Finance Receivables



	December 31, 2019			December 31, 2018
Retail finance receivables
Retail finance receivables, collectively evaluated for impairment, net of fees	$	39,890		$	38,354
Retail finance receivables, individually evaluated for impairment, net of fees	2,378			2,348
Total retail finance receivables, net of fees^(a)	42,268			40,702
Less: allowance for loan losses - collective	(536		)	(523		)
Less: allowance for loan losses - specific	(330		)	(321		)
Total retail finance receivables, net	41,402			39,858
Commercial finance receivables
Commercial finance receivables, collectively evaluated for impairment, net of fees	12,073			12,680
Commercial finance receivables, individually evaluated for impairment, net of fees	76			41
Total commercial finance receivables, net of fees^(b)	12,149			12,721
Less: allowance for loan losses - collective	(60		)	(63		)
Less: allowance for loan losses - specific	(18		)	(4		)
Total commercial finance receivables, net	12,071			12,654
Total finance receivables, net	$	53,473		$	52,512
Fair value utilizing Level 2 inputs	$	12,071		$	12,654
Fair value utilizing Level 3 inputs	$	42,012		$	39,564

________________


(a)	Net of unearned income, unamortized premiums and discounts, and deferred fees and costs of $83 million and $53 million at December 31, 2019 and 2018.


(b)	Net of dealer cash management balances of $1.2 billion and $922 million at December 31, 2019 and 2018.

Rollforward of Allowance for Retail Loan Losses A summary of the activity in the allowance for retail loan losses is as follows:



	Years ended December 31,
	2019			2018			2017
Allowance for retail loan losses beginning balance	$	844		$	889		$	765
Provision for loan losses	690			624			742
Charge-offs	(1,218		)	(1,196		)	(1,171		)
Recoveries	548			536			552
Foreign currency translation	2			(9		)	1
Allowance for retail loan losses ending balance	$	866		$	844		$	889

Retail Credit Quality Our retail finance receivables portfolio includes loans made to consumers and businesses to finance the purchase of vehicles for personal and commercial use. We review the credit quality of our retail finance receivables based on customer payment activity. A retail account is considered delinquent if a substantial portion of a scheduled payment has not been received by the date such payment was contractually due. Retail finance receivables are collateralized by vehicle titles and, subject to local laws, we generally have the right to repossess the vehicle in the event the customer defaults on the payment terms of the contract. The following is a consolidated summary of the contractual amounts of delinquent retail finance receivables, which is not significantly different than the recorded investment for such receivables:



	December 31, 2019				December 31, 2018
	Amount		Percent of Contractual Amount Due		Amount		Percent of Contractual Amount Due
31 - 60 days	$	1,354	3.2	%	$	1,349	3.3	%
Greater than 60 days	542		1.3		547		1.4
Total finance receivables more than 30 days delinquent	1,896		4.5		1,896		4.7
In repossession	44		0.1		44		0.1
Total finance receivables more than 30 days delinquent or in repossession	$	1,940	4.6	%	$	1,940	4.8	%

At December 31, 2019 and 2018, the accrual of finance charge income had been suspended on retail finance receivables with contractual amounts due of $875 million and $888 million.

Impaired Retail Finance Receivables - TDRs The outstanding recorded investment for retail finance receivables that are considered to be TDRs and the related allowance is presented below:



	December 31, 2019			December 31, 2018
Outstanding recorded investment	$	2,378		$	2,348
Less: allowance for loan losses	(330		)	(321		)
Outstanding recorded investment, net of allowance	$	2,048		$	2,027
Unpaid principal balance^(a)	$	2,404		$	2,379

________________


(a)	Includes $366 million in nonaccrual loans at both December 31, 2019 and 2018.

Additional information about loans classified as TDRs is presented below:



	Years Ended December 31,
	2019		2018		2017
Average outstanding recorded investment	$	2,363	$	2,288	$	2,074
Finance charge income recognized	$	245	$	239	$	228
Number of loans classified as TDRs during the period	69,863		69,298		74,784
Recorded investment of loans classified as TDRs during the period	$	1,269	$	1,267	$	1,309

The unpaid principal balance, net of recoveries, of loans that were charged off during the reporting period within 12 months of being modified as a TDR was $37 million, $38 million and $27 million for 2019, 2018 and 2017.

Commercial Credit Quality Our commercial finance receivables consist of dealer financings, primarily for dealer inventory purchases. Proprietary models are used to assign a risk rating to each dealer. We perform periodic credit reviews of each dealership and adjust the dealership's risk rating, if necessary. Dealers in Group VI are subject to additional restrictions on funding, including suspension of lines of credit and liquidation of assets. The following table summarizes the credit risk profile by dealer risk rating of commercial finance receivables:



			December 31, 2019				December 31, 2018
			Amount		Percent		Amount		Percent
Group I	-	Dealers with superior financial metrics	$	1,953	16.1	%	$	2,192	17.2	%
Group II	-	Dealers with strong financial metrics	4,666		38.4		4,500		35.4
Group III	-	Dealers with fair financial metrics	3,989		32.8		4,292		33.7
Group IV	-	Dealers with weak financial metrics	1,043		8.6		1,205		9.5
Group V	-	Dealers warranting special mention due to elevated risks	370		3.0		449		3.5
Group VI	-	Dealers with loans classified as substandard, doubtful or impaired	128		1.1		83		0.7
Balance at end of period			$	12,149	100.0	%	$	12,721	100.0	%

At December 31, 2019 and 2018, substantially all of our commercial finance receivables were current with respect to payment status and amounts on nonaccrual status were insignificant. At December 31, 2019, commercial finance receivables classified as TDRs were insignificant and no commercial finance receivables were classified as TDRs at December 31, 2018. Activity in the allowance for commercial loan losses was insignificant for 2019, 2018 and 2017.