Santander Drive Auto Receivables Trust 2023-3 Annual Report - How They Did This Year

I’m here to help you break down the annual report for the Santander Drive Auto Receivables Trust 2023-3. Think of this as a "plain English" guide to understanding this investment without the confusing financial jargon.

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

This trust is a legal container created on July 19, 2023, to hold a $1.35 billion pool of car loans from Santander Consumer USA. It acts as a pass-through entity. It collects monthly payments from car buyers and distributes that cash to investors who hold the trust's notes. In 2025, the trust continued its primary job: collecting payments and paying investors based on the priority rules set when the trust began.

2. Financial performance

The trust doesn't earn "profit" like a typical company. Its performance depends on how many car buyers pay their loans on time. In 2025, the trust operated exactly as planned. Santander Consumer USA collected payments and sent them to the trustee on schedule. Investors earn a return based on the interest from the car loans, minus a 1% servicing fee and the interest paid to noteholders. The trust’s performance is currently tracking within the original expectations.

3. Major wins and challenges

The Win: The trust passed all its annual compliance audits. Independent accountants confirmed that the team managing the $1.35 billion in loans is handling payments and reporting correctly. Everything is working as intended.

The Challenge: There is a legal issue involving the trustee, Wilmington Trust, regarding unrelated lawsuits. While this doesn't affect the car loans directly, it is a background factor regarding the administrative stability of the entity managing the legal paperwork.

4. Financial health

The trust keeps a "Reserve Account" with about $13.5 million to cover any missed payments. As of late 2025, this cash cushion is healthy. The trust’s "debt" is simply the remaining balance of the notes, which shrinks every month as car buyers pay off their loans. There have been no defaults or missed payments.

5. Key risks

• Legal Risk: The litigation involving Wilmington Trust could cause administrative headaches or transition costs if they need to be replaced.
• Credit Risk: If too many car buyers stop paying their loans, the cash cushion might not be enough to cover losses. This would primarily hurt investors in the junior classes of notes.
• Prepayment Risk: If interest rates change, borrowers might refinance their loans. This would pay off the loans faster than expected, reducing the total interest you earn.

6. Leadership and strategy

There are no changes to the original 2023 agreement. Santander Consumer USA remains responsible for managing the loans until the pool is paid off. The trust is in "maintenance mode," continuing to collect payments and pay investors until the loans are fully settled.

7. Market transparency

The trust follows SEC rules for transparency. It provides monthly reports showing exactly how the loans are performing, including how many borrowers are behind on their payments.

Final Thought for Investors: This trust is designed to be a predictable, "set it and forget it" investment. Because it is a closed pool of loans, your main focus should be on the monthly performance reports provided by the trust. If you are considering this investment, check the most recent monthly report to see if the rate of late payments is staying within the range you are comfortable with.