KBRA Places Four CNART Ratings on Watch Downgrade and Five CNART Ratings on Watch Developing

KBRA has placed the four outstanding classes of CarNow Auto Receivables Trust (“CNART”) 2022-1 and CNART 2023-1 on Watch Downgrade following notices posted on August 5, 2025 by Computershare Trust Company, N.A. (“Computershare”), the indenture trustee and backup servicer, indicating that Byrider Finance, LLC (“Byrider”), the servicer, intends to cease servicing the two transactions effective August 31, 2025. Pursuant to the documents, this would result in a servicer termination event and the servicer may be terminated at the direction of the majority noteholders. Computershare as backup servicer would then assume the role of the servicer unless a successor servicer is designated. The servicing transfer and operational transitions may have a negative impact on the transactions’ performance. Concurrently, KBRA has placed the five outstanding classes of CNART 2021-2 and CNART 2023-2 on Watch Developing, reflecting KBRA’s concerns regarding the ongoing financial health of the servicer, Byrider. With today’s placements, all KBRA’s outstanding ratings on the CNART transactions are on Watch.

The table below displays the current capital structures and the Watch Placements undertaken in this review. To date, the securities have received timely interest payments; however, two classes had previously been lowered to CCC (sf) and one class to CC (sf) from three transactions, due to deteriorating collateral credit performance and decreased overcollateralization. These classes have an increased risk of principal loss and are susceptible to interest shortfalls in the future.

Byrider, dba CarNow Acceptance Company, operated a used vehicle retailer in the U.S. that focused on both the sale and financing of vehicles to subprime borrowers whose FICO scores are 650 and below. Byrider was founded in 1989 and was acquired by Altamont Capital Partners in May 2011. Byrider’s business model consisted of vehicle acquisition, reconditioning, sales, underwriting, financing, loan servicing and after-sale support. Since September 2024, Byrider no longer originates auto loans.

KBRA will continue to monitor the performance of the transactions and will seek to resolve or update the Watch Placements within 90 days.

For additional information regarding a specific transaction, see the list below to access ratings, reports, and disclosures:

Methodologies