CAF provides financing to qualified retail customers purchasing vehicles from CarMax. CAF provides us the opportunity to capture additional profits, cash flows and sales while managing our reliance on third-party finance sources. Management regularly analyzes CAF’s operating results by assessing profitability, the performance of the auto loans receivable, including trends in credit losses and delinquencies, and CAF direct expenses. This information is used to assess CAF’s performance and make operating decisions, including resource allocation.

We typically use securitizations or other funding arrangements to fund loans originated by CAF, as discussed in Note 1(F). CAF income primarily reflects the interest and fee income generated by the auto loans receivable less the interest expense associated with the debt issued to fund these receivables, a provision for estimated loan losses and direct CAF expenses.

CAF income does not include any allocation of indirect costs. Although CAF benefits from certain indirect overhead expenditures, we have not allocated indirect costs to CAF to avoid making subjective allocation decisions. Examples of indirect costs not allocated to CAF include retail store expenses and corporate expenses. In addition, except for auto loans receivable, which are disclosed in Note 4, CAF assets are not separately reported nor do we allocate assets to CAF because such allocation would not be useful to management in making operating decisions.


	Years Ended February 29 or 28
(In millions)	2024		% (1)	2023		% (1)	2022		% (1)
Interest margin:
Interest and fee income	$	1,677.4	9.7	$	1,441.5	8.8	$	1,296.8	8.7
Interest expense	(638.7)		(3.7)	(310.3)		(1.9)	(228.8)		(1.5)
Total interest margin	1,038.7		6.0	1,131.2		6.9	1,068.0		7.2
Provision for loan losses	(310.5)		(1.8)	(317.0)		(1.9)	(141.7)		(0.9)
Total interest margin after provision for loan losses	728.2		4.2	814.2		5.0	926.3		6.2



Direct expenses:
Payroll and fringe benefit expense	(66.5)		(0.4)	(62.8)		(0.4)	(50.5)		(0.3)
Depreciation and amortization	(16.5)		(0.1)	(15.5)		(0.1)	(6.6)		—
Other direct expenses	(76.9)		(0.4)	(72.4)		(0.4)	(67.7)		(0.5)
Total direct expenses	(159.9)		(0.9)	(150.8)		(0.9)	(124.8)		(0.8)
CarMax Auto Finance income	$	568.3	3.3	$	663.4	4.1	$	801.5	5.4

Total average managed receivables	$	17,313.2		$	16,304.3		$	14,934.0