Finance Receivables

Below is information about finance receivables that have been divided into two portfolios: pre-acquisition and post-acquisition. see Note 1 - "Summary of Significant Accounting Policies."

The total finance receivables portfolio consists of the following (in millions):



	June 30, 2013									December 31, 2012
	North America			International			Total			North America
Consumer
Pre-acquisition consumer finance receivables - outstanding balance	$	1,432		$	1,305		$	2,737		$	2,162
Pre-acquisition consumer finance receivables - carrying value	$	1,279		$	1,272		$	2,551		$	1,958
Post-acquisition consumer finance receivables, net of fees	9,947			5,933			15,880			8,831
	11,226			7,205			18,431			10,789
Less: allowance for loan losses	(415		)	(8		)	(423		)	(345		)
Total consumer finance receivables, net	10,811			7,197			18,008			10,444
Commercial
Post-acquisition commercial finance receivables, collectively evaluated for impairment, net of fees	1,165			3,792			4,957			560
Post-acquisition commercial finance receivables, individually evaluated for impairment, net of fees	4						4
Less: allowance for loan losses - collective	(10		)	(12		)	(22		)	(6		)
Less: allowance for loan losses - specific	(2		)				(2		)
Total commercial finance receivables, net	1,157			3,780			4,937			554
Total finance receivables, net	$	11,968		$	10,977		$	22,945		$	10,998

Consumer Finance Receivables

Pre-acquisition Consumer Finance Receivables

Following is a summary of activity in our pre-acquisition consumer finance receivables portfolio (in millions):



	Three Months Ended
	June 30,
	2013									2012
	North America			International			Total			North America
Pre-acquisition consumer finance receivables - outstanding balance, beginning of period	$	1,759					$	1,759		$	3,675
Pre-acquisition consumer finance receivables - carrying value, beginning of period	$	1,580					$	1,580		$	3,358
International operations acquisition				$	1,569		1,569
Principal collections and other	(292		)	(264		)	(556		)	(509		)
Change in carrying value adjustment	(9		)	8			(1		)	(37		)
Foreign currency translation				(41		)	(41		)
Balance at end of period	$	1,279		$	1,272		$	2,551		$	2,812



	Six Months Ended
	June 30,
	2013									2012
	North America			International			Total			North America
Pre-acquisition consumer finance receivables - outstanding balance, beginning of period	$	2,162					$	2,162		$	4,366
Pre-acquisition consumer finance receivables - carrying value, beginning of period	$	1,958					$	1,958		$	4,027
International operations acquisition				$	1,569		1,569
Principal collections and other	(641		)	(264		)	(905		)	(1,096		)
Change in carrying value adjustment	(38		)	8			(30		)	(119		)
Foreign currency translation				(41		)	(41		)
Balance at end of period	$	1,279		$	1,272		$	2,551		$	2,812

The following table provides information related to the credit-impaired consumer finance receivables acquired with the international operations on the applicable acquisition dates (in millions):



Contractually required payments receivable:	$	1,956
Cash flows expected to be collected:	$	1,818
Fair value:	$	1,569

We review our pre-acquisition portfolio for differences between contractual cash flows and the cash flows expected to be collected to determine if the difference is attributable, at least in part, to credit quality. During the six months ended June 30, 2013 and 2012, as a result of improvements in the credit performance of the pre-acquisition portfolio in North America, expected cash flows increased by $54 million and $170 million, respectively. We transferred the amount of excess cash flows from the non-accretable difference to accretable yield. This excess will be amortized through finance charge income over the remaining life of the portfolio. There was no transfer of excess cash flows from the non-accretable difference related to the international operations pre-acquisition portfolio during the three and six months ended June 30, 2013.

A summary of the activity in the accretable yield on the pre-acquisition consumer finance receivables portfolios is as follows (in millions):



	Three Months Ended
	June 30,
	2013									2012
	North America			International			Total			North America
Balance at beginning of period	$	371					$	371		$	768
International operations acquisition				$	249		249
Accretion of accretable yield	(79		)	(53		)	(132		)	(143		)
Transfer from non-accretable difference	6						6			3
Foreign currency translation				(12		)	(12		)
Balance at end of period	$	298		$	184		$	482		$	628



	Six Months Ended
	June 30,
	2013									2012
	North America			International			Total			North America
Balance at beginning of period	$	404					$	404		$	737
International operations acquisition				$	249		249
Accretion of accretable yield	(160		)	(53		)	(213		)	(279		)
Transfer from non-accretable difference	54						54			170
Foreign currency translation				(12		)	(12		)
Balance at end of period	$	298		$	184		$	482		$	628

Post-acquisition Consumer Finance Receivables

Consumer finance contracts are purchased by us from auto dealers without recourse, and accordingly, the dealer has no liability to us if the consumer defaults on the contract. Depending upon the contract structure and consumer credit attributes, we may pay dealers a participation fee or we may charge dealers a non-refundable acquisition fee when purchasing individual finance contracts. We also have subvention programs with GM and other new vehicle manufacturers, under which the manufacturers provide us cash payments in order for us to offer lower interest rates on consumer finance contracts we purchase. We record the amortization of participation fees and subvention and accretion of acquisition fees to finance charge income using the effective interest method.

Following is a summary of activity in our post-acquisition consumer finance receivables portfolio (in millions):



	Three Months Ended
	June 30,
	2013									2012
	North America			International			Total			North America
Post-acquisition consumer finance receivables, net of fees - beginning of period	$	9,432					$	9,432		$	6,326
International operations acquisition				$	5,422		5,422
Loans purchased	1,351			1,117			2,468			1,489
Charge-offs	(116		)				(116		)	(53		)
Principal collections and other	(720		)	(594		)	(1,314		)	(422		)
Foreign currency translation				(12		)	(12		)
Balance at end of period	$	9,947		$	5,933		$	15,880		$	7,340



	Six Months Ended
	June 30,
	2013									2012
	North America			International			Total			North America
Post-acquisition consumer finance receivables, net of fees - beginning of period	$	8,831					$	8,831		$	5,314
International operations acquisition				$	5,422		5,422
Loans purchased	2,710			1,117			3,827			2,885
Charge-offs	(248		)				(248		)	(104		)
Principal collections and other	(1,346		)	(594		)	(1,940		)	(755		)
Foreign currency translation				(12		)	(12		)
Balance at end of period	$	9,947		$	5,933		$	15,880		$	7,340

A summary of the activity in the allowance for consumer loan losses is as follows (in millions):



	Three Months Ended
	June 30,
	2013								2012
	North America			International		Total			North America
Balance at beginning of period	$	382				$	382		$	208
Provision for loan losses	80			$	8	88			62
Charge-offs	(116		)			(116		)	(53		)
Recoveries	69					69			32
Balance at end of period	$	415		$	8	$	423		$	249



	Six Months Ended
	June 30,
	2013								2012
	North America			International		Total			North America
Balance at beginning of period	$	345				$	345		$	179
Provision for loan losses	169			$	8	177			110
Charge-offs	(248		)			(248		)	(104		)
Recoveries	149					149			64
Balance at end of period	$	415		$	8	$	423		$	249

Consumer Credit Quality

We use proprietary scoring systems in the underwriting process that measure the credit quality of the receivables using several factors, such as credit bureau information, consumer credit risk scores (e.g. FICO score), and contract characteristics. In addition to our proprietary scoring system, we consider other individual consumer factors, such as employment history, financial stability, and capacity to pay. At the time of loan origination, substantially all of our international consumers have prime credit ratings. In North America, however, our consumer finance receivables are predominantly sub-prime. A summary of the credit risk profile by FICO score band, determined at origination, of the consumer finance receivables in North America is as follows (dollars in millions):



	June 30, 2013		Percent		December 31, 2012		Percent
FICO Score less than 540	$	3,338	29.3	%	$	3,011	27.4	%
FICO Score 540 to 599	5,301		46.6		5,014		45.6
FICO Score 600 to 659	2,397		21.1		2,513		22.9
FICO Score 660 and greater	343		3.0		455		4.1
Balance at end of period^(a)	$	11,379	100.0	%	$	10,993	100.0	%

_________________


(a)	Balance at the end of the period is the sum of pre-acquisition consumer finance receivables-outstanding balance and post-acquisition consumer finance receivables, net of fees for the North American segment.

We review the credit quality of our consumer finance receivables based on consumer payment activity. A consumer account is considered delinquent if a substantial portion of a scheduled payment has not been received by the date such payment was contractually due. Consumer finance receivables are collateralized by vehicle titles and we have the right to repossess the vehicle in the event the consumer defaults on the payment terms of the contract. The following is a summary of the contractual amounts of consumer finance receivables, which is not materially different than recorded investment, that are (i) more than 30 days delinquent, not yet in repossession, and (ii) in repossession, but not yet charged off (dollars in millions):



	June 30,
	2013								2012
	North America		International		Total		Percent of Contractual Amount Due		North America		Percent of Contractual Amount Due

31 - 60 days	$	601	$	44	$	645	3.4	%	$	428	4.1	%
Greater - than 60 days	208		45		253		1.4		158		1.5
	809		89		898		4.8		586		5.6
In repossession	31		4		35		0.2		25		0.3
	$	840	$	93	$	933	5.0	%	$	611	5.9	%

The accrual of finance charge income has been suspended on $472 million and $503 million of consumer finance receivables (based on contractual amount due) as of June 30, 2013 and December 31, 2012, respectively.

Impaired Finance Receivables - Troubled Debt Restructurings ("TDRs")

Consumer finance receivables that become classified as TDRs are separately assessed for impairment. A specific allowance is estimated based on the present value of the expected future cash flows of the receivable discounted at the loan's original effective interest rate. The financial effects of the accounts that become classified as TDRs result in an impairment charge recorded as part of the provision for loan losses. Accounts that become classified as TDRs because of a payment deferral still accrue interest at the contractual rate and an additional fee is collected (where permitted) at each time of deferral and recorded as a reduction of accrued interest. No interest or fees are forgiven on a payment deferral to a customer and therefore, there are no additional financial effects of deferred loans becoming classified as TDRs. Accounts in Chapter 13 bankruptcy would have already been placed on non-accrual; therefore, there are no additional financial effects from these loans becoming classified as TDRs. As of June 30, 2013, the outstanding balance of international operations consumer finance receivables determined to be TDRs was insignificant; therefore, the following information is presented with regard to the TDRs in North America only.

The outstanding recorded investment for consumer finance receivables that are considered to be TDRs and the related allowance is presented below (in millions):



	June 30, 2013			December 31, 2012
Outstanding recorded investment	$	471		$	228
Less: allowance for loan losses	(71		)	(32		)
Outstanding recorded investment, net of allowance	$	400		$	196
Unpaid principal balance	$	479		$	232

Finance charge income from loans classified as TDRs is accounted for in the same manner as other accruing loans. Cash collections on these loans are allocated according to the same payment hierarchy methodology applied to loans that are not classified as TDRs. Additional information about loans classified as TDRs is presented below (in millions):



	Three Months Ended				Six Months Ended
	June 30,
	2013		2012		2013		2012
Average recorded investment	$	403	$	53	$	345	$	51
Interest income recognized	15		1		25		1

The following table provides information on the recorded investment of consumer loans at the time they became classified as TDRs (dollars in millions):



	June 30,
	2013			2012
	Number of Accounts	Amount		Number of Accounts	Amount
Three months ended June 30	8,966	$	164	2,060	$	39
Six months ended June 30	15,948	290		2,709	52

A redefault is when an account meets the requirements for evaluation under our charge-off policy (See Note 1 - "Summary of Significant Accounting Policies" to the Consolidated Financial Statements in our 2012 Annual Report on Form 10-K for additional information).

The unpaid principal balance, net of recoveries, of loans that redefaulted during the reporting period and were within 12 months or less of being modified as a TDR were $5 million and $10 million for the three and six months ended June 30, 2013.

Commercial Finance Receivables

Following is a summary of activity in our post-acquisition commercial finance receivables portfolio (in millions):



	Three Months Ended
	June 30,
	2013									2012
	North America			International			Total			North America
Post-acquisition commercial finance receivables, net of fees - beginning of period	$	883					$	883
International operations acquisition				$	3,990		3,990
Loans funded	1,334			6,024			7,358			$	174
Principal collections and other	(1,048		)	(6,199		)	(7,247		)	(46		)
Foreign currency translation				(23		)	(23		)
Balance at end of period	$	1,169		$	3,792		$	4,961		$	128



	Six Months Ended
	June 30,
	2013									2012
	North America			International			Total			North America
Post-acquisition commercial finance receivables, net of fees - beginning of period	$	560					$	560
International operations acquisition				$	3,990		3,990
Loans funded	2,374			6,024			8,398			$	174
Principal collections and other	(1,765		)	(6,199		)	(7,964		)	(46		)
Foreign currency translation				(23		)	(23		)
Balance at end of period	$	1,169		$	3,792		$	4,961		$	128

A summary of the activity in the allowance for commercial loan losses is as follows (in millions):



	Three Months Ended
	June 30, 2013
	North America		International		Total
Balance at beginning of period	$	11			$	11
Provision for loan losses	1		$	11	12
Recoveries			1		1
Balance at end of period	$	12	$	12	$	24



	Six Months Ended
	June 30, 2013
	North America		International		Total
Balance at beginning of period	$	6			$	6
Provision for loan losses	6		$	11	17
Recoveries			1		1
Balance at end of period	$	12	$	12	$	24

Commercial Credit Quality

We extend wholesale credit to dealers primarily in the form of approved lines of credit to purchase new GM vehicles as well as used vehicles. Each commercial lending request is evaluated, taking into consideration the borrower's financial condition and the underlying collateral for the loan.

We use a proprietary model to assign each dealer a risk rating. This model uses historical performance data to identify key factors about a dealer that we consider significant in predicting a dealer's ability to meet its financial obligations. We also consider numerous other financial and qualitative factors including capitalization and leverage, liquidity and cash flow, profitability and credit history.

We regularly review our model to confirm the continued business significance and statistical predictability of the factors and update the model to incorporate new factors or other information that improves its statistical predictability. In addition, we verify the existence of the assets collateralizing the receivables by physical audits of vehicle inventories, which are performed with increased frequency for higher risk (i.e., Group III and Group IV) dealers. We perform a credit review of each dealer at least annually and adjust the dealer's risk rating, if necessary.

Dealers are assigned to six groups according to their risk rating as follows:

•Group I - Dealers with strong to superior financial metrics

•Group II - Dealers with fair to favorable financial metrics

•Group III - Dealers with marginal to weak financial metrics

•Group IV - Dealers with poor financial metrics

•Group V - Dealers warranting special mention due to potential weaknesses

•Group VI - Dealers with loans classified as impaired

The credit lines for Group VI dealers are suspended, and no further funding is extended to these dealers.

Performance of our commercial finance receivables is evaluated based on our internal dealer risk rating analysis, as payment for wholesale receivables is generally not required until the dealer has sold the vehicle inventory. Wholesale and dealer loan receivables with the same dealer customer share the same risk rating.

A summary of the credit risk profile by dealer grouping of the commercial finance receivables is as follows (in millions):



	June 30, 2013		December 31, 2012
Group I	$	287	$	99
Group II	972		278
Group III	2,257		171
Group IV	928		12
Group V	513
Group VI	4
	$	4,961	$	560

At June 30, 2013 99.6% of our commercial finance receivables were current with respect to payment status.

Impaired Commercial Finance Receivables

We consider a loan impaired when based on current information and events, it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement. The amount of impairment is based on expected proceeds, including the estimated amount of future cash flows and/or the fair value of underlying collateral, compared to the recorded investment of the loan. A specific allowance for losses is established in the amount of any measured impairment.

Commercial finance receivables classified as TDRs are assessed for impairment and included in our allowance for credit losses based on the present value of the expected future cash flows of the receivable discounted at the loan's original effective interest rate. For receivables where foreclosure is probable, the fair value of the collateral is used to estimate the specific impairment. At June 30, 2013 and December 31, 2012, there were no outstanding commercial finance receivables classified as TDRs.