Drive Auto Receivables Trust 2024-2 Annual Report - How They Did This Year

I’m here to help you break down the annual report for Drive Auto Receivables Trust 2024-2. Instead of digging through complex financial jargon, we’ll walk through what this means for you as an investor.

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

This trust is a legal entity created to hold $1.25 billion in subprime auto loans from Santander Consumer USA. As an investor, you own notes backed by these loans. The trust makes money by collecting monthly payments from borrowers. This year, the trust paid $312.5 million in principal and interest to investors, maintaining an average interest rate of 5.85%.

2. Financial performance

The trust earned $84.2 million in interest from the loans. After paying servicing fees and administrative costs, $78.1 million was available for investors. The investment is shrinking as borrowers pay off their loans; currently, 74.8% of the original loan balance remains.

3. Operational updates and risks

All loan servicers passed their audits, and the $25 million reserve fund remains fully stocked to cover potential defaults. While there is a lawsuit involving the trustee, Wilmington Trust, it currently pertains to other deals and does not involve this specific trust.

4. Financial health and liquidity

The trust maintains a 2% reserve fund to ensure stability. It has no corporate debt other than the notes you hold. Currently, the trust holds $12.4 million in cash, which is waiting to be paid out to investors. The debt is tied directly to the $935 million in remaining loans.

5. Key risks to consider

The "Net Loss Rate" is currently 4.2%. If borrowers stop paying, the trust has less money to distribute. Additionally, if interest rates drop, borrowers might refinance their loans elsewhere. This would return your principal faster than expected, which would lower your total interest earnings over the life of the investment.

6. Competitive positioning

The trust operates in the subprime auto market, relying on Santander Consumer USA’s credit-scoring models to manage risk. It also utilizes a "subordination buffer," which provides an extra layer of protection for senior investors if loan losses occur.

7. Strategy and management

The trust updated its rules in March 2025 to clarify procedures for replacing the trustee if necessary. The management team remains focused on collecting payments from the 3.1% of loans that are currently behind schedule.

8. Future outlook

The trust’s performance is tied to unemployment rates and used car prices. If losses remain at the current 4.2% rate, the trust is projected to conclude its operations by late 2029. The primary goal for the coming year is to continue collecting payments while protecting the reserve fund.

9. Regulatory environment

Regulators are increasing oversight of auto lenders to ensure fair practices. While this results in higher administrative costs for Santander Consumer USA, it also provides greater transparency, which helps in monitoring the quality of the underlying assets.

Note to the investor: This report confirms the trust is following its established rules and that the loan collectors are actively managing the portfolio. The trust is currently profitable and meeting its payment obligations to investors. When deciding whether to hold or adjust your position, keep an eye on the Net Loss Rate—as long as it stays near current levels, the trust remains on track to meet its projected timeline.