49.50%, 40.50%, 26.50%, and 16.70% of initial hard credit enhancement, respectively. Additional credit support may be provided from excess spread available in the structure.

Morningstar DBRS' credit rating on the securities referenced herein addresses the credit risk associated with the identified financial obligations in accordance with the relevant transaction documents. The associated financial obligations for each of the rated notes are the related Noteholders' Monthly Interest Distributable Amount and the related Note Balance.

Morningstar DBRS' credit rating does not address nonpayment risk associated with contractual payment obligations contemplated in the applicable transaction document(s) that are not financial obligations. The associated contractual payment obligation that is not a financial obligation for each of the rated notes is the related interest on any Noteholders' Interest Carryover Shortfall.

Morningstar DBRS' long-term credit ratings provide opinions on risk of default. Morningstar DBRS considers risk of default to be the risk that an issuer will fail to satisfy the financial obligations in accordance with the terms under which a long-term obligation has been issued. The Morningstar DBRS short-term debt rating scale provides an opinion on the risk that an issuer will not meet its short-term financial obligations in a timely manner.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS

There were no Environmental/Social/Governance factor(s) that had a significant or relevant effect on the credit analysis.

A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (August 13, 2024) https://dbrs.morningstar.com/research/437781.

Notes:
All figures are in US dollars unless otherwise noted.

The principal methodology applicable to the credit ratings is

Rating U.S. Retail Auto Loan Securitizations (August 06, 2024) https://dbrs.morningstar.com/research/437569.

Other methodologies referenced in this transaction are listed at the end of this press release.

The credit rating was initiated at the request of the rated entity.

The rated entity or its related entities did participate in the credit rating process for this credit rating action.

Morningstar DBRS had access to the accounts, management and other relevant internal documents of the rated entity or its related entities in connection with this credit rating action.

This is a solicited credit rating.

A provisional credit rating is not a final credit rating with respect to the above-mentioned securities and may change or be different than the final credit rating assigned or may be discontinued. The assignment of the final credit ratings on the above-mentioned securities are subject to receipt by Morningstar DBRS of all data and/or information and final documentation that Morningstar DBRS deems necessary to finalize the credit ratings.

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

DBRS, Inc.
140 Broadway, 43rd Floor
New York, NY 10005 USA
Tel. +1 212 806-3277

The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies.

Rating U.S. Structured Finance Transactions (November 18, 2024)
https://dbrs.morningstar.com/research/443136

Operational Risk Assessment for U.S. ABS Originators and Servicers (December 5, 2024)
https://dbrs.morningstar.com/research/444162/operational-risk-assessment-for-us-abs-servicers

Legal Criteria for U.S. Structured Finance (December 3, 2024)
https://dbrs.morningstar.com/research/444064/legal-criteria-for-us-structured-finance

For more information on this credit or on this industry, visit dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.