Santander Drive Auto Receivables Trust 2023-2 Annual Report

I’ve put together this guide to help you understand how the Santander Drive Auto Receivables Trust 2023-2 performed this year.

First, a quick clarification: This isn't a typical company. It is an "Auto Receivables Trust." Think of it as a large bucket holding thousands of car loans. Investors put money into this bucket. As borrowers make their monthly payments, that money flows back to you. Because of this, the trust has no employees, CEOs, or products like a standard business.

1. What is this trust and how did it perform?

Created in May 2023, this trust bundles subprime and non-prime car loans from Santander Consumer USA. It started with about $1.46 billion in loans. Its only job is to collect monthly payments and pass that cash to investors through a set payment order. As of late 2025, the trust is operating as planned, and the servicers are meeting all required obligations.

2. Financial performance

Since this is a trust, it doesn't report "profit" or "revenue." Instead, we track if cash flows as expected. We measure this using the loan loss rate and the rate of late payments. The trust holds a $14.6 million reserve—1% of the original pool—to cover potential losses. Managers, including Santander Consumer USA and Wilmington Trust, are successfully collecting and distributing funds according to the trust's rules.

3. Major wins and challenges

The investment notes have maintained their original credit ratings. The trust navigated high interest rates without triggering any events that would stop payments to investors. While Wilmington Trust is currently defending itself against lawsuits from other, unrelated deals, these legal matters have not impacted the operations or cash flow of this specific trust.

4. Financial health

The trust follows strict rules to ensure you get paid. Filings confirm that all servicing requirements are met, including maintaining an "overcollateralization" amount, which acts as a safety cushion if the loan values drop. Late payments remain within the range predicted in 2023, and the reserve account is fully funded, ensuring you continue to receive your scheduled payments.

5. Key risks

Your main risk is the performance of the car loans. If too many borrowers stop paying, the cash flow into the bucket will shrink, which would hit the lower-rated notes first. Additionally, the trust is sensitive to used car prices; if car values fall, the trust receives less money back when a vehicle is repossessed. You are also relying on the institutions managing the paperwork to maintain their operational standards.

6. Future outlook

The trust is now in its "paydown" phase. The total loan balance is dropping as borrowers pay off their debts, and the trust has already retired many of its short-term notes. You can expect steady, predictable monthly payments. As long as the total loss percentage stays below the established limit, you should receive payments as scheduled until the trust reaches its maturity in 2029.

Decision-making tip: When evaluating this investment, focus on the "paydown" status. Because this trust is designed to wind down over time, it is best suited for those looking for predictable, scheduled cash flow rather than long-term growth. Keep an eye on the monthly loss reports—as long as those figures stay within the trust's original projections, the structure is performing exactly as intended.