Commitments and Contingencies

Leases

We lease space for our operating facilities and administrative offices under leases with terms up to 10 years with renewal options. Certain leases contain lease escalation clauses for real estate taxes and other operating expenses and renewal option clauses calling for increased rents.

A summary of lease expense is as follows (in millions):



	Years Ended December 31,
	2015		2014		2013
Lease expense	$	28	$	28	$	21

Operating lease commitments are as follows (in millions):



	Years Ending December 31,
	2016		2017		2018		2019		2020		Thereafter		Total
Operating lease commitments	$	19	$	19	$	16	$	14	$	11	$	38	$	117

Concentrations of Credit Risk

Financial instruments which potentially subject us to concentrations of credit risk are primarily cash equivalents, restricted cash, derivative financial instruments and retail finance receivables. Our cash equivalents and restricted cash represent investments in highly rated securities placed through various major financial institutions. The counterparties to our derivative financial instruments are various major financial institutions.

Retail finance receivables in the North America Segment represent contracts with customers residing throughout the U.S. and Canada, with borrowers located in Texas accounting for 16.2% of the portfolio as of December 31, 2015. No other state accounted for more than 10% of retail finance receivables. Retail finance receivables in the International Segment represent contracts with customers residing throughout Europe and Latin America. Borrowers located in the U.K., Brazil, Germany and Mexico accounted for 28.6%, 21.4%, 20.6%, and 12.5% of the international retail finance receivables as of December 31, 2015. No other country accounted for more than 10% of retail finance receivables.

At December 31, 2015, substantially all of our commercial finance receivables represent loans to GM-franchised dealerships and their affiliates.

Guarantees of Indebtedness

The payments of principal and interest on senior notes issued by our top-tier holding company, our primary Canadian operating subsidiary and a European subsidiary are guaranteed by our primary U.S. operating subsidiary, AFSI. At December 31, 2015 and 2014, the par value of our senior notes was $19.1 billion and $8.4 billion. See Note 21 - "Guarantor Consolidating Financial Statements" for further discussion.

Legal Proceedings

As a retail finance company, we are subject to various customer claims and litigation seeking damages and statutory penalties, based upon, among other things, usury, disclosure inaccuracies, wrongful repossession, violations of bankruptcy stay provisions, certificate of title disputes, fraud, breach of contract and discriminatory treatment of credit applicants. Some litigation against us could take the form of class action complaints by customers and certain legal actions include claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages. We establish reserves for legal claims when payments associated with the claims become probable and the payments can be reasonably estimated. Given the inherent difficulty of predicting the outcome of litigation and regulatory matters, it is generally very difficult to predict what the eventual outcome will be, and when the matter will be resolved. The actual costs of resolving legal claims may be higher or lower than any amounts reserved for the claims. At December 31, 2015, we estimated our reasonably possible legal exposure for unfavorable outcomes of up to $101 million, and have accrued $43 million.

Other Administrative Tax Matters

We accrue non-income tax liabilities for contingencies when management believes that a loss is probable and the amounts can be reasonably estimated, while contingent gains are recognized only when realized. In the event any losses are sustained in excess of accruals, they will be charged against income at that time.

In evaluating indirect tax matters, we take into consideration factors such as our historical experience with matters of similar nature, specific facts and circumstances, and the likelihood of prevailing. We reevaluate and update our accruals as matters progress over time. Where there is a reasonable possibility that losses exceeding amounts already recognized may be incurred, our estimate of the additional range of loss is up to $50 million.