Carvana Auto Receivables Trust 2022-P2 Annual Performance Review

I’m putting together this guide to help you understand how the Carvana Auto Receivables Trust 2022-P2 performed over the last year.

First, remember that this isn't a typical company. It doesn't sell cars or software. It is a "securitization trust"—a financial container holding a specific pool of car loans originated by Carvana. Investors buy a slice of the monthly payments made by these car buyers. The 2022-P2 issuance, which closed in May 2022, holds approximately $500 million in subprime and non-prime auto loans.

1. How the Trust Performs

This trust acts as a "pass-through" vehicle. It has no employees or CEO; it simply collects monthly car payments and distributes that cash to investors. Because the pool of loans is fixed, the trust’s performance depends entirely on whether car buyers keep paying. The trust has consistently paid principal and interest to Class A, B, C, and D noteholders according to the payment schedule established in 2022.

2. Financial Health & Compliance

The money flowing to investors remains secure. The "Servicer" (Bridgecrest Credit Company) and other key parties have confirmed they are meeting all their contractual duties. Every major player passed their annual audit, confirming that the operational "plumbing" of this trust is functioning as intended. The trust maintains a "Reserve Account" of approximately $2.5 million to cover any temporary gaps in payment collections.

3. Operational Improvements

Carvana has implemented a more robust process to ensure reporting accuracy. They established a centralized digital hub for all payment reports, ensuring that accountants and regulators are reviewing the same, finalized data. Additionally, new attorney oversight has been integrated into the reporting process. These upgrades ensure that all monthly and annual reports reach the SEC on time, providing better transparency and verifying that payment details are accurate.

4. Key Risks to Consider

Since this is a fixed pool of loans, the primary risk is borrower default. If buyers stop paying, the cash flow to the trust decreases.

• No "Safety Net": There is no insurance company guaranteeing these payments. You rely solely on the borrowers' ability to pay and the underlying value of the vehicles. If a borrower defaults, the car is repossessed and sold. If the sale price is less than the remaining loan balance, the trust’s cash flow is reduced.
• Diversification: The pool includes thousands of individual loans, and no single borrower represents more than 0.01% of the total pool. This diversification helps ensure that an individual default has a negligible impact on your overall return.

5. Future Outlook

The trust is performing as expected. Because it does not add new loans, the pool will naturally shrink as borrowers pay off their debts. With the new reporting controls now in place, administrative processes are more stable. As the pool shrinks, the credit enhancement (the protection) for senior investors effectively grows, providing a larger margin of safety as the trust nears its final maturity date.

Investor Tip: To track your investment, focus on the monthly distribution reports. These documents will show you the current balance of the pool and the pace at which the loans are being paid off, which is the best indicator of how your specific slice of the trust is evolving.