Problem
Carvana's Success Rides on Used-Car Loans.
i. What are Carvana's motive(s) to turbocharge its revenue?
ii. Carvana records income on sales of car loans, or securitization transactions. What are securitizations? How does auto-loan securitization work according to this article?
iii. Under current market conditions, Carvana is able to sell securitized portfolios of car loans at a premium to their face value. Why are investors willing to pay the premiums?
iv. Why are Carvana's gains on the loan sales "a critical audit matter"?