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Finance Receivables
 3 Months Ended
Mar. 31, 2025
Receivables [Abstract]  
Financing Receivables FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES
We manage finance receivables as “consumer” and “non-consumer” portfolios. The receivables are generally secured by the vehicles, inventory, or other property being financed.

Finance receivables are recorded at the time of origination or purchase at fair value and are subsequently reported at amortized cost, net of any allowance for credit losses.

For all finance receivables, we define “past due” as any payment, including principal and interest, that is at least 31 days past the contractual due date.
NOTE 4. FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES (Continued)

Total Finance Receivables, Net

Total finance receivables, net were as follows (in millions):
December 31,
2024		March 31,
2025
Consumer
Retail installment contracts, gross$79,573 $78,274 
Finance leases, gross8,357 8,841 
Retail financing, gross87,930 87,115 
Unearned interest supplements from Ford and affiliated companies(4,598)(4,469)
Consumer finance receivables 83,332 82,646 
Non-Consumer
Dealer financing 37,384 34,941 
Other financing2,098 2,465 
Non-Consumer finance receivables 39,482 37,406 
Total recorded investment $122,814 $120,052 
Recorded investment in finance receivables$122,814 $120,052 
Allowance for credit losses(864)(881)
Total finance receivables, net$121,950 $119,171 
Net finance receivables subject to fair value (a)$114,069 $110,846 
Fair value (b)113,545 110,801 
__________
(a)Net finance receivables subject to fair value exclude finance leases. 
(b)The fair value of finance receivables is categorized within Level 3 of the fair value hierarchy.

Finance leases are comprised of sales-type and direct financing leases. Financing revenue from finance leases for the first quarter of 2024 and 2025 was $117 million and $137 million, respectively, and is included in Retail financing on our consolidated income statements.

At December 31, 2024 and March 31, 2025, accrued interest was $336 million and $311 million, respectively, which we report in Other assets on our consolidated balance sheets.

Included in the recorded investment in finance receivables were consumer and non-consumer receivables that have been sold for legal purposes in securitization transactions but continue to be reported in our consolidated financial statements. See Note 6 for additional information.
NOTE 4. FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES (Continued)

Credit Quality

Consumer Portfolio. Credit quality ratings for consumer receivables are based on aging. Receivables over 60 days past due are in intensified collection status.

The credit quality analysis of consumer receivables at December 31, 2024 and gross charge-offs during the year ended December 31, 2024 were as follows (in millions):

Amortized Cost Basis by Origination Year
Prior to 202020202021202220232024TotalPercent
Consumer
31-60 days past due$43 $93 $104 $187 $242 $203 $872 1.0 %
Greater than 60 days past due15 27 35 57 82 59 275 0.4 
Total past due58 120 139 244 324 262 1,147 1.4 
Current788 3,162 5,465 12,298 24,189 36,283 82,185 98.6 
Total$846 $3,282 $5,604 $12,542 $24,513 $36,545 $83,332 100.0 %
Gross charge-offs$46 $58 $71 $152 $191 $50 $568 

The credit quality analysis of consumer receivables at March 31, 2025 and gross charge-offs during the period ended March 31, 2025 were as follows (in millions):
Amortized Cost Basis by Origination Year
Prior to 202120212022202320242025TotalPercent
Consumer
31-60 days past due$99 $86 $162 $226 $224 $11 $808 1.0 %
Greater than 60 days past due28 26 47 66 63 3 233 0.3 
Total past due127 112 209 292 287 14 1,041 1.3 
Current3,034 4,518 10,659 21,957 34,228 7,209 81,605 98.7 
Total$3,161 $4,630 $10,868 $22,249 $34,515 $7,223 $82,646 100.0 %
Gross charge-offs$19 $16 $35 $50 $45 $1 $166 
Non-Consumer Portfolio. The credit quality of dealer financing receivables is evaluated based on our internal dealer risk rating analysis. We use a proprietary model to assign each dealer a risk rating. This model uses historical dealer performance data to identify key factors about a dealer that we consider most significant in predicting a dealer’s ability to meet its financial obligations. We also consider numerous other financial and qualitative factors of the dealer’s operations, including capitalization and leverage, liquidity and cash flow, profitability, and credit history with ourselves and other creditors.

Dealers are assigned to one of four groups according to risk ratings as follows:

•Group I – strong to superior financial metrics;
•Group II – fair to favorable financial metrics;
•Group III – marginal to weak financial metrics; and
•Group IV – poor financial metrics, including dealers classified as uncollectible.

We generally suspend credit lines and extend no further funding to dealers classified in Group IV.
NOTE 4. FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES (Continued)

The credit quality analysis of dealer financing receivables at December 31, 2024 and gross charge-offs during the year ended December 31, 2024 were as follows (in millions):
Amortized Cost Basis by Origination Year
Dealer Loans
Prior to 202020202021202220232024TotalWholesale LoansTotalPercent
Group I$270 $63 $97 $47 $231 $245 $953 $33,345 $34,298 91.7 %
Group II13 — 3 1 28 31 76 2,494 2,570 6.9 
Group III— — 2 — 1 4 7 462 469 1.3 
Group IV— — — — — 1 1 46 47 0.1 
Total (a)$283 $63 $102 $48 $260 $281 $1,037 $36,347 $37,384 100.0 %
Gross charge-offs$1 $— $— $— $— $— $1 $6 $7 
__________
(a)Total past due dealer financing receivables at December 31, 2024 were $8 million. 

The credit quality analysis of dealer financing receivables at March 31, 2025 and gross charge-offs during the period ended March 31, 2025 were as follows (in millions):
Amortized Cost Basis by Origination Year
Dealer Loans
Prior to 202120212022202320242025TotalWholesale LoansTotalPercent
Group I$338 $88 $36 $211 $136 $99 $908 $30,780 $31,688 90.7 %
Group II6 2 3 31 11 30 83 2,503 2,586 7.4 
Group III— — — — — 14 14 574 588 1.7 
Group IV— — — 3 — 1 4 75 79 0.2 
Total (a)$344 $90 $39 $245 $147 $144 $1,009 $33,932 $34,941 100.0 %
Gross charge-offs$— $— $— $— $— $— $— $1 $1 
__________
(a)Total past due dealer financing receivables at March 31, 2025 were $7 million.

Non-Accrual of Revenue. The accrual of financing revenue is discontinued at the time a receivable is determined to be uncollectible or when it is 90 days past due. Accounts may be restored to accrual status only when a customer settles all past-due deficiency balances and future payments are reasonably assured. For receivables in non-accrual status, subsequent financing revenue is recognized only to the extent a payment is received. Payments are generally applied first to outstanding interest and then to the unpaid principal balance.

Loan Modifications. Consumer and non-consumer receivables that have a modified interest rate and/or a term extension (including receivables that were modified in reorganization proceedings pursuant to the U.S. Bankruptcy Code) are typically considered to be loan modifications. We do not grant modifications to the principal balance of our receivables. If a receivable is modified in a reorganization proceeding, all payment requirements of the reorganization plan need to be met before remaining balances are forgiven.
NOTE 4. FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES (Continued)

During the collection process, we may offer a term extension to a customer experiencing financial difficulty. During the extension period, finance charges continue to accrue. If the customer's financial difficulty is not temporary, but we believe the customer is willing and able to repay their loan at a lower payment amount, we may offer to modify the interest rate and/or extend the term in order to lower the scheduled monthly payment. In those cases, the outstanding balance generally remains unchanged. The use of interest rate modifications and term extensions helps us mitigate financial loss. Term extensions may assist in cases where we believe the customer will recover from short-term financial difficulty and resume regularly scheduled payments. Before offering an interest rate modification or term extension, we evaluate and take into account the capacity of the customer to meet the revised payment terms. Although the granting of an extension could delay the eventual charge-off of a receivable, we are typically able to repossess and sell the related collateral, thereby mitigating the loss. The effect of most loan modifications made to borrowers experiencing financial difficulty is included in the historical trends used to measure the allowance for credit losses. A loan modification that improves the delinquency status of a borrower reduces the probability of default, which results in a lower allowance for credit losses. At March 31, 2025, an insignificant portion of our total finance receivables portfolio had been granted a loan modification and these modifications are generally treated as a continuation of the existing loan.

Allowance for Credit Losses

The allowance for credit losses represents our estimate of the lifetime expected credit losses inherent in finance receivables as of the balance sheet date. The adequacy of the allowance for credit losses is assessed quarterly.

Adjustments to the allowance for credit losses are made by recording charges to Provision for credit losses on our consolidated income statements. The uncollectible portion of a finance receivable is charged to the allowance for credit losses at the earlier of when an account is deemed to be uncollectible or when an account is 120 days delinquent, taking into consideration the financial condition of the customer or borrower, the value of the collateral, recourse to guarantors, and other factors.

Charge-offs on finance receivables include uncollected amounts related to principal, interest, late fees, and other allowable charges. Recoveries on finance receivables previously charged off as uncollectible are credited to the allowance for credit losses. In the event we repossess the collateral, the receivable is charged off and the collateral is recorded at its estimated fair value less costs to sell and reported in Other assets on our consolidated balance sheets.

An analysis of the allowance for credit losses related to finance receivables for the periods ended March 31 was as follows (in millions):
First Quarter 2024First Quarter 2025
ConsumerNon-ConsumerTotal ConsumerNon-ConsumerTotal
Allowance for credit losses
Beginning balance$879 $3 $882 $860 $4 $864 
Charge-offs (129)— (129)(166)(1)(167)
Recoveries39 3 42 40 — 40 
Provision for credit losses91 (3)88 135 5 140 
Other (a)(3)— (3)3 1 4 
Ending balance$877 $3 $880 $872 $9 $881 
__________
(a)Primarily represents amounts related to foreign currency translation adjustments.
During the first quarter of 2025, the allowance for credit losses increased $17 million, reflecting deterioration of the economic outlook, offset partially by lower consumer receivables.