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FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES
 9 Months Ended
Sep. 30, 2025
Receivables [Abstract]  
FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES 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.

Total Finance Receivables, Net

Total finance receivables, net were as follows (in millions):
December 31,
2024		September 30,
2025
Consumer
Retail installment contracts, gross$79,573 $79,004 
Finance leases, gross8,357 9,287 
Retail financing, gross87,930 88,291 
Unearned interest supplements from Ford and affiliated companies(4,598)(4,333)
Consumer finance receivables 83,332 83,958 
Non-Consumer
Dealer financing 37,384 35,525 
Other financing2,098 2,127 
Non-Consumer finance receivables 39,482 37,652 
Total recorded investment $122,814 $121,610 
Recorded investment in finance receivables$122,814 $121,610 
Allowance for credit losses(864)(897)
Total finance receivables, net$121,950 $120,713 
Net finance receivables subject to fair value (a)$114,069 $111,962 
Fair value (b)113,545 112,853 
__________
(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 third quarter of 2024 and 2025 was $137 million and $146 million, respectively, and for the first nine months of 2024 and 2025 was $376 million and $431 million, respectively, and is included in Retail financing on our consolidated income statements.

At December 31, 2024 and September 30, 2025, accrued interest was $336 million and $289 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 September 30, 2025 and gross charge-offs during the first nine months of 2025 were as follows (in millions):
Amortized Cost Basis by Origination Year
Prior to 202120212022202320242025TotalPercent
Consumer
31-60 days past due$67 $67 $136 $201 $237 $95 $803 1.0 %
Greater than 60 days past due23 25 48 67 77 41 281 0.3 
Total past due90 92 184 268 314 136 1,084 1.3 
Current1,629 2,881 7,644 17,439 29,412 23,869 82,874 98.7 
Total$1,719 $2,973 $7,828 $17,707 $29,726 $24,005 $83,958 100.0 %
Gross charge-offs$44 $43 $96 $142 $148 $17 $490 
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 September 30, 2025 and gross charge-offs during the first nine months of 2025 were as follows (in millions):
Amortized Cost Basis by Origination Year
Dealer Loans
Prior to 202120212022202320242025TotalWholesale LoansTotalPercent
Group I$295 $70 $33 $171 $82 $169 $820 $30,457 $31,277 88.1 %
Group II26 8 3 34 47 34 152 3,519 3,671 10.3 
Group III— — — 1 1 5 7 526 533 1.5 
Group IV— — — — 1 5 6 38 44 0.1 
Total (a)$321 $78 $36 $206 $131 $213 $985 $34,540 $35,525 100.0 %
Gross charge-offs$— $— $— $3 $— $— $3 $10 $13 
__________
(a)Total past due dealer financing receivables at September 30, 2025 were $6 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 September 30, 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.
NOTE 4. FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES (Continued)

An analysis of the allowance for credit losses related to finance receivables for the periods ended September 30 was as follows (in millions):
Third Quarter 2024Third Quarter 2025
ConsumerNon-ConsumerTotal ConsumerNon-ConsumerTotal
Allowance for credit losses
Beginning balance$876 $4 $880 $885 $5 $890 
Charge-offs (155)— (155)(177)1 (176)
Recoveries41 — 41 48 — 48 
Provision for credit losses99 — 99 134 1 135 
Other (a)(3)— (3)— — — 
Ending balance$858 $4 $862 $890 $7 $897 
First Nine Months 2024First Nine Months 2025
ConsumerNon-ConsumerTotalConsumerNon-ConsumerTotal
Allowance for credit losses
Beginning balance$879 $3 $882 $860 $4 $864 
Charge-offs(408)(7)(415)(490)(13)(503)
Recoveries122 3 125 133 — 133 
Provision for credit losses277 5 282 374 15 389 
Other (a)(12)— (12)13 1 14 
Ending balance$858 $4 $862 $890 $7 $897 
__________
(a)Primarily represents amounts related to foreign currency translation adjustments.

During the third quarter of 2025, the allowance for credit losses increased $7 million, reflecting an increase in consumer receivables. During the first nine months of 2025, the allowance for credit losses increased $33 million, primarily reflecting economic outlook assumptions.