Credit Acceptance Announces 3rd Quarter Earnings

SOUTHFIELD, MI – Credit Acceptance Corporation (NasdaqNM: CACC) (the “Company”) announced consolidated net income for the three months ended September 30, 2004 of $12,742,000 or $0.31 per diluted share compared to $8,818,000 or $0.20 per diluted share for the same period in 2003. For the nine months ended September 30, 2004, consolidated net income was $26,878,000 or $0.65 per diluted share compared to $18,419,000 or $0.43 per diluted share for the same period in 2003.

The increase in consolidated net income for the three months ended September 30, 2004 compared to the same period in 2003 was primarily due to: (i) an increase in finance charge income due to increases in the average annualized yield on the loan portfolio and the average size of the loan portfolio during 2004 and (ii) an increase in foreign exchange gain due to an increase in the fair value of forward contracts during 2004. Partially offsetting these items was a decrease in ancillary product income due to the Company’s change in accounting policy during the first quarter of 2004 for recognizing income on third party vehicle service contracts sold.

The increase in consolidated net income for the nine months ended September 30, 2004 compared to the same period in 2003 was primarily due to: (i) an increase in finance charge income due to increases in the average size of the loan portfolio and the average annualized yield on the loan portfolio during 2004 and (ii) the United Kingdom impairment expenses recognized during the second quarter of 2003. Partially offsetting these items were: (i) a decrease in ancillary product income due to the Company’s change in accounting policy during the first quarter of 2004 for recognizing income on third-party vehicle service contracts sold and (ii) an increase in the provision for credit losses primarily due to the Company’s change in estimate during the first quarter of 2004 for recording losses on its loan portfolio and the Company’s revised methodology during the first quarter of 2004 for calculating finance charge income and the related provision for earned but unpaid servicing fees.

Excluding the impact of certain items detailed in the table below, consolidated adjusted net income for the three months ended September 30, 2004 was $13,193,000 or $0.32 per diluted share compared to $9,197,000 or $0.21 per diluted share for the same period in 2003. The increase was primarily due to: (i) an increase in finance charge income due to increases in the average annualized yield on the loan portfolio and the average size of the loan portfolio during 2004 and (ii) an increase in ancillary product income due to increases in revenue per vehicle service contract sold and the number of third party vehicle service contract products sold during 2004.

Excluding the impact of certain items detailed in the table below, consolidated adjusted net income for the nine months ended September 30, 2004 was $37,239,000 or $0.90 per diluted share compared to $24,638,000 or $0.57 per diluted share for the same period in 2003. The increase was primarily due to: (i) an increase in finance charge income due to increases in the average size of the loan portfolio and the average annualized yield on the loan portfolio during 2004 and (ii) a decrease in the provision for credit losses inherent in the loan portfolio due to recoveries on previously charged-off loans exceeding credit losses during 2004.

Reconciliation of Reported Net Income to Adjusted Net Income
The Company’s reported net income includes certain items set forth in the table below that the Company believes should be considered in measuring the performance of the business when comparing current period results with the same period in the prior year. Management believes this information is important because it allows shareholders to better compare results between periods and make more informed assumptions about future results. In addition, the Company uses adjusted net income for performance purposes in determining bonus compensation paid under the Company’s incentive compensation plans.

The Company defines adjusted economic profit as adjusted net operating profit after-tax less an imputed cost of equity. Adjusted economic profit measures how efficiently the Company utilizes capital. To consider the cost of both debt and equity, the Company’s calculation of adjusted economic profit deducts from adjusted net income a cost of equity equal to 10% of average equity, which approximates the S&P 500′s rate of return since 1965. Management uses economic profit to assess the Company’s performance as well as to make capital allocation decisions. Management believes this information is important to shareholders because it allows shareholders to compare the returns earned by the Company investing capital in its core business with the return they could expect if the Company returned capital to shareholders and they invested in other securities.

Description of Credit Acceptance Corporation
Since 1972, Credit Acceptance has provided auto loans to consumers, regardless of their credit history. Our product is offered through a nationwide network of automobile dealers who benefit by selling vehicles to consumers who otherwise could not obtain financing, by repeat and referral sales generated by these same customers, and from sales to customers responding to advertisements for our product, but who actually end up qualifying for traditional financing.

Without our product, consumers are often unable to purchase a vehicle or they purchase an unreliable one and are not provided the opportunity to improve their credit standing. As we report to the three national credit reporting agencies, a significant number of our customers improve their lives by improving their credit score and move on to more traditional sources of financing. Credit Acceptance is publicly traded on the NASDAQ National Market under the symbol CACC. For more information, visit www.creditacceptance.com.

Cautionary Statement Regarding Forward Looking Information – Certain statements in this release that are not historical facts, such as those using terms like “believes,” “expects,” “anticipates,” “assumptions,” “forecasts,” “estimates” and those regarding the Company’s future results, plans and objectives, are “forward-looking statements” within the meaning of the federal securities laws. These forward-looking statements represent the Company’s outlook only as of the date of this release. While the Company believes that its forward-looking statements are reasonable, actual results could differ materially since the statements are based on current expectations, which are subject to risks and uncertainties. Factors that might cause such a difference include the following:

• the Company’s potential inability to accurately forecast and estimate the amount and timing of future collections,

• increased competition from traditional financing sources and from non-traditional lenders,

• the unavailability of funding at competitive rates of interest,

• the Company’s potential inability to continue to obtain third party financing on favorable terms,

• the Company’s potential inability to generate sufficient cash flow to service its debt and fund its future operations,

• adverse changes in applicable laws and regulations,

• adverse changes in economic conditions,

• adverse changes in the automobile or finance industries or in the non-prime consumer finance market,

• the Company’s potential inability to maintain or increase the volume of automobile loans,

• an increase in the amount or severity of litigation against the Company,

• the loss of key management personnel or the inability to hire qualified personnel,

• the effect of terrorist attacks and potential attacks, and

• various other factors discussed in the Company’s reports filed with the Securities and Exchange Commission.

Other factors not currently anticipated by management may also materially and adversely affect the Company’s results of operations. The Company does not undertake, and expressly disclaims any obligation, to update or alter its statements whether as a result of new information, future events or otherwise, except as required by applicable law.