Leasing

Ally as the Lessee

We have operating leases for certain of our corporate facilities, which have remaining lease terms of 3 months to 6 years. Most of the property leases have fixed payment terms with annual fixed-escalation clauses and include options to extend or terminate the lease. We do not include these term extensions or termination provisions in our estimates of the lease term if 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 three months and nine months ended September 30, 2024, we paid $9 million and $26 million, respectively, in cash for amounts included in the measurement of lease liabilities at September 30, 2024, compared to $7 million and $23 million for the three months and nine months ended September 30, 2023, in cash amounts included in the measurement of lease liabilities at September 30, 2023. These amounts are included in net cash provided by operating activities in the Condensed Consolidated Statement of Cash Flows. During the nine months ended September 30, 2024 and September 30, 2023, we obtained $19 million and $10 million, respectively, of ROU assets in exchange for new lease liabilities. As of September 30, 2024, the weighted-average remaining lease term of our operating lease portfolio was 4 years, and the weighted-average discount rate was 3.16%, compared to 4 years and 2.85% as of December 31, 2023.

The following table presents future minimum rental payments we are required to make under operating leases that have commenced as of September 30, 2024, and that have noncancelable lease terms expiring after September 30, 2024.


($ in millions)
2024	$	9
2025	34
2026	27
2027	22
2028	16
2029 and thereafter	3
Total undiscounted cash flows	111
Difference between undiscounted cash flows and discounted cash flows	(6)
Total lease liability	$	105

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


	Three months ended September 30,				Nine months ended September 30,
($ in millions)	2024		2023		2024		2023
Operating lease expense	$	7	$	7	$	22	$	21

Variable lease expense	1		1		3		3

Total lease expense, net (a)	$	8	$	8	$	25	$	24

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

Ally as the Lessor

Investment in Operating Leases

We purchase consumer operating lease contracts and the associated vehicles from automotive dealerships or manufacturers after those contracts are executed. The amount we pay for an operating lease contract is based on the negotiated price for the vehicle less vehicle trade-in, down payment from the consumer, tax credits, 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, tax credits, 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. The consumer, dealership, or automotive manufacturer may have the option to purchase the vehicle at the end of the lease term, which generally 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 Condensed Consolidated Statement of Comprehensive Income (Loss) as incurred.

When we acquire a consumer operating lease, we assume ownership of the vehicle. We require that property damage, bodily injury, collision, and comprehensive insurance be obtained by the lessee on all consumer operating leases. Neither the consumer, dealer, nor automotive manufacturer is responsible for the value of the vehicle at the time of lease termination. When vehicles are not purchased by customers, the receiving dealer, or automotive manufacturer 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 Condensed Consolidated Statement of Comprehensive Income (Loss). Excessive mileage or excessive wear and tear on the vehicle during the lease may impact the sales proceeds received upon remarketing. As of September 30, 2024, and December 31, 2023, consumer operating leases with a carrying value, net of accumulated depreciation, of $1.3 billion and $12 million, respectively, were covered by residual value guarantees. The increase is primarily driven by a new automotive manufacturer relationship added during the nine months ended September 30, 2024. As of September 30, 2024, $2 million is under a residual value guarantee of 15% of the automotive manufacturer’s suggested retail price and $1.3 billion is under a residual value guarantee of approximately 50% of the vehicles’ contract residual value. As of December 31, 2023, $12 million was under a residual value guarantee of 15% of the automotive manufacturer’s suggested retail price.

The following table details our investment in operating leases.



($ in millions)	September 30, 2024		December 31, 2023
Vehicles	$	9,865	$	11,101
Accumulated depreciation	(1,547)		(1,930)
Investment in operating leases, net	$	8,318	$	9,171

The following table presents future minimum rental payments we have the right to receive under operating leases with noncancelable lease terms expiring after September 30, 2024.


($ in millions)
2024	$	362
2025	1,165
2026	752
2027	254
2028	25
2029 and thereafter	2
Total lease payments from operating leases	$	2,560

We recognized operating lease revenue of $316 million and $1.0 billion for the three months and nine months ended September 30, 2024, respectively, and $385 million and $1.2 billion for the three months and nine months ended September 30, 2023. 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.


	Three months ended September 30,				Nine months ended September 30,
($ in millions)	2024		2023		2024		2023
Depreciation expense on operating lease assets (excluding remarketing gains) (a)	$	225	$	269	$	711	$	812
Remarketing gains, net	(24)		(57)		(129)		(174)
Net depreciation expense on operating lease assets	$	201	$	212	$	582	$	638

(a)Includes variable lease payments related to excess mileage and excessive wear and tear on vehicles of $6 million and $16 million for the three months and nine months ended September 30, 2024, respectively, and $3 million and $7 million for the three months and nine months ended September 30, 2023.

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 Condensed Consolidated Balance Sheet was $530 million and $537 million as of September 30, 2024, and December 31, 2023, respectively. This includes lease payment receivables of $526 million and $531 million at September 30, 2024, and December 31, 2023, respectively, and unguaranteed residual assets of $4 million and $6 million at September 30, 2024, and December 31, 2023, respectively. Interest income on finance lease receivables was $11 million and $34 million for the three months and nine months ended September 30, 2024, respectively, and $10 million and $28 million for the three months and nine months ended September 30, 2023, and is included in interest and fees on finance receivables and loans in our Condensed Consolidated Statement of Comprehensive Income (Loss).

The following table presents future minimum rental payments we have the right to receive under finance leases with noncancelable lease terms expiring after September 30, 2024.


($ in millions)
2024	$	53
2025	187
2026	162
2027	118
2028	57
2029 and thereafter	33
Total undiscounted cash flows	610
Difference between undiscounted cash flows and discounted cash flows	(84)
Present value of lease payments recorded as lease receivable	$	526

Leasing

Ally as the Lessee

We have operating leases for certain of our corporate facilities, which have remaining lease terms of 3 months to 6 years. Most of the property leases have fixed payment terms with annual fixed-escalation clauses and include options to extend or terminate the lease. We do not include these term extensions or termination provisions in our estimates of the lease term if 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 three months and nine months ended September 30, 2024, we paid $9 million and $26 million, respectively, in cash for amounts included in the measurement of lease liabilities at September 30, 2024, compared to $7 million and $23 million for the three months and nine months ended September 30, 2023, in cash amounts included in the measurement of lease liabilities at September 30, 2023. These amounts are included in net cash provided by operating activities in the Condensed Consolidated Statement of Cash Flows. During the nine months ended September 30, 2024 and September 30, 2023, we obtained $19 million and $10 million, respectively, of ROU assets in exchange for new lease liabilities. As of September 30, 2024, the weighted-average remaining lease term of our operating lease portfolio was 4 years, and the weighted-average discount rate was 3.16%, compared to 4 years and 2.85% as of December 31, 2023.

The following table presents future minimum rental payments we are required to make under operating leases that have commenced as of September 30, 2024, and that have noncancelable lease terms expiring after September 30, 2024.


($ in millions)
2024	$	9
2025	34
2026	27
2027	22
2028	16
2029 and thereafter	3
Total undiscounted cash flows	111
Difference between undiscounted cash flows and discounted cash flows	(6)
Total lease liability	$	105

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


	Three months ended September 30,				Nine months ended September 30,
($ in millions)	2024		2023		2024		2023
Operating lease expense	$	7	$	7	$	22	$	21

Variable lease expense	1		1		3		3

Total lease expense, net (a)	$	8	$	8	$	25	$	24

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

Ally as the Lessor

Investment in Operating Leases

We purchase consumer operating lease contracts and the associated vehicles from automotive dealerships or manufacturers after those contracts are executed. The amount we pay for an operating lease contract is based on the negotiated price for the vehicle less vehicle trade-in, down payment from the consumer, tax credits, 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, tax credits, 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. The consumer, dealership, or automotive manufacturer may have the option to purchase the vehicle at the end of the lease term, which generally 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 Condensed Consolidated Statement of Comprehensive Income (Loss) as incurred.

When we acquire a consumer operating lease, we assume ownership of the vehicle. We require that property damage, bodily injury, collision, and comprehensive insurance be obtained by the lessee on all consumer operating leases. Neither the consumer, dealer, nor automotive manufacturer is responsible for the value of the vehicle at the time of lease termination. When vehicles are not purchased by customers, the receiving dealer, or automotive manufacturer 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 Condensed Consolidated Statement of Comprehensive Income (Loss). Excessive mileage or excessive wear and tear on the vehicle during the lease may impact the sales proceeds received upon remarketing. As of September 30, 2024, and December 31, 2023, consumer operating leases with a carrying value, net of accumulated depreciation, of $1.3 billion and $12 million, respectively, were covered by residual value guarantees. The increase is primarily driven by a new automotive manufacturer relationship added during the nine months ended September 30, 2024. As of September 30, 2024, $2 million is under a residual value guarantee of 15% of the automotive manufacturer’s suggested retail price and $1.3 billion is under a residual value guarantee of approximately 50% of the vehicles’ contract residual value. As of December 31, 2023, $12 million was under a residual value guarantee of 15% of the automotive manufacturer’s suggested retail price.

The following table details our investment in operating leases.



($ in millions)	September 30, 2024		December 31, 2023
Vehicles	$	9,865	$	11,101
Accumulated depreciation	(1,547)		(1,930)
Investment in operating leases, net	$	8,318	$	9,171

The following table presents future minimum rental payments we have the right to receive under operating leases with noncancelable lease terms expiring after September 30, 2024.


($ in millions)
2024	$	362
2025	1,165
2026	752
2027	254
2028	25
2029 and thereafter	2
Total lease payments from operating leases	$	2,560

We recognized operating lease revenue of $316 million and $1.0 billion for the three months and nine months ended September 30, 2024, respectively, and $385 million and $1.2 billion for the three months and nine months ended September 30, 2023. 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.


	Three months ended September 30,				Nine months ended September 30,
($ in millions)	2024		2023		2024		2023
Depreciation expense on operating lease assets (excluding remarketing gains) (a)	$	225	$	269	$	711	$	812
Remarketing gains, net	(24)		(57)		(129)		(174)
Net depreciation expense on operating lease assets	$	201	$	212	$	582	$	638

(a)Includes variable lease payments related to excess mileage and excessive wear and tear on vehicles of $6 million and $16 million for the three months and nine months ended September 30, 2024, respectively, and $3 million and $7 million for the three months and nine months ended September 30, 2023.

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 Condensed Consolidated Balance Sheet was $530 million and $537 million as of September 30, 2024, and December 31, 2023, respectively. This includes lease payment receivables of $526 million and $531 million at September 30, 2024, and December 31, 2023, respectively, and unguaranteed residual assets of $4 million and $6 million at September 30, 2024, and December 31, 2023, respectively. Interest income on finance lease receivables was $11 million and $34 million for the three months and nine months ended September 30, 2024, respectively, and $10 million and $28 million for the three months and nine months ended September 30, 2023, and is included in interest and fees on finance receivables and loans in our Condensed Consolidated Statement of Comprehensive Income (Loss).

The following table presents future minimum rental payments we have the right to receive under finance leases with noncancelable lease terms expiring after September 30, 2024.


($ in millions)
2024	$	53
2025	187
2026	162
2027	118
2028	57
2029 and thereafter	33
Total undiscounted cash flows	610
Difference between undiscounted cash flows and discounted cash flows	(84)
Present value of lease payments recorded as lease receivable	$	526