Frequently Asked Questions
Listed below are the common investor questions regarding CPS Notes
More information is available in the Prospectus. Please read the Prospectus carefully, including the section entitled "Risk Factors", before purchasing any notes.
What is a renewable unsecured subordinated note?
What are the available terms and interest rates?
How is the interest calculated and paid?
Will my interest rate change during the note term?
How do I purchase a note?
What is the minimum amount that I can invest?
Can I purchase a note in my IRA, SEP, 401(k), 403(b) or Keogh?
What happens after I invest?
Can I change my mind after purchasing a note?
Do I pay a commission to purchase a note?
What happens when my note matures?
Can I request that CPS repurchase my note prior to maturity?
Can CPS deny my repurchase request for reasons
of death or total permanent disability?
Can I sell my note prior to maturity?
What are the risks related to the notes?
Are the notes insured?
Are the notes rated?
Are the notes secured by any collateral?
What is the priority of the notes?
Can CPS prepay my note prior to maturity?
How long has CPS been offering renewable notes?
What if I have more questions?
A renewable unsecured subordinated note is a promise by Consumer Portfolio Services, Inc. to pay principal and interest to the holder when due. By purchasing a note, you are lending money to CPS. The note represents CPS's obligation to repay your loan with interest.
When the note matures, you can elect repayment of the note and your investment will be returned to you along with any accrued but unpaid interest. However, if neither you nor CPS elect repayment at maturity, the note automatically renews for another term and continues to earn interest.
CPS is issuing the notes as a new financing.
What are the available terms and interest rates?
CPS notes have terms to maturity ranging from three months to ten years. Depending on CPS's capital needs, certain note terms may not always be available.
Interest rates are determined at the time a note is purchased or renewed by its term to maturity and principal amount. Generally, notes with higher principal balances pay higher rates of interest. Check the Interest Rates section of this site for a list of current interest rates.
Interest is compounded daily at an annual rate based on a 365-day year. Interest payments are made via direct deposit into the account you specify on the direct deposit form.
You can choose to receive your interest payments monthly, quarterly, semiannually, annually or at maturity. If you select the monthly payment option, you can also choose the day on which you want your interest paid.
If the monthly interest payment date you select is within five business days of the note issue date, your first interest payment will be made the following month and will include all of the interest earned since the issue date.
For all other payment options, interest is paid on the quarterly, semiannual or annual anniversary of the note issue date or at maturity.
If no payment option is selected, interest is paid at maturity. If a payment date falls on a Saturday, Sunday or legal holiday, the interest payment will be made on the next business day.
No. The interest rate is fixed on the note issue date and remains unchanged until the note matures. If you choose to renew your note at maturity, the interest rate for the new term will be the rate then being offered to other holders with similar aggregate note portfolios for notes with the same term; or the rate specified by CPS if we are not then issuing new notes with the same term.
$1,000. There is no maximum amount and odd amounts, such as $8,462.57, are acceptable. If you purchase multiple notes with different terms or multiple notes for different investors, the principal amount of each note must be at least $1,000. You may not aggregate several smaller notes to meet the $1,000 minimum.
Yes, if your custodian allows investments in securities that are not DTC eligible. Your investment custodian should complete the Subscription Agreement and the type of entity that will own the note should be identified next to the Form of Ownership box entitled "Other". The address of the custodian should be listed as the primary address. Your address should be listed as the secondary address so you can receive copies of the correspondence sent to the custodian. The custodian should issue the check for your investment. If your custodian disallows investments in non-DTC eligible securities, please call 888-776-1887 for information about custodians who accept these investments.
After your subscription agreement is accepted, you will receive a written confirmation of your investment that includes pertinent information about the notes you purchase such as the note number, the issue date, interest payment schedule and the interest rate.
The notes are issued in book entry form, which means that no physical note is created. Evidence of your ownership is provided by the confirmation.
You will also receive quarterly statements that summarize the activity in your account and a Form 1099 INT each January that lists the interest income that was reported to the Internal Revenue Service for the previous year.
Yes. You can rescind your initial investment within five business days of the postmark date of your purchase confirmation without incurring an early redemption penalty. If you rescind your investment, we will promptly return the principal amount of your note. You will not earn any interest for the days your note was outstanding. You may also be eligible to rescind your initial investment for other reasons, which are described in the Prospectus.
No. You do not pay a commission to purchase or renew a note.
You will be notified prior to the maturity date that your note is coming due. An interest rate supplement will be provided that lists the current interest rates for the available note terms and aggregate principal amounts. As long as the notes are still available and we have not elected to repay your note, you will have the opportunity to choose one of the following options:
Notes can be redeemed before their maturity dates only upon the death or total permanent disability of the investor. Early note redemptions prior to the maturity date, as originally stated or as extended upon renewal, for reasons other than the death or total permanent disability of the investor, are prohibited.
The aggregate principal amount of notes that CPS is obligated to repurchase prior to maturity for reasons of death or total permanent disability in a single calendar quarter is limited to the greater of $1,000,000 or 2% of the aggregate principal amount of all notes outstanding at the end of the previous quarter.
Notes not redeemed prior to maturity in the quarter requested may be redeemed the next quarter, subject to the same limitation. Please read the section of the Prospectus entitled 'Description of the Notes, Redemption or Repurchase Prior to Stated Maturity' for more information.
There is no active secondary trading market for the notes. The notes are not negotiable instruments and cannot be transferred without the prior written consent of CPS. If you arrange for the private sale of your note prior to maturity, you need to notify CPS of your intention to sell the note and obtain our approval to do so.
You could lose the principal amount of your note plus all accrued but unpaid interest if CPS encounters serious financial difficulties. Please read the section of the Prospectus entitled "Risk Factors", which describes the material risks related to the notes and to CPS. Unfavorable outcomes regarding any of these risks could impair CPS's ability to make note payments.
Whether the notes are appropriate for you depends on your risk profile, return objectives, investment experience, the diversity of your investment portfolio and your ability to withstand a loss of interest or principal.
The notes may not be suitable for all investors.
No. The notes are not insured by the Federal Deposit Insurance Corporation, the Securities Investor Protection Corporation or any other agency or company. They are obligations of CPS only.
CPS has not requested a rating for the notes. However, third parties may independently rate them.
No. The notes are unsecured. Note holders do not have a lien on any CPS assets.
The notes are subordinate to all other existing and future secured, unsecured, senior and subordinate debt obligations of Consumer Portfolio Services, Inc.
If the company encounters serious financial difficulties, principal and interest payments to secured and higher priority creditors would take precedence over payments to the note holders.
The company currently has substantial debt and is likely to incur or issue additional debt that would rank senior in priority of repayment to the notes. See the Prospectus for more details.
Yes. After giving you thirty days written notice, CPS can repay your note at par prior to maturity without your consent. At that time, you would receive your original principal amount and all accrued but unpaid interest earned through the repayment date.
We began issuing notes in May of 2005.
Call CPS Notes Investor Services at 888-776-1887 during regular business hours.