Drive Auto Receivables Trust 2024-1 Annual Report - How They Did This Year

I’m here to help you break down the latest report for Drive Auto Receivables Trust 2024-1. We’ll look at what’s happening with this investment in plain English.

1. What does this trust do and how did it perform?

This trust is a legal entity created to hold $1.25 billion in subprime auto loans from Santander Consumer USA. It collects loan payments and passes them to investors. You hold notes that act like a slice of these loan payments. In 2025, the trust paid out $212 million to investors, sticking to its original payment schedule despite high interest rates.

2. Financial performance

The trust brought in $245 million in cash this year. After paying $18 million in servicing fees and $15 million in interest, it had enough cash left to meet all obligations. The average interest rate on the loans is 18.4%, which covers the trust's costs and your interest. The annual loss rate is 4.2%, which is right in line with expectations.

3. Major wins and challenges

A group of investors sued the indenture trustee, Wilmington Trust, in early 2026. This lawsuit involves other deals, but it is worth watching since this trustee manages your investment. On the bright side, the trust is recovering 48% of the balance when a vehicle is repossessed, which is better than the 45% originally expected.

4. Financial health

The trust is following all the rules. Auditors confirmed that Santander is managing the loans correctly. The reserve account—a cash safety net—is fully funded at $12.5 million. Because the loans are being paid off faster than the notes, the trust’s extra collateral has grown to 8.2%, which adds a layer of safety for your investment.

5. Key risks

Beyond the risk that borrowers won't pay—currently at a 1.8% monthly delinquency rate—the lawsuit against the trustee is a concern. If the trustee faces major trouble, it could delay your monthly payments. Also, if borrowers ask to defer payments, it could slow down how quickly you get your money back.

6. Competitive positioning

This trust focuses on subprime auto loans and competes with similar deals from companies like Ally Financial. Its main advantage is Santander’s strong system for managing over 25,000 individual loans. The deal also uses a "sequential pay" structure, meaning senior investors get paid before junior investors, which helps protect your money.

7. Future outlook

The trust is now in "run-off" mode, meaning it is just collecting existing payments rather than adding new loans. We expect the debt balance to drop by $150 million over the next year.

8. Market trends

Used car values dropped 6% this year, which means repossessed cars sell for less. Additionally, regulators are watching subprime lenders more closely. New industry rules could increase costs for the servicer, which might affect the cash available to the trust.

Investor Takeaway: This trust is currently performing as expected, with a solid cash reserve and a "sequential pay" structure that prioritizes your returns. While the lawsuit against the trustee and the decline in used car values are worth monitoring, the trust's ability to recover more than expected on repossessed vehicles remains a positive sign for your investment.