Leasing

12 Months Ended

Dec. 31, 2021

Leases [Abstract]

Leasing

Leasing

Ally as the Lessee

We have operating leases for our corporate facilities, which have remaining lease terms of 7 months to 10 years. Most of the property leases have fixed payment terms with annual fixed-escalation clauses and include options to extend the leases for periods that range from 1 to 15 years. Some of those lease agreements also include options to terminate the leases in periods that range from approximately 5 to 6 years after the commencement of the leases. We have not included any of these term extensions or termination provisions in our estimates of the lease term, as we do not consider it reasonably certain that the options will be exercised.

We also have operating leases for a fleet of vehicles that is used by our sales force for business purposes, with noncancelable lease terms of 367 days. Thereafter, the leases are month-to-month, up to a maximum of 48 months from inception.

During the years ended December 31, 2021, and December 31, 2020, we paid $51 million and $49 million in cash for amounts included in the measurement of lease liabilities at December 31, 2021, and December 31, 2020, respectively. These amounts are included in net cash provided by operating activities in the Consolidated Statement of Cash Flows. During the years ended December 31, 2021, and December 31, 2020, we obtained $361 million and $93 million, respectively, of ROU assets in exchange for new lease liabilities. For the year ended December 31, 2021, this balance included a new corporate facility in Charlotte, North Carolina, which we executed a purchase agreement on in July 2021, and reclassified the ROU asset to property and equipment and satisfied the finance lease liability. As of December 31, 2021, the weighted-average remaining lease term of our operating lease portfolio was 6 years, and the weighted-average discount rate was 1.96%, compared to 7 years and 2.21% as of December 31, 2020.

The following table presents future minimum rental payments we are required to make under operating leases that have commenced as of December 31, 2021, and that have noncancelable lease terms expiring after December 31, 2021.

Year ended December 31, ($ in millions)
2022	$	41
2023	32
2024	26
2025	21
2026	20
2027 and thereafter	46
Total undiscounted cash flows	186
Difference between undiscounted cash flows and discounted cash flows	(11)
Total lease liability	$	175

In March 2021, we commenced the lease for a new corporate facility in Charlotte, North Carolina, which included an underlying purchase option. We provided notice of our intent to exercise the purchase option in April 2021, and executed on the purchase agreement in July 2021. Additionally, we agreed to lease a portion of this corporate facility in exchange for $13 million in future lease payments over a ten year lease term. During the year ended December 31, 2021, we recognized $1 million of income associated with this lease agreement.

The following table details the components of total net operating lease expense.

Year ended December 31, ($ in millions)	2021		2020		2019
Operating lease expense	$	46	$	46	$	45
Variable lease expense	7		8		8
Total lease expense, net (a)	$	53	$	54	$	53

(a)Included in other operating expenses in our Consolidated Statement of Income.

Ally as the Lessor

Investment in Operating Leases

We purchase consumer operating lease contracts and the associated vehicles from dealerships after those contracts are executed by the dealers and the consumers. The amount we pay a dealer for an operating lease contract is based on the negotiated price for the vehicle less vehicle trade-in, down payment from the consumer, and available automotive manufacturer incentives. Under the operating lease, the consumer is obligated to make payments in amounts equal to the amount by which the negotiated purchase price of the vehicle (less any trade-in value, down payment, or available manufacturer incentives) exceeds the contract residual value (including residual support) of the vehicle at lease termination, plus operating lease rental charges. The customer can terminate the lease at any point after commencement, subject to additional charges and fees. Both the consumer and the dealership have the option to purchase the vehicle at the end of the lease term, which can range from 24 to 60 months, at the residual value of the vehicle, however it is not reasonably certain this option will be exercised and accordingly our consumer leases are classified as operating leases. In addition to the charges described above, the consumer is generally responsible for certain charges related to excess mileage or excessive wear and tear on the vehicle. These charges are deemed variable lease payments and, as these payments are not based on a rate or index, they are recognized as net depreciation expense on operating lease assets in our Consolidated Statement of Income as incurred.

When we acquire a consumer operating lease, we assume ownership of the vehicle from the dealer. We require that property damage, bodily injury, collision, and comprehensive insurance be obtained by the lessee on all consumer operating leases. Neither the consumer nor the dealer is responsible for the value of the vehicle at the time of lease termination. When vehicles are not purchased by customers or the receiving dealer at scheduled lease termination, the vehicle is returned to us for remarketing. We generally bear the risk of loss to the extent the value of a leased vehicle upon remarketing is below the expected residual value. At termination, our actual sales proceeds from remarketing the vehicle may be higher or lower than the estimated residual value resulting in a gain or loss on remarketing, which is included in net depreciation expense on operating lease assets in our Consolidated Statement of Income. Excessive mileage or excessive wear and tear on the vehicle during the lease may impact the sales proceeds received upon remarketing. As of December 31, 2021, and December 31, 2020, consumer operating leases with a carrying value, net of accumulated depreciation, of $165 million and $352 million, respectively, were covered by a residual value guarantee of 15% of the manufacturer’s suggested retail price.

The following table details our investment in operating leases.

Year ended December 31, ($ in millions)	2021		2020
Vehicles	$	12,384	$	11,182
Accumulated depreciation	(1,522)		(1,543)
Investment in operating leases, net	$	10,862	$	9,639

The following table presents future minimum rental payments we have the right to receive under operating leases with noncancelable lease terms expiring after December 31, 2021.

Year ended December 31, ($ in millions)
2022	$	1,546
2023	1,140
2024	511
2025	116
2026	8
Total lease payments from operating leases	$	3,321

We recognized operating lease revenue of $1.6 billion, $1.4 billion, and $1.5 billion for the years ended December 31, 2021, 2020, and 2019, respectively. Depreciation expense on operating lease assets includes net remarketing gains recognized on the sale of operating lease assets. The following table summarizes the components of depreciation expense on operating lease assets.

Year ended December 31, ($ in millions)	2021		2020		2019
Depreciation expense on operating lease assets (excluding remarketing gains) (a)	$	914	$	978	$	1,050
Remarketing gains, net	(344)		(127)		(69)
Net depreciation expense on operating lease assets	$	570	$	851	$	981

(a)Includes variable lease payments related to excess mileage and excessive wear and tear on vehicles of $16 million during the year ended December 31, 2021, $23 million during the year ended December 31, 2020, and $19 million during the year ended December 31, 2019.

Finance Leases

In our Automotive Finance operations, we also hold automotive leases that require finance lease treatment as prescribed by ASC Topic 842, Leases. Our total gross investment in finance leases, which is included in finance receivables and loans, net, on our Consolidated Balance Sheet was $470 million and $450 million as of December 31, 2021, and December 31, 2020, respectively. This includes lease payment receivables of $457 million and $437 million at December 31, 2021, and December 31, 2020, respectively, and unguaranteed residual assets of $13 million at both December 31, 2021, and December 31, 2020. Interest income on finance lease receivables was $27 million for the year ended December 31, 2021, and $24 million for the year ended December 31, 2020, and is included in interest and fees on finance receivables and loans in our Consolidated Statement of Income.

The following table presents future minimum rental payments we have the right to receive under finance leases with noncancelable lease terms expiring after December 31, 2021.

Year ended December 31, ($ in millions)
2022	$	159
2023	133
2024	111
2025	58
2026	32
2027 and thereafter	13
Total undiscounted cash flows	506
Difference between undiscounted cash flows and discounted cash flows	(50)
Present value of lease payments recorded as lease receivable	$	456

Leasing

Leasing

Ally as the Lessee

We have operating leases for our corporate facilities, which have remaining lease terms of 7 months to 10 years. Most of the property leases have fixed payment terms with annual fixed-escalation clauses and include options to extend the leases for periods that range from 1 to 15 years. Some of those lease agreements also include options to terminate the leases in periods that range from approximately 5 to 6 years after the commencement of the leases. We have not included any of these term extensions or termination provisions in our estimates of the lease term, as we do not consider it reasonably certain that the options will be exercised.

We also have operating leases for a fleet of vehicles that is used by our sales force for business purposes, with noncancelable lease terms of 367 days. Thereafter, the leases are month-to-month, up to a maximum of 48 months from inception.

During the years ended December 31, 2021, and December 31, 2020, we paid $51 million and $49 million in cash for amounts included in the measurement of lease liabilities at December 31, 2021, and December 31, 2020, respectively. These amounts are included in net cash provided by operating activities in the Consolidated Statement of Cash Flows. During the years ended December 31, 2021, and December 31, 2020, we obtained $361 million and $93 million, respectively, of ROU assets in exchange for new lease liabilities. For the year ended December 31, 2021, this balance included a new corporate facility in Charlotte, North Carolina, which we executed a purchase agreement on in July 2021, and reclassified the ROU asset to property and equipment and satisfied the finance lease liability. As of December 31, 2021, the weighted-average remaining lease term of our operating lease portfolio was 6 years, and the weighted-average discount rate was 1.96%, compared to 7 years and 2.21% as of December 31, 2020.

The following table presents future minimum rental payments we are required to make under operating leases that have commenced as of December 31, 2021, and that have noncancelable lease terms expiring after December 31, 2021.

Year ended December 31, ($ in millions)
2022	$	41
2023	32
2024	26
2025	21
2026	20
2027 and thereafter	46
Total undiscounted cash flows	186
Difference between undiscounted cash flows and discounted cash flows	(11)
Total lease liability	$	175

In March 2021, we commenced the lease for a new corporate facility in Charlotte, North Carolina, which included an underlying purchase option. We provided notice of our intent to exercise the purchase option in April 2021, and executed on the purchase agreement in July 2021. Additionally, we agreed to lease a portion of this corporate facility in exchange for $13 million in future lease payments over a ten year lease term. During the year ended December 31, 2021, we recognized $1 million of income associated with this lease agreement.

The following table details the components of total net operating lease expense.

Year ended December 31, ($ in millions)	2021		2020		2019
Operating lease expense	$	46	$	46	$	45
Variable lease expense	7		8		8
Total lease expense, net (a)	$	53	$	54	$	53

(a)Included in other operating expenses in our Consolidated Statement of Income.

Ally as the Lessor

Investment in Operating Leases

We purchase consumer operating lease contracts and the associated vehicles from dealerships after those contracts are executed by the dealers and the consumers. The amount we pay a dealer for an operating lease contract is based on the negotiated price for the vehicle less vehicle trade-in, down payment from the consumer, and available automotive manufacturer incentives. Under the operating lease, the consumer is obligated to make payments in amounts equal to the amount by which the negotiated purchase price of the vehicle (less any trade-in value, down payment, or available manufacturer incentives) exceeds the contract residual value (including residual support) of the vehicle at lease termination, plus operating lease rental charges. The customer can terminate the lease at any point after commencement, subject to additional charges and fees. Both the consumer and the dealership have the option to purchase the vehicle at the end of the lease term, which can range from 24 to 60 months, at the residual value of the vehicle, however it is not reasonably certain this option will be exercised and accordingly our consumer leases are classified as operating leases. In addition to the charges described above, the consumer is generally responsible for certain charges related to excess mileage or excessive wear and tear on the vehicle. These charges are deemed variable lease payments and, as these payments are not based on a rate or index, they are recognized as net depreciation expense on operating lease assets in our Consolidated Statement of Income as incurred.

When we acquire a consumer operating lease, we assume ownership of the vehicle from the dealer. We require that property damage, bodily injury, collision, and comprehensive insurance be obtained by the lessee on all consumer operating leases. Neither the consumer nor the dealer is responsible for the value of the vehicle at the time of lease termination. When vehicles are not purchased by customers or the receiving dealer at scheduled lease termination, the vehicle is returned to us for remarketing. We generally bear the risk of loss to the extent the value of a leased vehicle upon remarketing is below the expected residual value. At termination, our actual sales proceeds from remarketing the vehicle may be higher or lower than the estimated residual value resulting in a gain or loss on remarketing, which is included in net depreciation expense on operating lease assets in our Consolidated Statement of Income. Excessive mileage or excessive wear and tear on the vehicle during the lease may impact the sales proceeds received upon remarketing. As of December 31, 2021, and December 31, 2020, consumer operating leases with a carrying value, net of accumulated depreciation, of $165 million and $352 million, respectively, were covered by a residual value guarantee of 15% of the manufacturer’s suggested retail price.

The following table details our investment in operating leases.

Year ended December 31, ($ in millions)	2021		2020
Vehicles	$	12,384	$	11,182
Accumulated depreciation	(1,522)		(1,543)
Investment in operating leases, net	$	10,862	$	9,639

The following table presents future minimum rental payments we have the right to receive under operating leases with noncancelable lease terms expiring after December 31, 2021.

Year ended December 31, ($ in millions)
2022	$	1,546
2023	1,140
2024	511
2025	116
2026	8
Total lease payments from operating leases	$	3,321

We recognized operating lease revenue of $1.6 billion, $1.4 billion, and $1.5 billion for the years ended December 31, 2021, 2020, and 2019, respectively. Depreciation expense on operating lease assets includes net remarketing gains recognized on the sale of operating lease assets. The following table summarizes the components of depreciation expense on operating lease assets.

Year ended December 31, ($ in millions)	2021		2020		2019
Depreciation expense on operating lease assets (excluding remarketing gains) (a)	$	914	$	978	$	1,050
Remarketing gains, net	(344)		(127)		(69)
Net depreciation expense on operating lease assets	$	570	$	851	$	981

(a)Includes variable lease payments related to excess mileage and excessive wear and tear on vehicles of $16 million during the year ended December 31, 2021, $23 million during the year ended December 31, 2020, and $19 million during the year ended December 31, 2019.

Finance Leases

In our Automotive Finance operations, we also hold automotive leases that require finance lease treatment as prescribed by ASC Topic 842, Leases. Our total gross investment in finance leases, which is included in finance receivables and loans, net, on our Consolidated Balance Sheet was $470 million and $450 million as of December 31, 2021, and December 31, 2020, respectively. This includes lease payment receivables of $457 million and $437 million at December 31, 2021, and December 31, 2020, respectively, and unguaranteed residual assets of $13 million at both December 31, 2021, and December 31, 2020. Interest income on finance lease receivables was $27 million for the year ended December 31, 2021, and $24 million for the year ended December 31, 2020, and is included in interest and fees on finance receivables and loans in our Consolidated Statement of Income.

The following table presents future minimum rental payments we have the right to receive under finance leases with noncancelable lease terms expiring after December 31, 2021.

Year ended December 31, ($ in millions)
2022	$	159
2023	133
2024	111
2025	58
2026	32
2027 and thereafter	13
Total undiscounted cash flows	506
Difference between undiscounted cash flows and discounted cash flows	(50)
Present value of lease payments recorded as lease receivable	$	456

Leasing

Leasing

Ally as the Lessee

We have operating leases for our corporate facilities, which have remaining lease terms of 7 months to 10 years. Most of the property leases have fixed payment terms with annual fixed-escalation clauses and include options to extend the leases for periods that range from 1 to 15 years. Some of those lease agreements also include options to terminate the leases in periods that range from approximately 5 to 6 years after the commencement of the leases. We have not included any of these term extensions or termination provisions in our estimates of the lease term, as we do not consider it reasonably certain that the options will be exercised.

We also have operating leases for a fleet of vehicles that is used by our sales force for business purposes, with noncancelable lease terms of 367 days. Thereafter, the leases are month-to-month, up to a maximum of 48 months from inception.

During the years ended December 31, 2021, and December 31, 2020, we paid $51 million and $49 million in cash for amounts included in the measurement of lease liabilities at December 31, 2021, and December 31, 2020, respectively. These amounts are included in net cash provided by operating activities in the Consolidated Statement of Cash Flows. During the years ended December 31, 2021, and December 31, 2020, we obtained $361 million and $93 million, respectively, of ROU assets in exchange for new lease liabilities. For the year ended December 31, 2021, this balance included a new corporate facility in Charlotte, North Carolina, which we executed a purchase agreement on in July 2021, and reclassified the ROU asset to property and equipment and satisfied the finance lease liability. As of December 31, 2021, the weighted-average remaining lease term of our operating lease portfolio was 6 years, and the weighted-average discount rate was 1.96%, compared to 7 years and 2.21% as of December 31, 2020.

The following table presents future minimum rental payments we are required to make under operating leases that have commenced as of December 31, 2021, and that have noncancelable lease terms expiring after December 31, 2021.

Year ended December 31, ($ in millions)
2022	$	41
2023	32
2024	26
2025	21
2026	20
2027 and thereafter	46
Total undiscounted cash flows	186
Difference between undiscounted cash flows and discounted cash flows	(11)
Total lease liability	$	175

In March 2021, we commenced the lease for a new corporate facility in Charlotte, North Carolina, which included an underlying purchase option. We provided notice of our intent to exercise the purchase option in April 2021, and executed on the purchase agreement in July 2021. Additionally, we agreed to lease a portion of this corporate facility in exchange for $13 million in future lease payments over a ten year lease term. During the year ended December 31, 2021, we recognized $1 million of income associated with this lease agreement.

The following table details the components of total net operating lease expense.

Year ended December 31, ($ in millions)	2021		2020		2019
Operating lease expense	$	46	$	46	$	45
Variable lease expense	7		8		8
Total lease expense, net (a)	$	53	$	54	$	53

(a)Included in other operating expenses in our Consolidated Statement of Income.

Ally as the Lessor

Investment in Operating Leases

We purchase consumer operating lease contracts and the associated vehicles from dealerships after those contracts are executed by the dealers and the consumers. The amount we pay a dealer for an operating lease contract is based on the negotiated price for the vehicle less vehicle trade-in, down payment from the consumer, and available automotive manufacturer incentives. Under the operating lease, the consumer is obligated to make payments in amounts equal to the amount by which the negotiated purchase price of the vehicle (less any trade-in value, down payment, or available manufacturer incentives) exceeds the contract residual value (including residual support) of the vehicle at lease termination, plus operating lease rental charges. The customer can terminate the lease at any point after commencement, subject to additional charges and fees. Both the consumer and the dealership have the option to purchase the vehicle at the end of the lease term, which can range from 24 to 60 months, at the residual value of the vehicle, however it is not reasonably certain this option will be exercised and accordingly our consumer leases are classified as operating leases. In addition to the charges described above, the consumer is generally responsible for certain charges related to excess mileage or excessive wear and tear on the vehicle. These charges are deemed variable lease payments and, as these payments are not based on a rate or index, they are recognized as net depreciation expense on operating lease assets in our Consolidated Statement of Income as incurred.

When we acquire a consumer operating lease, we assume ownership of the vehicle from the dealer. We require that property damage, bodily injury, collision, and comprehensive insurance be obtained by the lessee on all consumer operating leases. Neither the consumer nor the dealer is responsible for the value of the vehicle at the time of lease termination. When vehicles are not purchased by customers or the receiving dealer at scheduled lease termination, the vehicle is returned to us for remarketing. We generally bear the risk of loss to the extent the value of a leased vehicle upon remarketing is below the expected residual value. At termination, our actual sales proceeds from remarketing the vehicle may be higher or lower than the estimated residual value resulting in a gain or loss on remarketing, which is included in net depreciation expense on operating lease assets in our Consolidated Statement of Income. Excessive mileage or excessive wear and tear on the vehicle during the lease may impact the sales proceeds received upon remarketing. As of December 31, 2021, and December 31, 2020, consumer operating leases with a carrying value, net of accumulated depreciation, of $165 million and $352 million, respectively, were covered by a residual value guarantee of 15% of the manufacturer’s suggested retail price.

The following table details our investment in operating leases.

Year ended December 31, ($ in millions)	2021		2020
Vehicles	$	12,384	$	11,182
Accumulated depreciation	(1,522)		(1,543)
Investment in operating leases, net	$	10,862	$	9,639

The following table presents future minimum rental payments we have the right to receive under operating leases with noncancelable lease terms expiring after December 31, 2021.

Year ended December 31, ($ in millions)
2022	$	1,546
2023	1,140
2024	511
2025	116
2026	8
Total lease payments from operating leases	$	3,321

We recognized operating lease revenue of $1.6 billion, $1.4 billion, and $1.5 billion for the years ended December 31, 2021, 2020, and 2019, respectively. Depreciation expense on operating lease assets includes net remarketing gains recognized on the sale of operating lease assets. The following table summarizes the components of depreciation expense on operating lease assets.

Year ended December 31, ($ in millions)	2021		2020		2019
Depreciation expense on operating lease assets (excluding remarketing gains) (a)	$	914	$	978	$	1,050
Remarketing gains, net	(344)		(127)		(69)
Net depreciation expense on operating lease assets	$	570	$	851	$	981

(a)Includes variable lease payments related to excess mileage and excessive wear and tear on vehicles of $16 million during the year ended December 31, 2021, $23 million during the year ended December 31, 2020, and $19 million during the year ended December 31, 2019.

Finance Leases

In our Automotive Finance operations, we also hold automotive leases that require finance lease treatment as prescribed by ASC Topic 842, Leases. Our total gross investment in finance leases, which is included in finance receivables and loans, net, on our Consolidated Balance Sheet was $470 million and $450 million as of December 31, 2021, and December 31, 2020, respectively. This includes lease payment receivables of $457 million and $437 million at December 31, 2021, and December 31, 2020, respectively, and unguaranteed residual assets of $13 million at both December 31, 2021, and December 31, 2020. Interest income on finance lease receivables was $27 million for the year ended December 31, 2021, and $24 million for the year ended December 31, 2020, and is included in interest and fees on finance receivables and loans in our Consolidated Statement of Income.

The following table presents future minimum rental payments we have the right to receive under finance leases with noncancelable lease terms expiring after December 31, 2021.

Year ended December 31, ($ in millions)
2022	$	159
2023	133
2024	111
2025	58
2026	32
2027 and thereafter	13
Total undiscounted cash flows	506
Difference between undiscounted cash flows and discounted cash flows	(50)
Present value of lease payments recorded as lease receivable	$	456