Filed Pursuant to Rule 424b(5)
Registration No. 333-262894 and 333-262894-03

 

Prospectus

 

ALLY AUTO RECEIVABLES TRUST 2022-3 Issuing Entity (CIK: 0001954336) $717,120,000 Asset Backed Notes, Classes A-2, A-3 and A-4   ALLY AUTO ASSETS LLC Depositor (CIK: 0001477336)   ALLY BANK Sponsor and Servicer (CIK: 0001601846)

 

You should consider carefully the risk factors beginning on page 9 in this prospectus. The notes represent obligations of the issuing entity only. The notes do not represent obligations of or interests in, and are not guaranteed by, Ally Auto Assets LLC, Ally Bank or any of their affiliates. Neither the notes nor the receivables are insured or guaranteed by any governmental entity.		The issuing entity is issuing the following classes of notes(1):
						Class A-2 Notes(2)		Class A-3 Notes(2)		Class A-4 Notes(2)
				Initial Principal Balance		$323,000,000		$323,000,000		$71,120,000
				Offered Amount		$306,850,000		$306,850,000		$67,560,000
				Interest Rate		5.29%		5.07%		5.07%
				Initial Distribution Date		January 17, 2023		January 17, 2023		January 17, 2023
				Final Scheduled Distribution Date		August 15, 2025		April 15, 2027		October 16, 2028
				Distribution Frequency		Monthly		Monthly		Monthly
				Price to Public		99.99636%		99.99397%		99.99669%
				Underwriting Discount		0.200%		0.250%		0.300%
				Proceeds to the Depositor		99.79636%		99.74397%		99.69669%
		(1)  The issuing entity will also issue Class A-1 Notes with an initial principal balance of $216,000,000 and a final scheduled distribution date of December 15, 2023. (2)  Approximately 5% (by initial principal balance) of each of the Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes will be retained by the depositor or another majority-owned affiliate of the sponsor.   The interest rate for each class of notes will be a fixed rate.   The aggregate principal amount of the notes being offered under this prospectus is $681,260,000.   The primary assets of the issuing entity will be a pool of fixed rate retail installment sale contracts used to finance the purchase of new and used cars and light trucks.

Credit Enhancement and Liquidity

 

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Reserve account, with an initial deposit of at least $2,471,181.60.

 

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Overcollateralization in the initial amount of $4,442,639.22.

 

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Excess cashflow collected on the pool of fixed rate retail installment sale contracts.

 

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Collections achieved through discounting certain receivables for the low annual percentage rates on some of the fixed rate installment sale contracts.

 

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Class B Asset Backed Notes, with a principal balance of $20,760,000.

 

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Class C Asset Backed Notes, with a principal balance of $17,300,000.

 

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Class D Asset Backed Notes, with a principal balance of $12,850,000.

 

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The Class A-1 Notes, the Class B Notes, the Class C Notes and the Class D Notes are not being offered under this prospectus and instead will be retained initially by the depositor or its affiliate or, to the extent not required to be retained, sold in private placements.

 

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The Class D Notes are subordinated to the Class A Notes, the Class B Notes and the Class C Notes.

 

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The Class C Notes are subordinated to the Class A Notes and the Class B Notes.

 

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The Class B Notes are subordinated to the Class A Notes.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these notes or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

 

BofA Securities		Barclays		Citigroup
AmeriVet Securities		Loop Capital Markets		Ramirez & Co., Inc.

The date of this prospectus is December 6, 2022.

IMPORTANT NOTICE ABOUT INFORMATION

PRESENTED IN THIS PROSPECTUS

You should rely only on the information provided in this prospectus and any pricing supplement hereto, including the information incorporated by reference in this prospectus. We have not authorized anyone to provide you with other or different information. We are not offering the notes in any state where the offer is not permitted.

This prospectus provides information regarding the pool of receivables held by the issuing entity and the terms of your notes.

You can find definitions of the capitalized terms used in this prospectus in the “Glossary of Terms to this Prospectus,” which appears at the end of this prospectus.

The term “Ally Bank,” when used in connection with Ally Bank’s capacity as acquirer of the receivables, seller of the receivables to the depositor or servicer of the receivables, includes any successors or assigns of Ally Bank in such capacity permitted pursuant to the transaction documents.

Ally Auto Assets LLC has met the registration requirements of General Instruction I.A.1 of Form SF-3 by filing no later than the date of the filing of the final prospectus, and determining that each of its affiliated depositors and issuing entities have timely filed, or have cured by filing at least 90 days prior to the date hereof:

 

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the CEO certification described in “The Depositor—CEO Certification”; and

 

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the transaction documents containing the provisions described in “The Receivables Pool—Asset Representations Review,” “The Receivables Pool—Dispute Resolution” and “Reports to Securityholders—Investor Communications.”

FORWARD LOOKING STATEMENTS

Whenever we use words like “intends,” “anticipates” or “expects” or similar words in this prospectus, we are making a forward-looking statement, or a projection of what we think will happen in the future. Forward-looking statements are inherently subject to a variety of circumstances, many of which are beyond our control and could cause actual results to differ materially from what we anticipate. Any forward-looking statements in this prospectus speak only as of the date of this prospectus. We do not assume any responsibility to update or review any forward-looking statement contained in this prospectus to reflect any change in our expectation about the subject of that forward-looking statement or to reflect any change in events, conditions or circumstances on which we have based any forward-looking statement, except as required by federal securities laws.

NOTICES TO RESIDENTS OF THE UNITED KINGDOM

THIS PROSPECTUS IS NOT A PROSPECTUS FOR THE PURPOSES OF THE UK PROSPECTUS REGULATION (AS DEFINED BELOW). THIS PROSPECTUS HAS BEEN PREPARED ON THE BASIS THAT ANY OFFER OF THE NOTES IN THE UNITED KINGDOM WILL BE MADE ONLY TO A PERSON OR LEGAL ENTITY QUALIFYING AS A QUALIFIED INVESTOR (AS DEFINED IN THE UK PROSPECTUS REGULATION, A “UK QUALIFIED INVESTOR”). ACCORDINGLY ANY PERSON MAKING OR INTENDING TO MAKE AN OFFER IN THE UNITED KINGDOM OF NOTES WHICH ARE THE SUBJECT OF THE OFFERING CONTEMPLATED IN THIS PROSPECTUS MAY ONLY DO SO TO ONE OR MORE UK QUALIFIED INVESTORS. NONE OF THE ISSUING ENTITY, THE DEPOSITOR NOR THE UNDERWRITERS HAS AUTHORIZED, NOR DO THEY AUTHORIZE, THE MAKING OF ANY OFFER OF NOTES TO ANY PERSON OR LEGAL ENTITY IN THE UNITED KINGDOM OTHER THAN A UK QUALIFIED INVESTOR. THE EXPRESSION “UK PROSPECTUS REGULATION” MEANS REGULATION (EU) 2017/1129 (AS AMENDED) AS IT FORMS PART OF THE DOMESTIC LAW OF THE UNITED KINGDOM BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 (AS AMENDED, THE “EUWA”).

 

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THE NOTES ARE NOT INTENDED TO BE OFFERED, SOLD OR OTHERWISE MADE AVAILABLE TO AND SHOULD NOT BE OFFERED, SOLD OR OTHERWISE MADE AVAILABLE TO ANY UK RETAIL INVESTOR IN THE UNITED KINGDOM. FOR THESE PURPOSES, A UK RETAIL INVESTOR MEANS A PERSON WHO IS ONE (OR MORE) OF: (I) A RETAIL CLIENT, AS DEFINED IN POINT (8) OF ARTICLE 2 OF REGULATION (EU) NO 2017/565 AS IT FORMS PART OF THE DOMESTIC LAW OF THE UNITED KINGDOM BY VIRTUE OF THE EUWA; OR (II) A CUSTOMER WITHIN THE MEANING OF THE PROVISIONS OF THE UNITED KINGDOM FINANCIAL SERVICES AND MARKETS ACT 2000 (AS AMENDED, THE “FSMA”) AND ANY RULES OR REGULATIONS MADE UNDER THE FSMA TO IMPLEMENT DIRECTIVE (EU) 2016/97 (AS AMENDED), WHERE THAT CUSTOMER WOULD NOT QUALIFY AS A PROFESSIONAL CLIENT, AS DEFINED IN POINT (8) OF ARTICLE 2(1) OF REGULATION (EU) NO 600/2014 AS IT FORMS PART OF THE DOMESTIC LAW OF THE UNITED KINGDOM BY VIRTUE OF THE EUWA; OR (III) NOT A UK QUALIFIED INVESTOR. CONSEQUENTLY NO KEY INFORMATION DOCUMENT REQUIRED BY REGULATION (EU) NO 1286/2014 (AS AMENDED) AS IT FORMS PART OF THE DOMESTIC LAW OF THE UNITED KINGDOM BY VIRTUE OF THE EUWA (THE “UK PRIIPS REGULATION”) FOR OFFERING OR SELLING THE NOTES OR OTHERWISE MAKING THEM AVAILABLE TO UK RETAIL INVESTORS IN THE UNITED KINGDOM HAS BEEN PREPARED AND THEREFORE OFFERING OR SELLING THE NOTES OR OTHERWISE MAKING THEM AVAILABLE TO ANY UK RETAIL INVESTOR IN THE UNITED KINGDOM MAY BE UNLAWFUL UNDER THE UK PRIIPS REGULATION.

THIS PROSPECTUS MAY ONLY BE COMMUNICATED OR CAUSED TO BE COMMUNICATED IN THE UNITED KINGDOM TO PERSONS AUTHORIZED TO CARRY ON A REGULATED ACTIVITY UNDER THE FSMA OR TO PERSONS OTHERWISE HAVING PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS AND QUALIFYING AS INVESTMENT PROFESSIONALS UNDER ARTICLE 19 (INVESTMENT PROFESSIONALS) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005, AS AMENDED (THE “ORDER”), OR TO PERSONS FALLING WITHIN ARTICLE 49(2)(A)-(D) (HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC.) OF THE ORDER OR TO ANY OTHER PERSON TO WHOM THIS PROSPECTUS MAY OTHERWISE LAWFULLY BE COMMUNICATED OR CAUSED TO BE COMMUNICATED.

NEITHER THIS PROSPECTUS NOR THE NOTES ARE OR WILL BE AVAILABLE TO OTHER CATEGORIES OF PERSONS IN THE UNITED KINGDOM AND NO ONE IN THE UNITED KINGDOM FALLING OUTSIDE SUCH CATEGORIES IS ENTITLED TO RELY ON, AND THEY MUST NOT ACT ON, ANY INFORMATION IN THIS PROSPECTUS. THE COMMUNICATION OF THIS PROSPECTUS TO ANY PERSON IN THE UNITED KINGDOM OTHER THAN PERSONS IN THE CATEGORIES STATED ABOVE IS UNAUTHORIZED AND MAY CONTRAVENE THE FSMA.

NOTICES TO RESIDENTS OF THE EUROPEAN ECONOMIC AREA

THIS PROSPECTUS IS NOT A PROSPECTUS FOR THE PURPOSES OF THE PROSPECTUS REGULATION (AS DEFINED BELOW). THIS PROSPECTUS HAS BEEN PREPARED ON THE BASIS THAT ANY OFFER OF THE NOTES IN ANY MEMBER STATE OF THE EUROPEAN ECONOMIC AREA (EACH, A “RELEVANT MEMBER STATE”) WILL BE MADE ONLY TO A PERSON OR LEGAL ENTITY QUALIFYING AS A QUALIFIED INVESTOR (AS DEFINED IN THE PROSPECTUS REGULATION). ACCORDINGLY ANY PERSON MAKING OR INTENDING TO MAKE AN OFFER IN THAT RELEVANT MEMBER STATE OF NOTES WHICH ARE THE SUBJECT OF THE OFFERING CONTEMPLATED IN THIS PROSPECTUS MAY ONLY DO SO TO ONE OR MORE QUALIFIED INVESTORS. NONE OF THE ISSUING ENTITY, THE DEPOSITOR NOR THE UNDERWRITERS HAS AUTHORIZED, NOR DO THEY AUTHORIZE, THE MAKING OF ANY OFFER OF NOTES IN A RELEVANT MEMBER STATE TO ANY PERSON OR LEGAL ENTITY OTHER THAN A QUALIFIED INVESTOR. THE EXPRESSION “PROSPECTUS REGULATION” MEANS REGULATION (EU) 2017/1129 (AS AMENDED).

THE NOTES ARE NOT INTENDED TO BE OFFERED, SOLD OR OTHERWISE MADE AVAILABLE TO AND SHOULD NOT BE OFFERED, SOLD OR OTHERWISE MADE AVAILABLE TO ANY RETAIL INVESTOR IN THE EUROPEAN ECONOMIC AREA. FOR THESE PURPOSES, A RETAIL INVESTOR MEANS A PERSON WHO IS ONE (OR MORE) OF: (I) A RETAIL CLIENT AS DEFINED IN POINT (11) OF ARTICLE 4(1) OF DIRECTIVE 2014/65/EU (AS AMENDED, “MIFID II”); OR (II) A CUSTOMER WITHIN THE MEANING OF

 

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DIRECTIVE (EU) 2016/97 (AS AMENDED), WHERE THAT CUSTOMER WOULD NOT QUALIFY AS A PROFESSIONAL CLIENT AS DEFINED IN POINT (10) OF ARTICLE 4(1) OF MIFID II; OR (III) NOT A QUALIFIED INVESTOR. CONSEQUENTLY NO KEY INFORMATION DOCUMENT REQUIRED BY REGULATION (EU) NO 1286/2014 (AS AMENDED, THE “PRIIPS REGULATION”) FOR OFFERING OR SELLING THE NOTES OR OTHERWISE MAKING THEM AVAILABLE TO RETAIL INVESTORS IN THE EUROPEAN ECONOMIC AREA HAS BEEN PREPARED AND THEREFORE OFFERING OR SELLING THE NOTES OR OTHERWISE MAKING THEM AVAILABLE TO ANY RETAIL INVESTOR IN THE EUROPEAN ECONOMIC AREA MAY BE UNLAWFUL UNDER THE PRIIPS REGULATION.

 

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TABLE OF CONTENTS

Prospectus

 

IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS			i
FORWARD LOOKING STATEMENTS			i
NOTICES TO RESIDENTS OF THE UNITED KINGDOM			i
NOTICES TO RESIDENTS OF THE EUROPEAN ECONOMIC AREA			ii
SUMMARY			1
RISK FACTORS			9
SUMMARY OF TRANSACTION PARTIES *			21
SUMMARY OF MONTHLY DEPOSITS TO AND WITHDRAWALS FROM ACCOUNTS*			22
THE SPONSOR			23
ACQUISITION AND UNDERWRITING			24
Acquisition and Underwriting			24
Underwriting Exceptions			25
Subvention			25
THE SERVICER			25
SERVICING PROCEDURES			27
Collections			29
Servicing Compensation and Payment of Expenses			29
THE TRUST			30
Capitalization of the Trust			31
THE RECEIVABLES POOL			32
Tangible and Electronic Contracting			32
Criteria Applicable to the Selection of Receivables			32
Composition of the Receivables Pool—(Total: New and Used)			34
Composition of the Receivables Pool—(New)			34
Composition of the Receivables Pool—(Used)			34
Distribution of the Receivables Pool by Annual Percentage Rate—Aggregate			35
Distribution of the Receivables Pool by State			35
Distribution of the Receivables Pool by Loan-to-Value Ratio			36
Distribution of the Receivables Pool by FICO Score			36
Distribution of the Receivables Pool by Original Term			36
Distribution of the Receivables Pool by Vehicle Make			37
Distribution of the Receivables Pool by Vehicle Model			37
Depositor Review of the Receivables Pool			37
Exceptions to Underwriting Guidelines			39
Asset Representations Review			40
Dispute Resolution			43
REPURCHASE HISTORY			44
ASSET-LEVEL DATA FOR THE RECEIVABLES			45
THE SPONSOR’S PORTFOLIO DATA			46
Delinquencies, Repossessions, Bankruptcies and Net Losses			46
STATIC POOL INFORMATION			49
WEIGHTED AVERAGE LIFE OF THE OFFERED NOTES			50
Percent of Initial Note Principal Balance Outstanding at Various ABS Percentages			53
THE NOTES			62
Distributions			62

 

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Payments of Interest			64
Payments of Principal			65
Redemption			66
Controlling Class			66
The Indenture			66
CREDIT RISK RETENTION			73
BOOK-ENTRY REGISTRATION			73
Book-Entry Registration			73
Definitive Notes			74
REPORTS TO SECURITYHOLDERS			75
Reports to Securityholders			75
Investor Communications			77
POOL FACTORS AND TRADING INFORMATION			77
THE CERTIFICATES			77
THE TRANSFER AGREEMENTS AND THE SERVICING AGREEMENTS			78
Sale and Assignment of Receivables			78
Servicer Advances			80
Accounts			80
Evidence as to Compliance			81
Changes to Servicer; Servicer Indemnification and Proceedings			82
Servicer Default			82
Rights upon Servicer Default			83
Waiver of Past Defaults			83
Amendment			84
Distribution of Assets Following Payment in Full of the Notes			84
Insolvency Event			84
Certificateholder Liability; Indemnification			85
Termination			85
Administration Agreement			85
Custodian Agreement			86
Credit Enhancement			86
Investment of Funds			87
USE OF PROCEEDS			87
CERTAIN FEES AND EXPENSES			87
Other Fees and Expenses			88
LEGAL ASPECTS OF THE RECEIVABLES			88
Security Interest in Vehicles			88
Repossession			89
Notice of Sale; Redemption Rights			90
Deficiency Judgments and Excess Proceeds			90
Consumer Protection Laws			90
Other Limitations			91
Transfer of Vehicles			91
INSOLVENCY ASPECTS OF THE OFFERINGS			92
Potentially Applicable Insolvency Regimes			92
Consequences of Insolvency Regimes for Payments on the Notes			92
Bankruptcy of the Trust			93
Measures to Avoid Insolvency Proceedings With Respect to Special Purpose Entities			94
FDIC Rule			94
THE DEPOSITOR			96
CEO Certification			97

 

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THE INDENTURE TRUSTEE			97
THE OWNER TRUSTEE			99
ASSET REPRESENTATIONS REVIEWER			100
REQUIREMENTS FOR CERTAIN EU AND UK REGULATED INVESTORS AND THEIR AFFILIATES			101
LEGAL PROCEEDINGS			103
AFFILIATIONS AND RELATIONSHIPS AMONG TRANSACTION PARTIES			103
CONSIDERATIONS FOR ERISA AND OTHER U.S. EMPLOYEE BENEFIT PLANS			104
General			104
Plan Assets Regulation			104
MATERIAL FEDERAL INCOME TAX CONSEQUENCES			105
Qualifications on Opinion of Tax Counsel			106
The Notes			106
Tax Shelter Disclosure and Investor List Requirements			109
STATE AND LOCAL TAX CONSEQUENCES			110
PLAN OF DISTRIBUTION			110
Matters Relating to the Offering of the Notes in the European Economic Area			112
LEGAL OPINIONS			113
WHERE YOU CAN FIND MORE INFORMATION			113
INCORPORATION BY REFERENCE			113
GLOSSARY OF TERMS TO THIS PROSPECTUS			115

 

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RISK FACTORS

You should consider the following risk factors in deciding whether to purchase the offered notes.

Risks Relating to Macroeconomic, Regulatory and Other External Factors

 

The Sponsor, the Servicer and its Affiliates Must Comply with Governmental Laws and Regulations that are Subject to Change and Involve Significant Costs		Ally Bank and its affiliates, including Ally Financial, are governed by numerous foreign, federal and state laws and the supervision and examination of various regulatory agencies. In July 2010, Congress passed the Dodd-Frank Act, which has adversely affected and could further impact the financial services industry. The financial services industry has undergone and may continue to undergo further increased regulation, such as additional disclosure and other obligations, restrictions on pricing and enforcement proceedings resulting from the Dodd-Frank Act and other governmental entities.
		Compliance with the implementing regulations under the Dodd-Frank Act and the oversight of the SEC, the Consumer Financial Protection Bureau (“CFPB”) or other government entities, as applicable, has imposed costs on, created operational constraints for, and placed limits on pricing of consumer products with respect to banks such as the sponsor. Because of the complexity of the Dodd-Frank Act, the ultimate impact of the Dodd-Frank Act and its effects on the financial markets and their participants will not be fully known for an extended period of time. Therefore, requirements imposed by the Dodd-Frank Act may have a significant future impact on the servicing of the receivables, or on the regulation and supervision of the servicer, the administrator, the sponsor, the depositor, the issuing entity or their respective affiliates.
		The CFPB has successfully asserted the power to investigate and bring enforcement actions directly against securitization vehicles. On December 13, 2021, in an action brought by the CFPB against National Collegiate Master Student Loan Trust, the U.S. District Court for the District of Delaware denied a motion to dismiss filed by a securitization trust by holding that the trust is a “covered person” under the Dodd-Frank Act because it engages in the servicing of loans, even if through servicers and subservicers. On February 11, 2022, the case was stayed pending the defendant’s interlocutory appeal to the Third Circuit Court of Appeals and possible consideration of, among other matters, whether the securitization trust is a “covered person” within the meaning of the Dodd-Frank Act. On April 29, 2022, the Third Circuit Court of Appeals granted the defendant’s petition for an interlocutory appeal. Depending upon the outcome of the appeal, the CFPB may not be able to proceed directly against the securitization trust in this matter. The CFPB may rely on this decision as precedent in investigating and bringing enforcement actions against other trusts, including the issuing entity, in the future
		In February 2022, the CFPB also issued a Compliance Bulletin stating its position that automobile loan holders and servicers are responsible for ensuring that their repossession-related practices, and the practices of their service providers, do not violate the law, and the CFPB also described its intention to hold loan holders and servicers liable for unfair,

 

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		deceptive, or abusive acts or practices related to the repossession of automobiles. It is possible that the CFPB may bring enforcement actions against securitization trusts holding automobile loans, such as the issuing entity, and servicers in the future.
Economic Developments May Adversely Affect the Performance and Market Value of Your Notes		A deterioration in economic conditions and certain economic factors, such as reduced business activity, high unemployment, volatile interest rates, rising or falling oil prices, housing prices, lack of available credit, the rate of inflation and consumer perceptions of the economy, as well as other factors, such as terrorist events, civil unrest, public health emergencies (including “COVID-19” or similar outbreaks), extreme weather conditions or political instability (such as the military conflict between Ukraine and Russia), or significant changes in the political environment or public policy, or an increase of obligors’ payment obligations under other indebtedness incurred by the obligors, could adversely affect the ability and willingness of obligors to meet their payment obligations under the receivables. Obligors may be unable to make timely payments or the servicer may elect to, or be required to, implement forbearance programs in connection with obligors suffering a hardship (including hardships related to a pandemic such as COVID-19). Further, labor shortages could result in staffing problems in various industries and businesses, including industries critical to the business and operations of the sponsor and the servicer and the servicing of the receivables, which could adversely affect the ability of the servicer and other transaction parties to perform their respective obligations under the transaction documents. All of the foregoing could affect the issuing entity’s ability to make payments on your notes.
		The United States has in the past experienced and in the future may experience a recession or period of economic contraction or volatility. During the recession that resulted from the outbreak of COVID-19, the United States experienced an unprecedented level of unemployment claims, economic volatility, inflation and a decline in consumer confidence and spending. The long-term impacts of social, economic and financial disruptions caused (directly and indirectly) by COVID-19 are unknown. Although the economy initially improved following the initial outbreak of COVID-19, the outlook for the U.S. economy remains uncertain and it is unclear whether the United States is experiencing, or soon will experience, another recession, which may adversely affect the performance of the receivables and the performance and market value of your notes. Recently, rapidly rising inflation and related economic policies have caused periods of economic contraction that may be prolonged. Periods of economic slowdown or recession are often characterized by elevated unemployment and diminished availability of credit, generally resulting in increases in delinquencies, defaults and losses on retail installment sale contracts and repossessions of the related financed vehicles. In addition, decreased consumer demand for motor vehicles and an increase in the inventory of used motor vehicles may depress the price at which repossessed motor vehicles may be sold or delay the timing of those sales. See “—New Car Incentive Purchase Programs and Other Market Factors May Reduce the Value of the Vehicles that Secure the Receivables” below.

 

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		If an economic contraction or downturn is experienced for a prolonged period of time, it is expected that the default rate on the receivables will increase and the price at which the related vehicles may be sold could decline. It is possible that a higher percentage of obligors will seek protection under bankruptcy or debtor relief laws as a result of financial and economic disruptions than is reflected in Ally Bank’s historical portfolio data. All of these factors could result in reduced or delayed payments on your notes.
		Additionally, an improvement in economic conditions could result in prepayments by the obligors of their payment obligations under the receivables. As a result, you may receive principal payments of your notes earlier than anticipated. No prediction or assurance can be made as to the effect of an economic downturn or economic growth on the rate of delinquencies, prepayments or losses on the receivables, and all of these factors could result in losses on your notes.
Limited Enforceability of the Receivables Could Reduce or Delay Payments on the Securities		Federal and state consumer protection laws regulate the creation and enforcement of consumer loans such as the receivables. Specific statutory liabilities are imposed upon creditors who fail to comply with these regulatory provisions. In some cases, this liability could affect an assignee’s ability to enforce secured loans such as the receivables and could also reduce the funds that the issuing entity would otherwise have to make payments on your securities.
The Impact of Climate Change Related Events, Including Efforts to Reduce or Mitigate the Effects of Climate Change, May Increase the Risk of Losses or Reduce the Return on Your Notes		Significant physical effects of climate change, such as extreme weather and natural disasters, may affect the obligors of the receivables. For example, obligors living in areas affected by extreme weather and natural disasters may suffer financial harm, reducing their ability to make timely payments on their receivables. The physical auctions that facilitate the disposition of the financed vehicles after repossession are also subject to disruption as a result of extreme weather and natural disasters, which could result in an inability to sell repossessed vehicles or a temporary or permanent decline in the market value of those vehicles. In addition, extreme weather and natural disasters may have industry- or economy-wide effects due to the interdependence of market actors. If such extreme weather or a natural disaster were to occur in a geographic region in which a large number of obligors are located, these risks would be exacerbated.
		Changes to laws or regulations enacted to address the potential impacts of climate change (including laws which may adversely impact the auto industry in particular as a result of efforts to mitigate the factors contributing to climate change) could have an adverse impact on the servicer, the sponsor, the depositor or the issuing entity and could adversely affect the timing and amount of payments on your notes.
		Any of those effects or their confluence could adversely affect the performance of the receivables or the market value of the financed

 

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		vehicles securing the receivables, which could result in losses or affect the timing of payments on your notes.
Risks Relating to the Characteristics, Servicing and Performance of the Receivables Pool
Longer Term Receivables May Increase the Frequency and Amount of Losses		The frequency and amount of losses may be greater for receivables with longer terms, because these receivables tend to have a somewhat greater frequency of delinquencies and defaults and because the slower rate of amortization of the principal balance of a longer term receivable may result in a longer period during which the value of the related financed vehicle is less than the remaining principal balance of such receivable. See “The Receivables Pool—Distribution of the Receivables Pool by Original Term” in this prospectus for the percentage of contracts with original terms of greater than 60 months.
New Car Incentive Purchase Programs and other Market Factors May Reduce the Value of the Vehicles that Secure the Receivables		The pricing of used cars is affected by the supply and demand for those cars, which, in turn, is affected by consumer demand and tastes, recalls, economic factors (including the price of gasoline and closure of dealerships), the introduction and pricing of new car models and other factors. Decisions by a manufacturer with respect to new vehicle production and brands, pricing and incentives may affect used car prices, particularly those for the same or similar models. An increase in the supply or a decrease in the demand for used cars may negatively impact the resale value of the vehicles securing the receivables. Decreases in the value of those vehicles may, in turn, reduce the incentive of obligors to make payments on the receivables and decrease the proceeds realized by the issuing entity from vehicle repossessions, which could result in losses on your notes.
		Initially stay at home orders enacted at the beginning of the COVID-19 pandemic restricted activity in both the new and used vehicle market causing disruptions to supply. The reduced supply of new and, as a consequence used vehicles, led to an increase in the value of used vehicles. Increased vehicle inventories may result from new vehicle supply returning and increased repossessions, which could adversely affect resale values. Economic factors will influence the affordability of new and used vehicles. Customer behavior may evolve with working from home arrangements, including the risk that working from home reduces the demand for vehicle purchases. All of these factors could have a negative impact on the resale value of the financed vehicles.
You May Suffer Losses on Your Investment Because The Indenture Trustee Does Not Have a Direct Perfected Security Interest In the Motor Vehicles Underlying the Receivables		Payments on the notes and the certificates are dependent on the payments made on the receivables and, in the case of non-payment of receivables,

 

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		the proceeds from the sale of the related vehicles. Each of the trust, the depositor and the indenture trustee derives its indirect perfected security interest in any specified vehicle through one or more assignments, commencing with an assignment from Ally Bank to the depositor. In the event of an insolvency of Ally Bank, the indenture trustee may be hindered or delayed in its ability to enforce its rights in the motor vehicles relating to defaulted receivables because the indenture trustee is not the secured party of record. Those hindrances and delays may result in a shortfall in liquidation proceeds available to repay noteholders. As a result, under those circumstances, you may experience a loss or delay in repayment of principal on your notes or distributions on the certificates.
Lack of First Priority Liens on Financed Vehicles or Receivables Could Make the Receivables Uncollectible and Reduce or Delay Payments on the Securities		If the security interests in the financed vehicles as described in “Legal Aspects of the Receivables—Security Interest in Vehicles” are not properly perfected, the interests of the depositor, the issuing entity and the indenture trustee in the financed vehicles would be subordinate to, among others, the following:
		(1)   bankruptcy trustee of the obligor,
		(2)   subsequent purchaser of the financed vehicle, and
		(3)   holder of a perfected security interest.
		As described in “The Receivables Pool—Tangible and Electronic Contracting” in this prospectus, for some receivables acquired in tangible form from the dealer, Ally Bank uses a third-party contractor to image the original tangible contract and convert such original tangible contract into electronic form. Once converted, Ally Bank maintains control of the electronic copies through a third-party custodian using the third-party custodian’s technology system. For receivables acquired in electronic form, Ally Bank acquires the contract electronically through the third-party custodian using the third-party custodian’s technology system. The third-party custodian’s technology system is designed to enable Ally Bank to perfect its interest in the receivables evidenced by electronic contracts by satisfying the Uniform Commercial Code’s requirements for “control” of electronic chattel paper. Ally Bank will obtain “control” of an electronic contract if (a) there is a “single authoritative copy” of the electronic contract that is readily distinguishable from all other copies and that identifies Ally Bank or Ally Financial as the assignee, (b) all other copies of the electronic contract indicate that they are not the “authoritative copy” of the electronic contract, (c) any revisions to the authoritative copy of the electronic contract are readily identifiable as either authorized or unauthorized revisions, and (d) authorized revisions of the electronic contract cannot be made without Ally Bank’s participation.
		The issuing entity and the indenture trustee may not be able to collect on a defaulted receivable in the absence of a perfected security interest in a vehicle financed by the receivable. Even if the issuing entity and the indenture trustee were to have a perfected security interest in the

 

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		financed vehicles, events could jeopardize the enforceability of that interest, such as:
		(1)   fraud or forgery by the vehicle owner,
		(2)   negligence or fraud by the servicer,
		(3)   mistakes by government agencies, and
		(4)   liens for repairs or unpaid taxes.
		See “Legal Aspects of the Receivables—Security Interest in Vehicles” in this prospectus.
		Financing statements will be filed in favor of the issuing entity, the depositor and the indenture trustee for the receivables sold to the issuing entity. The financing statements will perfect the security interests of the depositor, the issuing entity and the indenture trustee in the receivables. However, Ally Bank will serve as the custodian of the receivables and will not physically segregate or mark the receivable files to indicate that they have been sold to the depositor, sold by the depositor to the issuing entity or pledged by the issuing entity to the indenture trustee. See “The Transfer Agreements and the Servicing Agreements—Sale and Assignment of Receivables” in this prospectus. Additionally, if Ally Bank does not retain physical possession of a tangible contract or “control” for the purposes of the Uniform Commercial Code with respect to contracts which are electronic contracts, then the issuing entity’s security interest may be subordinate to the interest of another party that holds a prior interest based on its possession or “control.” See “Legal Aspects of the Receivables—Security Interest in Vehicles” in this prospectus.
		If another party purchases or perfects a first priority security interest in the receivables:
		(1)   for new value,
		(2)   in the ordinary course of business, and
		(3)   without actual knowledge of the depositor’s, the issuing entity’s or the indenture trustee’s interest in the receivables,
		then that purchaser or secured party may acquire an interest in the receivables that is senior to the issuing entity’s and the indenture trustee’s interest, and the collections on those receivables may not be available to make payments on your securities to the extent of such purchaser’s or secured party’s interest.

 

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Risks Relating to the Transaction Parties
Temporary Commingling of Funds by the Servicer Prior to Their Deposit into the Collection Account may Result in Losses or Delays in Payment on the Notes and the Certificates		The servicer receives collections on the receivables into an account of the servicer that contains other funds of the servicer and amounts collected by the servicer in respect of other receivables not owned by the issuing entity. Generally, the servicer is not required to transfer those funds to the collection account until two business days following receipt. This temporary commingling of funds prior to the deposit of collections on the receivables into the collection account may result in a delay or reduction in the amounts available to make payments on the notes if, in the event of a bankruptcy of the servicer, those funds are subject to the automatic stay under the bankruptcy laws or the servicer or the bankruptcy trustee is unable to specifically identify those funds and there are competing claims on those funds by other creditors of the servicer.
The Servicer Has Discretion Over the Servicing of the Receivables and the Manner in Which the Servicer Applies that Discretion May Impact the Amount and Timing of Funds Available to Pay Principal and Interest on the Notes and Distributions on the Certificates		The servicer has discretion in servicing the receivables, including the ability to grant payment extensions and to determine the timing and method of collection and liquidation procedures. See “Servicing Procedures” in this prospectus. The manner in which the servicer exercises that discretion could have an impact on the amount and timing of receipts by the trust from the receivables. The ability of the servicer to make modifications on the receivables is not expected to have a material impact on the distributions on the notes. The servicer, in its own discretion, may permit an extension on receivable payments due or halt repossession activity on a case-by-case basis or more broadly in accordance with its customary servicing procedures, for example, in connection with a natural disaster or public health emergency affecting a large group of obligors. For example, the servicer granted a significant number of extensions related to COVID-19, temporarily suspended involuntary repossession activities nationwide, and temporarily modified its customary servicing procedures to address other collections activity for COVID-19 affected customers. Payment extensions, other modifications to the receivables or delays in initiating repossession activity may extend the maturity of the receivables, increase the weighted average life of the notes and reduce the yield on your notes.
		If the servicer’s servicing procedures do not maximize the receipts from the receivables, the result may be losses or delays in payment on the securities. There are additional requirements with respect to the exercise of this discretion because the trust is a grantor trust. See “Servicing Procedures” in this prospectus.

 

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		Government rules and regulations have previously resulted in, and may in the future result in, additional regulations on repossessions activity, including periodic moratoriums on repossessions. In addition, supply chain issues related to the availability of new and used vehicles and the related fluctuating consumer demand for new and used vehicles may impact the resale value for returned and repossessed vehicles. If the servicer is delayed in repossessing a financed vehicle, unable to sell repossessed financed vehicles in a timely manner or unable to sell repossessed financed vehicles for an amount greater than the remaining principal balance of such receivable, you could experience increased losses on the related receivables and your notes.
The Insolvency or Replacement of the Servicer May Reduce or Delay Payments on the Notes		If Ally Bank were to cease acting as servicer for any reason, including as a result of an Ally Bank insolvency, collection practices of a successor servicer, which under certain circumstances may be the indenture trustee, may vary from those of Ally Bank. In addition, after a successor servicer is appointed, the successor servicer may experience some inefficiencies as a result of the transition. While Ally Bank is not permitted to resign or be terminated as servicer until a replacement servicer is installed, if Ally Bank were to become incapable of acting as servicer, a successor servicer had not yet accepted appointment and the indenture trustee failed to satisfy its obligations to act as replacement servicer, there could be a disruption in servicing that could result in a delay or decrease in collections on the receivables. It may become increasingly difficult to identify a qualified successor servicer other than the indenture trustee because the servicing fee is calculated as a percentage of the aggregate receivables face amount and some cost components of servicing are fixed; consequently, as the pool amortizes, the servicing fee will diminish at a greater rate than the cost of servicing. For the foregoing reasons, if there is a need to replace the servicer, you may experience delays or reductions in the payments on your securities.
FDIC Receivership or Conservatorship of Ally Bank Could Result in Delays in Payments or Losses on Your Notes		Ally Bank is a Utah chartered bank and its deposits are insured by the Federal Deposit Insurance Corporation, or the “FDIC.” If Ally Bank becomes insolvent, is in an unsound condition, violates its bylaws or regulations or engages in similar activity, the FDIC could be appointed as conservator or receiver for Ally Bank. In a receivership or conservatorship of Ally Bank, the FDIC as receiver or conservator would have broad powers to delay or reduce payments on your notes, if the FDIC were to be successful in:
		•   attempting to recharacterize the securitization of the receivables as a loan or otherwise attempting to recapture the receivables that have been conveyed to the issuing entity; or
		•   requiring the issuing entity, as assignee of the depositor, to go through an administrative claims procedure to establish its rights to payments collected on the receivables; or
		•   requesting a stay of proceedings to liquidate claims or otherwise enforce contractual and legal remedies against Ally Bank; or

 

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		•   repudiating without compensation Ally Bank’s ongoing servicing obligations under the servicing agreement, such as its duty to collect and remit payments or otherwise service the receivables; or
		•   arguing that a statutory injunction automatically prevents the indenture trustee and other transaction parties from exercising their rights, remedies and interests for up to 90 days.
		To limit the FDIC’s potential use of any of these powers, Ally Bank has structured this transaction to take advantage of a special regulation that the FDIC has created, entitled “Treatment of financial assets transferred in connection with a securitization or participation.” This FDIC regulation, which we refer to as the “FDIC Rule,” contains four separate safe harbors for transactions; in this prospectus, we describe the safe harbors applicable to securitizations based on whether the securitizations do or do not qualify for sale accounting treatment. The FDIC Rule limits the rights of the FDIC, as conservator or receiver, to delay or prevent payments to noteholders in securitization transactions. For a description of the FDIC Rule’s preconditions and effects, including the uncertainty regarding its application and interpretation, see “Insolvency Aspects of the Offerings—FDIC Rule” in this prospectus.
Risks Relating to the Nature of the Notes and the Structure of the Transaction
Principal and Interest Payments on the Notes Depend on Collections on the Receivables		The issuing entity’s ability to make principal and interest payments on the notes will depend on the amount of collections on the receivables, the amount of receivables that default and the amount on deposit in the reserve account. If there are decreased collections, increased defaults or insufficient funds in the reserve account, you may experience delays or reductions in payments on your notes.
Ally Bank and the Depositor Have Limited Obligations to the Issuing Entity and They Will Not Make Payments on the Securities		Ally Bank, the depositor and their respective affiliates other than the issuing entity are generally not obligated to make any payments to you on your notes or the certificates and do not guarantee payments on the receivables or your notes or the certificates. However, Ally Bank, as seller, will make representations and warranties regarding the characteristics of the receivables and these representations and warranties will then be assigned to the issuing entity. If Ally Bank, as seller, breaches the representations and warranties, it may be required to repurchase the applicable receivables from the issuing entity. Also, if Ally Bank, as servicer, breaches any covenant that materially and adversely affects the noteholders, it may be required to purchase the related receivables. If the seller fails to repurchase, or the servicer fails to purchase, the applicable receivables as and when required, you might experience reductions or delays in payments on your securities. See “The Transfer Agreements and the Servicing Agreements—Sale and Assignment of Receivables” in this prospectus. Further, absent a breach

 

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		of a representation and warranty, or a breach of a servicing covenant specifically requiring repurchase, Ally Bank will have no obligation to repurchase any receivable for which the related obligor received an extension or modification.
The Assets of the Issuing Entity Are Limited and Are the Only Source of Payment for the Securities		The issuing entity will not have any significant assets or sources of funds other than the receivables or its rights in the reserve account. The securities will only represent interests in or obligations of the issuing entity. The securities will not be insured or guaranteed by Ally Bank, the servicer, the depositor, the owner trustee, the indenture trustee, any of their respective affiliates or any governmental entity. You must rely primarily on payments on the receivables and on the reserve account for repayment of your securities. In addition, for defaulted receivables, you may have to look to the obligors on those receivables and the proceeds from the repossession and sale of financed vehicles which secure defaulted receivables. If these sources are insufficient, you may receive payments late or not receive back your full principal investment or all interest due to you. See “The Notes—Distributions,” “The Transfer Agreements and the Servicing Agreements—Credit Enhancement” and “Legal Aspects of the Receivables” in this prospectus.
Prepayments on and Repurchases of the Receivables Could Shorten the Average Life of the Securities		Obligors may prepay the receivables in full or in part at any time. In addition, the receivables may be prepaid as a result of defaults or from credit life, disability or physical damage insurance. Also, the seller, the servicer or the depositor may be required to repurchase or purchase, as applicable, receivables from the issuing entity in specified circumstances, as detailed in this prospectus under “The Transfer Agreements and the Servicing Agreements—Sale and Assignment of Receivables” and the servicer may have the right to purchase all remaining receivables from the issuing entity pursuant to its optional purchase right.
		A prepayment, repurchase, purchase or liquidation of the receivables, including liquidation of defaulted receivables, could shorten the average life of the securities. A variety of unpredictable economic, social and other factors influence prepayment rates.
		You will bear all reinvestment risk resulting from a faster or slower rate of prepayment, repurchase or extension of the receivables held by the issuing entity.
The Class A Notes are Subject to Risk Because Payments on the Class A Notes are Subordinated to Servicing Fees and Other Payments		The Class A Notes are subject to risk because payments of principal and interest on the Class A Notes are subordinated, as described below, to servicing fees, payments to the asset representations reviewer and payments to the indenture trustee and the vote tabulation agent with respect to an asset representations review.

 

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		Principal and interest payments on the Class A Notes on each distribution date will be subordinated to the basic servicing fee due to the servicer, payments to the asset representations reviewer, payments to the indenture trustee and the vote tabulation agent with respect to an asset representations review. If an event of default occurs and the notes are accelerated, principal payments on the Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes will be subordinated to principal payments on the Class A-1 Notes, principal payments on the Class A-3 Notes and the Class A-4 Notes will be subordinated to principal payments on the Class A-1 Notes and the Class A-2 Notes and principal payments on the Class A-4 Notes will be subordinated to principal payments on the Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes. This subordination could result in reduced or delayed payments of principal and interest on the Class A Notes.
You May Receive an Early Return of Your Investment or Incur a Shortfall in the Return of Your Investment Following an Event of Default Under the Indenture		If an event of default occurs under the indenture, the holders of a majority of the aggregate principal balance of the controlling class of the notes may declare the accrued interest and outstanding principal on the notes immediately due and payable. In that event, the indenture trustee may be directed to sell the receivables and other assets of the trust and apply the proceeds to repay the notes. The manner of sale will affect the amount of proceeds received and available for distribution. The liquidation and distribution of trust assets may result in an early return of principal to noteholders. You may not be able to reinvest the principal repaid to you for a rate of return or maturity date that is as favorable as those on your notes. Also, the proceeds from sale of the trust assets may not be sufficient to fully pay amounts owed on the notes. Those circumstances may result in losses to noteholders.
Retained Notes May Reduce the Liquidity of Your Notes and Subsequent Sales by the Depositor or an Affiliate May Adversely Affect Their Value		Approximately 5% (by initial principal balance) of each of the Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes will be retained by the depositor or another majority-owned affiliate of the sponsor. If any such retained notes are subsequently sold by the depositor or the other affiliate, the demand and the market price of the notes already in the market could be adversely affected.
Financial Market Disruptions and a Lack of Liquidity in the Secondary Market Could Adversely Affect the Market Value of Your Notes or Limit Your Ability to Resell Your Notes		The securities will not be listed on any securities exchange. Therefore, in order to sell your securities, you will need to find a willing buyer. The underwriters may assist in the resale of securities, but they are not required to do so. Additionally, events in the global financial markets, including the failure, acquisition or government seizure of major financial institutions, the establishment of government bailout programs

 

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		for financial institutions, problems related to financial assets, the de-valuation of various assets in secondary markets, the forced sale of asset-backed and other securities as a result of the de-leveraging of structured investment vehicles, hedge funds, financial institutions and other entities and the lowering of ratings on certain asset-backed securities, have caused and could further cause a significant reduction in liquidity in the secondary market for asset-backed securities. A period of illiquidity may adversely affect both the market value of your securities and your ability to sell the securities. As a result, you may be unable to obtain the price that you wish to receive for your securities or you may suffer a loss on your investment. In addition, recent regulatory interpretations by the SEC under Exchange Act Rule 15c2-11 may restrict the ability of brokers and dealers to publish quotations on the notes on any interdealer quotation system or other quotation medium after January 4, 2025, which may negatively affect liquidity in the secondary market. Illiquidity can have a severe adverse effect on the prices of securities that are especially sensitive to prepayment, credit or interest rate risk, such as the securities.
The Ratings for the Notes Are Limited in Scope, May be Unsolicited, May Not Continue to Be Issued and Do Not Consider the Suitability of the Notes for You		We expect to hire rating agencies to rate the notes for the trust. The notes may receive a rating from a rating agency not hired to rate the notes. A security rating is not a recommendation to buy, sell or hold the notes. The rating considers only the likelihood that the trust will pay interest on time and will ultimately pay principal in full. Ratings on the notes do not address the timing of distributions of principal on the notes prior to their applicable final scheduled distribution date. The ratings do not consider the prices of the notes or their suitability to a particular investor. The ratings may be revised or withdrawn at any time, and rating agencies not hired to rate the notes may provide an unsolicited rating that is different from or lower than the ratings provided by the rating agencies hired to rate the notes. If a rating agency issues a rating lower than the solicited ratings, changes its rating or withdraws its rating, no party has an obligation to provide additional credit enhancement or to restore the original rating. None of the sponsor, the servicer or any of their respective affiliates is under any obligation to monitor or disclose any changes to the ratings. There may be a conflict of interest for the rating agencies hired to rate the notes because the sponsor paid the fee charged by each rating agency for its rating services. Additionally, if any rating agency provides an unsolicited rating that is lower than the ratings provided by the rating agencies hired to rate the notes, the market value of the notes may be adversely affected. Moreover, criminal, civil or regulatory actions or other events adverse to a rating agency hired to rate the notes may have a detrimental effect on the credibility of such rating agency’s ratings, which could have an adverse effect on the market value of your notes.

 

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SUMMARY OF TRANSACTION PARTIES ^*

 

 

*	This chart provides only a simplified overview of the relationships among the key parties to the transaction. Refer to this prospectus for a further description.

**

See “Summary—Priority of Distributions” for a description of the relative priorities of each class. Approximately 5% (by initial principal balance) of each of the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, the Class B Notes, the Class C Notes and the Class D Notes will be retained by the depositor or another majority-owned affiliate of the sponsor. The Class A-1 Notes, the Class B Notes, the Class C Notes and the Class D Notes (other than the EVI) will be sold in one or more private placements or retained initially by the depositor or its affiliate. The depositor or its affiliate will retain the right to sell at any time all or a portion of such retained notes to the extent that it is not required to retain such notes. The certificates will be retained by the depositor, a majority-owned affiliate of the sponsor or another affiliate of the depositor as described in “Credit Risk Retention” in this prospectus.

 

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SUMMARY OF MONTHLY DEPOSITS TO AND WITHDRAWALS FROM ACCOUNTS*

 

 

*	This chart provides only a simplified overview of the monthly flow of funds. Refer to this prospectus for a further description.

 

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THE SPONSOR

Ally Bank is the sponsor of the transaction set forth in this prospectus.

Ally Bank was incorporated in 2004 under the laws of the State of Utah relating to industrial loan corporations under the name “GMAC Automotive Bank,” and changed its name to “GMAC Bank” in 2006. In December 2008, GMAC Bank converted into a Utah-chartered commercial nonmember bank and in May 2009 further changed its name to “Ally Bank.” In March 2016, Ally Bank received approval from the Board of Governors of the Federal Reserve System (“FRB”) to become a state member bank and be regulated by the FRB through the Federal Reserve Bank of Chicago. Ally Bank is subject to regulation primarily by the FRB and the Utah Department of Financial Institutions.

The sponsor is a wholly-owned indirect subsidiary of Ally Financial. On December 24, 2008, and in connection with the conversion of Ally Bank into a Utah-chartered commercial nonmember bank, Ally Financial and IB Finance Holding Company, LLC (“IB Finance”) were each approved by the FRB as bank holding companies under the Bank Holding Company Act of 1956, as amended (“BHCA”). IB Finance is the direct holding company for Ally Bank and is a subsidiary of Ally Financial. As a result, Ally Financial and IB Finance are now subject to the supervision and examination of the FRB.

Ally Bank has its principal office at 200 West Civic Center Drive, Sandy, Utah, 84070, Tel. No. (801) 790-5000, and administrative offices at 1100 Virginia Drive, Ft. Washington, Pennsylvania 19034.

Ally Bank’s financing operations are organized into two segments—automotive and mortgage products. Ally Bank provides automotive financial services primarily to and through dealerships and to the customers of those dealerships. The products and services offered by Ally Bank’s automotive financing operations include the funding of retail installment sale contracts, lease contracts, refinance loans, loans in connection with vehicle purchases by customers at the end of a lease, extension of term loans, loans to dealers for the financing of dealer inventory and other lines of credit.

In the retail market, Ally Bank provides vehicle financing to consumers through automotive dealerships, under the Ally Bank brand name. In most cases, Ally Bank purchases retail installment sale contracts and lease contracts for new and used vehicles and other products from dealers.

Ally Bank has been actively acquiring or originating assets, including retail installment sale contracts, lease contracts and loans to dealers for the financing of dealer inventory, since its incorporation in 2004. Ally Bank began securitizing retail assets in 2009, wholesale assets in 2010 and lease assets in 2011, and last sponsored a securitization of its retail auto receivables in conjunction with a public offering of asset-backed securities in October 2022. Ally Bank has sponsored over 55 securitizations in registered offerings and private placement transactions of its retail auto receivables and lease assets. As of September 30, 2022, approximately $8,560,023,878 of retail auto receivables originated by Ally Bank, or approximately 9.34% of the total outstanding retail auto receivables originated by Ally Bank, were pledged in connection with asset-backed securitization transactions. As of September 30, 2022, none of the prior securitizations sponsored by Ally Bank have defaulted or experienced an early amortization or similar triggering event.

Ally Bank has participated in the structuring of the transaction described in this prospectus and has originated the receivables to be assigned to the issuing entity. Ally Bank’s experience in and overall procedures for originating or acquiring retail auto receivables is described under “Acquisition and Underwriting.”

When Ally Bank securitizes automotive retail installment sale contracts and wholesale finance receivables, it may retain an interest in the sold assets. These interests may take the form of asset-backed securities, including senior and subordinated interests in the form of investment grade, non-investment grade or unrated securities. The EVI in the trust retained by the depositor or another majority-owned affiliate of the sponsor is described under “Credit Risk Retention” in this prospectus.

None of Ally Bank or any of its affiliates other than the issuing entity will be obligated to make, or otherwise guarantee, any principal, interest or other payment on the notes or the certificates.

 

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For further details with respect to Ally Bank’s prior retail vehicle installment sale contract securitizations over the last five years, see “Appendix A—Static Pool Data” in this prospectus.

ACQUISITION AND UNDERWRITING

Acquisition and Underwriting

Ally Bank acquires or originates the receivables in the ordinary course of its business from participating automobile and light truck dealers in accordance with the requirements of its agreements with dealers. Ally Bank has acquired or originated the receivables in the trust by taking assignment of retail installment sale contracts from dealers or making loans in connection with vehicle purchases by customers at the end of a lease.

Ally Bank’s process of acquiring receivables begins, in general, with the application by a customer for financing from a dealer for the purchase of a motor vehicle. Applications are initiated through websites established and maintained by third parties.

Ally Bank currently uses an underwriting process in which applications are reviewed solely by Ally Bank credit underwriters. For receivables originated prior to April 2017, Ally Bank and Ally Financial used an underwriting process in which applications were reviewed solely by Ally Financial credit underwriters. Under the previous process, those credit underwriters used Ally Bank’s underwriting standards when evaluating applications on behalf of Ally Bank.

The current application evaluation process begins with the placement of each application into one of 19 analytical categories or “segments,” based on specified aspects of the applicant’s credit profile and, in many cases, whether the related vehicle is new or used. Ally Bank then evaluates each application by applying a proprietary credit scoring algorithm, which it refers to as a “scorecard,” tailored to the applicable segment. Ally Financial and Ally Bank designed the initial scorecards with assistance from a third party credit scoring company. Inputs used by the scorecards vary, but typically include, among other items: (1) severity and aging of delinquency; (2) number of credit inquiries; (3) loan-to-value ratio; and (4) payment-to-income ratio. The scorecards are reviewed and updated on a periodic basis in order to account for changes in the perceived impact of specific inputs on applicant creditworthiness. The most recent scorecard redevelopment was implemented in August 2017.

The output of the proprietary scorecard is referred to as the “Ally score.” The Ally score predicts the statistical likelihood that a loss will occur with respect to that receivable, but does not predict the performance of any receivable with certainty. Ally Bank uses the Ally score and other credit scores to sort applicants into 30 tier grades. Concurrently with this process, Ally Bank takes other steps to gather information regarding the applicant, such as checking lists maintained by the Office of Foreign Assets Control and performing fraud and duplicate application checks.

Once the information is gathered, Ally Bank analyzes the application to determine whether to approve it and offer to purchase the receivable. These determinations are made on the basis of all of the information available to Ally Bank, including the following:

 

•

the applicant’s credit tier and Ally score,

 

•

the applicant’s experience in managing installment and revolving debt,

 

•

the asset value of the vehicle and the loan-to-value ratio for the receivable,

 

•

the term of the receivable, and

 

•

the applicant’s ability to pay.

Applications are first evaluated through an automated process. Applications are approved or declined and credit decisions are made either entirely through the automated process or through the automated process followed by manual review by a credit underwriter. Ally Bank developed its automated process in order to expedite the review of

 

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applications. The automated process uses an algorithm to approve applications with various combinations of credit factors. As a result, there are many clusters of credit factors that will lead to an automated approval, rather than one or a few sets of benchmark characteristics. Final approval based solely on automated approval, without manual review, is limited to the higher quality credit tiers. However, even in the higher quality credit tiers, a significant portion of approved applications are approved by credit underwriters rather than by the automated process.

For approved applications, buy rates applicable to the installment sale contracts are assigned on the basis of the Ally score in accordance with pricing tiers that are currently managed by Ally Bank and that prior to April 2017 were managed by Ally Financial and Ally Bank.

Ally Bank may use programs developed and maintained by the sponsor or third parties that would allow it to complete the entire contracting process electronically. The resulting contracts will be electronically signed by the related obligors and maintained by the sponsor or third parties in electronic form only.

Underwriting Exceptions

Ally Bank has established a series of policies, or “underwriting criteria,” that apply to the review of a credit application. The underwriting criteria contain guidelines for many attributes of an application, such as a maximum loan-to-value ratio, maximum payment-to-income ratio, minimum credit score, and, for lower credit quality applicants, maximum debt-to-income ratio. For used vehicles, additional guidelines exist for vehicle model year and mileage. Some, but not all, of these guidelines will vary according to the credit tier of the applicant or the term of the proposed contract, with a higher credit tier or a shorter contract term generally having a more permissive guideline.

Credit underwriters have a limited ability to approve exceptions to the guidelines contained in the underwriting criteria. Exceptions to the underwriting criteria must be approved by credit underwriters with appropriate credit authority. Approved applicants that do not comply with all credit guidelines typically have strong compensating factors that indicate a high ability of the applicant to repay the receivable, such as a co-obligor, a lower loan-to-value ratio or a shorter term. Examples of underwriting exceptions may include allowing a longer term or a greater ratio of payment to income, debt to income or loan to value than the standard allowances for such criteria or allowing higher mileage or an earlier model year for a used vehicle. Ally Bank monitors exceptions to the guidelines, with the goals of limiting exceptions to a small portion of approved applications and rarely permitting more than a single exception for any contract. Information regarding receivables that constituted exceptions to the guidelines is disclosed in this prospectus under “The Receivables Pool—Exceptions to Underwriting Guidelines.”

Subvention

Some receivables are originated under incentive programs sponsored by vehicle manufacturers, for which the financing rates are below the standard rates at which Ally Bank otherwise offers financing under retail contracts. Those receivables are referred to as subvented receivables.

Because the rates on the subvented receivables are lower than would otherwise be offered by Ally Bank, Ally Bank purchases those subvented receivables from the dealers and the applicable manufacturer pays the present value of the difference between the customer’s subvented rate and Ally Bank’s standard rate to Ally Financial on behalf of the dealer selling the related vehicle and Ally Financial forwards such amount to Ally Bank.

The percentage of subvented receivables in the pool is disclosed in this prospectus. See “The Receivables Pool—Composition of the Receivables Pool—(Total: New and Used).” Subvention is not taken into account by Ally Bank when determining the “odds” credit scoring.

THE SERVICER

On the closing date, Ally Bank, a Utah chartered bank, will be appointed the servicer of the pool of retail installment sale contracts to be owned by the trust pursuant to the servicing agreement among the servicer, the trust and the depositor. Ally Financial and Ally Bank will have serviced those retail installment sale contracts on behalf of Ally Bank prior to the transfer under the pooling agreement.

 

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Ally Bank began servicing assets in April 2016. Between April 2016 and March 2017, Ally Bank acted as a sub-servicer for Ally Financial with responsibility for certain servicing activities related to the entire U.S. portfolio of retail installment sale contracts and leases that were not delinquent and serviced by Ally Financial. Ally Bank performs its servicing operations from centers located in Jacksonville, Florida; Lewisville, Texas; and Detroit, Michigan. Since March 2017, Ally Bank began acting as primary servicer for its retail installment sale contracts and leases. Ally Bank only acts as servicer or sub-servicer with respect to receivables it originates or acquires for itself and Ally Financial and its affiliates and does not service assets that were not originated or acquired by Ally Bank for any other parties.

Ally Bank has entered into agreements with Ally Servicing LLC, or “Ally Servicing,” and Ally Financial under which Ally Servicing and Ally Financial have agreed to provide services with respect to the trust. Ally Servicing and Ally Financial act at the direction of Ally Bank and in compliance with the servicing agreement. For a further description of the servicing agreement, see “The Transfer Agreements and the Servicing Agreements” in this prospectus. In the event of any removal of Ally Bank as the servicer, Ally Servicing and Ally Financial may no longer be involved in the servicing of the receivables.

Ally Servicing is a wholly owned subsidiary of Ally Bank. Ally Servicing, a Delaware limited liability company, was originally incorporated as AccuTel, Inc. on April 8, 1999. On July 21, 2005, AccuTel changed its name to Semperian, Inc. Semperian, Inc. subsequently converted to a limited liability company. Semperian LLC changed its name to Ally Servicing LLC in August 2010.

Ally Servicing has its principal office at Ally Detroit Center, 500 Woodward Avenue, Detroit, Michigan 48226 Tel. No. 888-925-2559.

Since 1999, Ally Servicing has acted as a sub-servicer for Ally Financial, and has assumed increased servicing responsibilities over time. Currently, Ally Servicing acts as a sub-servicer for the entire U.S. portfolio of retail installment sale contracts and leases serviced by Ally Bank. Ally Servicing performs its sub-servicing operations from centers located in Jacksonville, Florida; Shoreview, Minnesota; Lewisville, Texas; and Little Rock, Arkansas. Ally Servicing acts as sub-servicer for Ally Bank and its affiliates, including Ally Financial, and acts as servicer for one or more third-parties beginning in the second quarter of 2022.

Prior to March 2017, Ally Financial, directly and through its subsidiaries, most notably Ally Servicing and Ally Bank, serviced prime and non-prime automobile retail installment sale contracts and leases acquired or originated by it and others on behalf of banks, credit unions, finance companies and securitized trusts.

General Motors Acceptance Corporation, the predecessor of Ally Financial, was incorporated in 1919 under the New York Banking Law relating to investment companies. General Motors Acceptance Corporation relinquished that status and became a Delaware corporation on January 1, 1998. In July 2006, General Motors Acceptance Corporation converted to a Delaware limited liability company and changed its name to GMAC LLC. In June 2009, GMAC LLC converted to a Delaware corporation and changed its name to GMAC Inc. On May 10, 2010, GMAC Inc. changed its name to Ally Financial Inc. Ally Financial has its principal corporate offices in Detroit, Michigan and Charlotte, North Carolina. It provides services from multiple locations throughout the United States.

On November 30, 2006, General Motors Corporation sold 51% of the common equity interests of Ally Financial to a consortium of investors, led by an affiliate of Cerberus Capital Management, L.P. We refer to that transaction as the “Acquisition.”

On December 24, 2008, and in connection with the conversion of GMAC Bank into a Utah-chartered commercial nonmember bank, Ally Financial and IB Finance were each approved by the FRB as bank holding companies under the BHCA. IB Finance is a subsidiary of Ally Financial and the direct holding company for Ally Financial’s bank depository institution, GMAC Bank, which is now known as Ally Bank. On December 23, 2013, Ally Financial was approved by the FRB as a financial holding company under the BHCA.

Since becoming a bank holding company, Ally Financial received various investments from the U.S. Department of the Treasury, the “Treasury,” in connection with the Treasury’s Supervisory Capital Assessment Program. On November 20, 2013, Ally Financial repurchased all of the Treasury’s then outstanding mandatorily convertible preferred stock. On April 15, 2014, Ally Financial closed an initial public offering of 95,000,000 shares

 

26

of its common stock. The Treasury announced on December 19, 2014 that it had sold its remaining Ally Financial common stock.

A table under “The Sponsor’s Portfolio Data—Delinquencies, Repossessions, Bankruptcies and Net Losses” sets forth the size and composition of the total portfolio of retail vehicle installment sale contracts of Ally Bank for which Ally Financial has provided servicing in each of the last five years.

SERVICING PROCEDURES

Some of the principal functions of the servicer are tracking the balances of outstanding receivables, notifying obligors of the amounts and due dates of their required payments, communicating with obligors regarding their accounts, seeking to collect overdue payments and, where necessary, charging off receivables and repossessing and liquidating the related motor vehicle. Subject to provisions in the servicing agreement restricting the servicer or specifying obligations different from its customary standards, policies and procedures for a grantor trust, pursuant to its customary standards, policies and procedures, comparable to practices followed by the servicer in servicing receivables for itself or other third parties (the “Established Collection Procedures”), and to its obligation under the transaction documents to make reasonable efforts to collect all payments on the receivables, the servicer may grant modifications, amendments, adjustments or extensions on a receivable.

The servicer may only make certain limited extensions or modifications. The servicer may amend or otherwise modify any receivable so that the amount financed or the number of originally scheduled due dates is altered or the last scheduled due date occurs after the final scheduled distribution date solely if, (a) in the judgement of the servicer, pursuant to the Established Collection Procedures, it is reasonably foreseeable that the obligor will default (it being understood that the servicer may proactively contact any obligor whom the servicer believes may be at a higher risk of a payment default under the related receivable) and (b) the servicer believes that such amendment or modification is appropriate or necessary to preserve the value of such receivable and to prevent such receivable from going into default (or, where such receivable is already in default, to prevent such receivable from being further impaired) (a “Permitted Payment Modification”). If an obligor requests an extension, the servicer may only grant an extension if it believes that such extension is necessary to prevent the receivable from going into default or from becoming further impaired and that such extension does not exceed 90 days in the aggregate during any 12-month period and 180 total days during the life of the receivable. If the obligor requests a modification due to a long-term hardship, the servicer may grant a modification if it believes that such modification is necessary to preserve property ownership and prevent the receivable from going into default or becoming further impaired and that such modification aligns with applicable laws and regulations. The servicer has the discretion to grant any modification if it delivers an opinion of counsel to the owner trustee to the effect that such modifications will not cause the trust to fail to qualify as a grantor trust for federal income tax purposes. In addition, the servicer may make modifications that are ministerial in nature, such as changing the payment due date. In addition, the servicer may amend or otherwise modify any receivable in accordance with or in order to comply with applicable law (including regulatory guidance, and including the Servicemembers Civil Relief Act or similar applicable state law).

Beginning on March 18, 2020, Ally Bank implemented a relief program to assist customers impacted by COVID-19. Obligors requesting relief under the program had the option to elect to extend their payments for up to 120 days without late fees being incurred, but with finance charges continuing to accrue. The length of the extension offered was reduced incrementally over time. As of June 21, 2020, customer relief under the program was no longer available.

Subject to the restrictions on discretion because the trust is a grantor trust and any additional restrictions in the servicing agreement, the servicer is allowed, for example, without the prior consent of the depositor, the trust, the indenture trustee, the owner trustee, or any other person, to establish the means and timing for contacting obligors regarding overdue payments, repossessing the vehicles securing the receivables, delivering notices, demands, claims, complaints, responses or other documents in connection with any proceedings, executing any instruments of satisfaction or cancellation, or of partial or full release or discharge of underlying obligors, granting extensions or adjustments on a receivable and waiving any late payment, or any other fees or charges that may be collected in the ordinary course of servicing such receivables. The servicer is not liable for the exercise of discretion made in good faith and in accordance with its established servicing procedures.

 

27

The servicer maintains the account information with respect to each serviced account. That information resides on a centralized accounts receivable system that is currently maintained by Ally Bank at a co-located data center. The servicer is also responsible for maintaining title records with respect to vehicles securing serviced contracts together with the related contract. As of the date of this prospectus, those documents are maintained for the servicer by PDP Group, Inc. at a facility in Hunt Valley, Maryland. Images of those documents are maintained on systems maintained at and accessible from locations different from the locations of the physical documents. Each contract included in the pool is marked on the applicable computer files to indicate its transfer to the trust.

The servicer will make reasonable efforts to collect all payments due on the receivables held by the trust and will, consistent with the servicing agreement, follow the collection procedures it follows for comparable motor vehicle receivables that it services for itself or others. See “Legal Aspects of the Receivables” in this prospectus.

The servicer produces and mails a monthly statement of account, or electronically delivers notification of statement availability through its website, to obligors prior to the due date of the related payment. Payments may be made either by check, debit card or through an automated clearing house (ACH) debit of the obligor’s account. If the payment remains outstanding, the servicer mails an initial notice of overdue payment to the obligor on or about the eighth day following the due date.

Obligors whose payment remains delinquent for a specified period following the payment due date are assigned to collections groups based on their risk profile, which is formulated from an algorithm tied to the obligor’s payment history. Most obligors initially receive an automated voice message, email or SMS text notifying them of the delinquency. If a payment remains outstanding, most accounts are subsequently assigned to the early-stage collections group, which contacts obligors using manual dialing, an automated dialing system, SMS text or email. Early-stage collections are performed by Ally Servicing or are outsourced to third parties with which Ally Servicing contracts for the provision of collection related services. These third parties act under the direct supervision of Ally Servicing and are required to follow the servicer’s servicing policies.

Based on the algorithm, responsibility for calls progresses to the mid-stage collections group at differing times but generally around 31 days past due. The mid-stage collection teams attempt to establish contact with the obligor by telephone, SMS text or email, and continue to attempt to obtain payment. Mid-stage collections are performed by Ally Servicing or are outsourced to third parties with which Ally Servicing contracts for the provision of collection related services. These third parties act under the direct supervision of Ally Servicing and are required to follow the servicer’s servicing policies.

Depending on the risk profile, delinquent accounts typically progress from the mid-stage collections group to the late-stage collections group generally around 60 days past due. The late-stage collection teams attempt to establish contact with the obligor by telephone, SMS text or email, and continue to attempt to obtain payment. Late-stage collection activity is performed by Ally Servicing.

If the servicer determines that eventual payment in full of a receivable is unlikely, the servicer will follow its normal practices and procedures to realize upon the receivable, including the repossession and disposition of the financed vehicle securing the receivable at a public or private sale, or the taking of any other action permitted by applicable law. The servicer will be entitled to receive its liquidation expenses as specified in the servicing agreement as an allowance for amounts charged to the account of the obligor, in keeping with the servicer’s customary procedures, for refurbishing and disposition of the financed vehicle and other out-of-pocket costs incurred in the liquidation. See “Certain Fees and Expenses” in this prospectus.

Accounts for which the servicer has made a determination to repossess the vehicle are referred to an outside repossession company located in the area of the obligor or in some cases, to a national provider. Those repossession companies are generally small local operations whose sole function is to repossess the related motor vehicle. In some areas, accounts issued for repossession are assigned to a service provider who oversees the repossession activity of their subcontractor. The service provider is responsible for the activity of the subcontractor. Typically, once the car is repossessed, a letter is sent to the obligor to inform them of the repossession, an affidavit of repossession is produced and title is obtained. Generally, the vehicle is then sold at auction (traditional auction or SmartAuction), although, at Ally Bank’s discretion, to maximize net proceeds, limited repairs and or refurbishing may be performed prior to sale.

 

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On March 17, 2020, Ally Bank temporarily suspended all repossession activities in all 50 states in response to the COVID-19 pandemic. Only essential recoveries (where allowed by law) continued to occur, which included impounded vehicles, customer surrenders and fraud vehicles. Ally Bank has resumed involuntary repossession activity where permitted by local law, but may elect (or be required) to again suspend such activity at any time in the future.

The net sale proceeds are applied to reduce the balance owing by the obligor. Excess proceeds, if any, are remitted to the obligor. To the extent there are deficiency balances, Ally Bank may elect to attempt to collect such deficiency balances. Deficiency balances are otherwise charged off. Following charge off, the account is assigned to recovery operations for evaluation and possible further attempts to collect amounts owing by the obligor. There is an exception to that process for obligors in bankruptcy.

The retail installment sale contracts require that each obligor on the receivables obtain physical damage insurance covering the vehicle securing each receivable. If an obligor fails to maintain insurance, the servicer may, but is not obligated to, purchase collateral protection insurance, which consists of obtaining a new policy on the obligor’s behalf. If collateral protection insurance is obtained, the servicer charges the related account in an amount equal to the cost of the insurance. Currently, the servicer does not actively monitor whether or not each obligor maintains physical damage insurance.

The securitized pool contains large numbers of individual retail installment sale contracts entered into by obligors located throughout the United States. This factor requires that the servicer of those contracts have a breadth and scale of operations that may not be required to effectively service many other types of assets. In addition, the security for each contract is a motor vehicle. The processing and maintenance of title and other information related to those motor vehicles requires specific systems capabilities and experience. In addition, repossessing those assets when appropriate requires knowledge and experience as to the methods for taking possession of and retitling the motor vehicle and contacts with the network of auctioneers through which the repossessed vehicles are liquidated.

Collections

The servicer will deposit collections into the collection account held by the account bank within two business days of receipt. The servicer may deduct from collections all Unrelated Amounts to the extent such Unrelated Amounts have not been previously reimbursed to the servicer.

Collections made during a monthly period, other than Administrative Receivables or Warranty Receivables, which are not late fees or other similar fees or charges, will be applied to principal and interest on the receivables.

Collections on Administrative Receivables and Warranty Receivables, including Administrative Purchase Payments and Warranty Payments will also be applied to principal and interest on the receivables.

Servicing Compensation and Payment of Expenses

On each distribution date, the servicer will receive the following servicing fees:

 

•

a basic servicing fee for the prior month, equal to one-twelfth of the Basic Servicing Fee Rate multiplied by the Aggregate Receivables Face Amount as of the first day of that monthly period (or, with respect to the first distribution date, a basic servicing fee equal to one-sixth of the Basic Servicing Fee Rate multiplied by the Aggregate Receivables Face Amount as of the cutoff date),

 

•

any unpaid basic servicing fees from all prior distribution dates, and

 

•

the other servicing fees described in “Certain Fees and Expenses” in this prospectus.

Servicing fees will be paid out of funds available for that purpose. The relative priority of basic servicing fees and any other servicing fees are set forth in “The Notes—Distributions.”

The basic servicing fee for each monthly period and any portion of the basic servicing fee that remains unpaid from prior distribution dates will be paid at the beginning of that monthly period out of collections for that monthly

 

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period. In addition, the servicer will retain any late fees, prepayment charges or similar fees and charges collected during a monthly period and any investment earnings on trust accounts during a monthly period.

The foregoing amounts are intended to compensate the servicer for performing the functions of a third party servicer of automobile receivables as an agent for their beneficial owner, including:

 

•

collecting and posting all payments,

 

•

responding to inquiries of obligors on the receivables,

 

•

investigating delinquencies,

 

•

sending payment coupons to obligors,

 

•

reporting tax information to obligors, and

 

•

policing the collateral.

These amounts will also compensate the servicer for its services as the administrator, including accounting for collections, furnishing monthly and annual statements to the owner trustee and the indenture trustee for distributions and generating federal income tax information for the trust, the certificateholders and the noteholders. These amounts also will reimburse the servicer for taxes, the fees of the owner trustee and the indenture trustee, accounting fees, outside auditor fees, data processing costs and other costs incurred in connection with administering the pool of receivables.

THE TRUST

The issuing entity, Ally Auto Receivables Trust 2022-3 is a statutory trust formed under the laws of the State of Delaware with a fiscal year end of December 31. The trust will be established and operated pursuant to a trust agreement dated on or before the anticipated closing date of December 14, 2022 (the “closing date”), which is the date the trust will initially issue the notes and certificates.

The trust will engage in only the following activities:

 

•

acquire, hold and manage the receivables and other assets of the trust,

 

•

issue notes and certificates,

 

•

make payments on the notes and certificates, and

 

•

take any action necessary to fulfill the roles of the trust in connection with the notes and the certificates.

The trust’s principal offices are in Wilmington, Delaware, in care of BNY Mellon Trust of Delaware, as owner trustee at the address listed in “The Owner Trustee” below.

The property of the trust will include:

 

•

a pool of retail installment sale contracts for new and used cars and light trucks and all payments received thereunder on and after the cutoff date exclusive of any amount allocable to the premium for physical damage collateral protection insurance required by the servicer or the seller,

 

•

amounts and investments of those amounts as from time to time may be held in the Designated Accounts and the proceeds of those accounts, except for the Certificate Distribution Account,

 

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•

security interests in the financed vehicles and, to the extent permitted by law, any accessions thereto,

 

•

any recourse against dealers on the receivables,

 

•

the right to proceeds of credit life, credit disability, physical damage or other insurance policies covering the financed vehicles, and

 

•

the rights of the depositor under the pooling agreement and the servicing agreement.

The reserve account will be held by the account bank for the benefit of the holders of the trust’s securities. The reserve account will be included in the property of the trust.

The servicer will continue to service the receivables held by the trust and will receive fees for these services. See “Servicing Procedures—Servicing Compensation and Payment of Expenses” in this prospectus. To facilitate the servicing of the receivables, the trust will authorize Ally Bank, as custodian, to retain physical possession of the receivables held by the trust and other documents relating thereto as custodian for the trust. Due to the administrative burden and expense, the certificates of title to the financed vehicles will not be amended to reflect the sale and assignment of the security interest in the financed vehicles to the depositor or the trust or the pledge of these security interests by the trust to the indenture trustee. In the absence of an amendment, the trust and the indenture trustee may not have a perfected security interest in the financed vehicles in all states.

None of the trust, the indenture trustee or the owner trustee will be responsible for the legality, validity or enforceability of any security interest in any financed vehicle. See “Legal Aspects of the Receivables” and “The Transfer Agreements and the Servicing Agreements—Sale and Assignment of Receivables” in this prospectus.

Capitalization of the Trust

The following table illustrates the capitalization of the trust as of November 1, 2022, the cutoff date, as if the issuance of the notes and the certificates had taken place on that date:

 

Class A-1 Asset Backed Notes		$	216,000,000
Class A-2 Asset Backed Notes		$	323,000,000
Class A-3 Asset Backed Notes		$	323,000,000
Class A-4 Asset Backed Notes		$	71,120,000
Class B Asset Backed Notes		$	20,760,000
Class C Asset Backed Notes		$	17,300,000
Class D Asset Backed Notes		$	12,850,000
Asset Backed Certificates		$	4,442,639
Total		$	988,472,639

The amount shown for the certificates is the initial level of overcollateralization. The holders of the certificates will be entitled to receive amounts representing the remaining overcollateralization after repayment of amounts owing on the notes. The Class A-1 Notes, the Class B Notes, the Class C Notes and the Class D Notes are not being offered under this prospectus. The Class A-1 Notes, the Class B Notes, the Class C Notes and the Class D Notes (other than the EVI) will be sold in one or more private placements or retained initially by the depositor or its affiliate. The certificates are not being offered by this prospectus and will be retained initially by the depositor or an affiliate. The depositor or its affiliate will retain the right to sell all or a portion of such Class A-1 Notes, such Class B Notes, such Class C Notes, such Class D Notes and the certificates (other than those held by the depositor or another majority-owned affiliate of the sponsor as part of the EVI) in one or more private placements at any time. The depositor or another majority-owned affiliate will initially hold the EVI. For a description of the EVI, see “Credit Risk Retention” in this prospectus.

 

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THE RECEIVABLES POOL

Each receivable to be held by the issuing entity is classified as a simple interest receivable.

Payments pursuant to a simple interest receivable are allocated between finance charges and principal based on the actual date on which a payment is received. Late payments, or early payments, on a simple interest receivable may result in the obligor making a greater- or smaller-number of payments than originally scheduled. The amount of additional payments required to pay the outstanding principal balance in full generally will not exceed the amount of an originally scheduled payment. If an obligor elects to prepay a simple interest receivable in full, the obligor is required to pay finance charges only to the date of prepayment.

Tangible and Electronic Contracting

Ally Bank has contracted with a third-party custodian to facilitate the process of creating and storing electronic contracts. The third-party custodian’s technology system permits transmission, storage, access and administration of electronic contracts and is comprised of proprietary and third-party software, hardware, network communications equipment, lines and services, computer servers, data centers, support and maintenance services, security devices and other related technology materials that enable electronic contracting in the automobile retail industry. Through use of the third-party custodian system, a dealer originates electronic retail installment sale contracts and then transfers these electronic contracts to Ally Bank.

With respect to a majority of tangible contracts, following dealer and obligor signing of such tangible contract, the dealer sends the documentation constituting the tangible record related to the applicable receivable to an imaging center, where a third-party contractor images the documentation and transmits the image directly to Ally Bank’s computer systems for review, and funding will occur if the documentation meets compliance and policy requirements. Following the imaging, the original tangible contract is converted into electronic form and Ally Bank maintains control of the electronic copies through the third-party custodian’s technology system, as further described above.

With respect to both receivables acquired as electronic contracts and receivables acquired as tangible contracts and converted to electronic contracts, the third-party custodian system uses a combination of technological and administrative features that are designed to: (i) designate a single copy of the record or records comprising an electronic contract as being the single authoritative copy of the receivable; (ii) manage access to and the expression of the authoritative copy, including by making such contract unalterable except in certain limited circumstances; (iii) identify Ally Bank or Ally Financial as the owner of record of the authoritative copy; and (iv) provide a means for transferring record ownership of, and the exclusive right of access to, the authoritative copy from the current owner of record to a successor owner of record.

Criteria Applicable to the Selection of Receivables

The pool of receivables to be sold to the trust was selected from Ally Bank’s portfolio based on several criteria, including that each receivable:

 

•

is secured by a new or used car or light truck,

 

•

is a simple interest receivable,

 

•

was originated in the United States,

 

•

provides for level monthly payments that may vary from one another by no more than $5,

 

•

will amortize the amount financed over its original term to maturity,

 

•

was originated or acquired by Ally Bank or its subsidiaries in the ordinary course of business,

 

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•

has a first payment due date on or after August 23, 2015,

 

•

was originated on or after July 9, 2015,

 

•

has an original term of 24 to 84 monthly payments,

 

•

has a remaining term of not less than 3 monthly payments,

 

•

as of the cutoff date, was not considered past due; that is, the payments due on that receivable in excess of $25 have been received within 30 days of the due date, and

 

•

has an APR of not greater than 19.14%.

The receivables in the pool of receivables on the closing date will be the same receivables that comprised the pool of receivables on the cutoff date.

The pool of receivables was selected from Ally Bank’s portfolio of receivables that meet the criteria described above and other administrative criteria utilized by Ally Bank from time to time. We believe that no selection procedures adverse to the noteholders were utilized in selecting the receivables in this pool of receivables. Ally Bank, as sponsor, incurred minimal internal expenses in selecting the pool of receivables. Ally Bank did not incur any third party expenses in connection with the selection of the pool of receivables.

The following tables describe the pool of receivables as of the cutoff date.

Each of the percentages and averages in the tables is computed on the basis of the amount financed of each receivable as of the cutoff date. The “Weighted Average Annual Percentage Rate of all Receivables in Pool” and “Weighted Average Annual Percentage Rate of Non-Subvented Receivables in Pool” in the following table are based on weighting by amount financed and remaining term of each receivable, each as of the cutoff date. The “Weighted Average Original Maturity” in the following table is based on weighting by original undiscounted principal balance of each receivable as of its date of origination. “Loan-to-Value Ratio” with respect to a receivable means the original undiscounted principal balance divided by the estimated vehicle value, multiplied by 100. The estimated vehicle value for a new vehicle is the dealer invoice cost of the vehicle. The estimated vehicle value for a used vehicle is the value received by Ally Financial or Ally Bank from the dealer, independently validated by Ally Financial or Ally Bank, based on a market guide, such as Blackbook, indicating the value of the vehicle and the source from which that value was determined. “Weighted Average Loan-to-Value Ratio” is based on a weighting by original undiscounted principal balance of each receivable as of its date of origination. A FICO score is a measurement designed by Fair, Isaac & Company and calculated by the major credit bureaus using collected information to assess credit risk. “Weighted Average FICO Score” is based on a weighting by original undiscounted principal balance of each receivable as of the cutoff date and excludes receivables with respect to which the obligor is a business account and receivables for which no FICO score is available. Of the 8,571 FICO scores excluded from the Weighted Average FICO Score, 7,193 or 83.92%, are business accounts and the remaining 1,378, or 16.08%, are accounts for which FICO scores are unavailable. In the table “Distribution of the Receivables Pool by FICO Score,” those excluded accounts make up the “Business Accounts and Unavailable” category. Percentages may not equal 100.00% due to rounding.

 

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Composition of the Receivables Pool—(Total: New and Used)

 

Aggregate Amount Financed		$	1,028,968,867.29
Number of Contracts in Pool			61,982
Average Amount Financed		$	16,601.09
Weighted Average FICO Score			729.00
Weighted Average Loan-to-Value Ratio			94.45
Weighted Average Annual Percentage Rate of all Receivables in Pool			6.77	%
Weighted Average Annual Percentage Rate of Non-Subvented Receivables in Pool			6.85	%
Discount Rate Applied to Receivables in Pool with Annual Percentage Rates at or below			8.50	%
Weighted Average Original Maturity (in months)			70.07 Months
Weighted Average Remaining Maturity (in months) (Range)			50.40 Months
			(3 to 83 Months	)
Percentage of New Cars and Light Trucks in Pool			40.00	%
Percentage of Used Cars and Light Trucks in Pool			60.00	%
Percentage of Cars in Pool			22.96	%
Percentage of Light Trucks in Pool			77.04	%
Percentage of Subvented Receivables in Pool			1.38	%
Percentage of Non-Subvented Receivables in Pool			98.62	%

Composition of the Receivables Pool—(New)

 

Aggregate Amount Financed		$	411,587,823.93
Number of Contracts in Pool			21,347
Average Amount Financed		$	19,280.83
Weighted Average FICO Score			733.70
Weighted Average Loan-to-Value Ratio			90.40
Weighted Average Annual Percentage Rate of all Receivables in Pool			6.27	%
Weighted Average Annual Percentage Rate of Non-Subvented Receivables in Pool			6.46	%
Weighted Average Original Maturity (in months)			71.44 Months
Weighted Average Remaining Maturity (in months) (Range)			49.47 Months
			(3 to 83 Months	)
Percentage of Subvented Receivables in Pool			3.45	%
Percentage of Non-Subvented Receivables in Pool			96.55	%

Composition of the Receivables Pool—(Used)

 

Aggregate Amount Financed		$	617,381,043.36
Number of Contracts in Pool			40,635
Average Amount Financed		$	15,193.3
Weighted Average FICO Score			726.36
Weighted Average Loan-to-Value Ratio			97.67
Weighted Average Annual Percentage Rate of all Receivables in Pool			7.09	%
Weighted Average Annual Percentage Rate of Non-Subvented Receivables in Pool			7.09	%
Weighted Average Original Maturity (in months)			68.98 Months
Weighted Average Remaining Maturity (in months) (Range)			51.02 Months
			(3 to 74 Months	)
Percentage of Subvented Receivables in Pool			0.00	%
Percentage of Non-Subvented Receivables in Pool			100.00	%

 

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Distribution of the Receivables Pool by Annual Percentage Rate—Aggregate

 

Annual Percentage Rate Range		Number of Contracts				Aggregate Amount Financed				Percentage of Aggregate Amount Financed
0.00% to 1.00%			210			$	6,976,853.67				0.68	%
1.01% to 2.00%			158			$	6,694,114.25				0.65	%
2.01% to 3.00%			162			$	2,712,889.11				0.26	%
3.01% to 4.00%			4,502			$	63,935,782.24				6.21	%
4.01% to 5.00%			9,078			$	138,269,452.09				13.44	%
5.01% to 6.00%			12,468			$	208,325,562.03				20.25	%
6.01% to 7.00%			14,517			$	248,248,345.47				24.13	%
7.01% to 8.00%			8,705			$	148,896,142.40				14.47	%
8.01% to 9.00%			5,426			$	93,664,503.87				9.10	%
9.01% to 10.00%			2,925			$	48,499,152.77				4.71	%
10.01% to 11.00%			1,532			$	25,022,921.50				2.43	%
11.01% to 12.00%			999			$	16,223,339.41				1.58	%
12.01% to 13.00%			613			$	9,935,937.76				0.97	%
13.01% to 14.00%			371			$	6,339,256.65				0.62	%
14.01% to 15.00%			179			$	3,126,544.13				0.30	%
15.01% to 16.00%			80			$	1,209,648.47				0.12	%
16.01% to 17.00%			35			$	579,331.77				0.06	%
17.01% to 18.00%			18			$	261,471.52				0.03	%
18.01% to 19.00%			3			$	36,548.16				0.00	%
19.01% to 20.00%			1			$	11,070.02				0.00	%
Total			61,982			$	1,028,968,867.29				100.00	%

Distribution of the Receivables Pool by State

The pool of receivables includes receivables originated in all 50 states. The following table sets forth the percentage of the aggregate amount financed in the states with the largest concentration of receivables. No other state accounts for more than 3.85% of the aggregate amount financed. Management believes that there are no factors unique to any state or region in which 10% or more of the receivables are located that may materially impact the trust’s ability to pay principal and interest on the notes. The following breakdown by state is based on the billing addresses of the obligors on the receivables:

 

State		Percentage of Aggregate Amount Financed
Texas			11.78	%
California			9.17	%
Florida			9.03	%
Pennsylvania			5.01	%
North Carolina			4.14	%
New Jersey			4.13	%

 

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Distribution of the Receivables Pool by Loan-to-Value Ratio

 

Loan-to-Value Ratio		Number of Contracts				Average Original Amount Financed				Average Original Estimated Vehicle Value				Percentage of Contracts
Less than 80			13,287			$	23,055.24			$	35,918.74				21.44	%
80 to 90			10,379			$	26,415.06			$	30,967.37				16.75	%
91 to 100			12,979			$	27,226.02			$	28,442.77				20.94	%
101 to 110			13,484			$	27,608.45			$	26,206.03				21.75	%
111 to 120			11,853			$	26,181.58			$	22,724.12				19.12	%
Total			61,982												100.00	%

Distribution of the Receivables Pool by FICO Score

 

FICO Band		Number of Contracts				Aggregate Amount Financed				Percentage of Aggregate Amount Financed
Business Accounts and Unavailable			8,571			$	123,474,691.99				12.00	%
651 - 675			8,441			$	153,628,479.07				14.93	%
676 - 700			11,116			$	195,175,522.02				18.97	%
701 - 725			9,619			$	162,743,204.78				15.82	%
726 - 750			6,955			$	115,906,554.34				11.26	%
751 - 775			5,112			$	84,892,112.63				8.25	%
776 - 800			4,298			$	68,757,683.71				6.68	%
801 - 825			4,078			$	61,404,057.08				5.97	%
826 - 850			2,652			$	42,517,398.44				4.13	%
851 - 875			992			$	17,541,237.78				1.70	%
876 - 900			148			$	2,927,925.45				0.28	%
Total			61,982			$	1,028,968,867.29				100.00	%

Distribution of the Receivables Pool by Original Term

 

Original Term (Months)		Number of Contracts				Aggregate Amount Financed				Percentage of Aggregate Amount Financed
60 and less			15,445			$	214,103,742.08				20.81	%
61 to 72			28,281			$	506,192,177.94				49.19	%
73 to 75			12,686			$	205,784,273.37				20.00	%
76 to 84			5,570			$	102,888,673.90				10.00	%
Total			61,982			$	1,028,968,867.29				100.00	%

 

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Distribution of the Receivables Pool by Vehicle Make

 

Vehicle Make		Percentage of Aggregate Amount Financed
Chevrolet			18.69	%
Ford			12.84	%
Ram			7.93	%
Jeep			7.56	%
GMC			6.60	%
Toyota-Scion			5.46	%
Honda			4.94	%
Nissan			4.75	%
Dodge			3.42	%
Hyundai			2.98	%

No other vehicle make accounts for more than 2.83% of the aggregate amount financed.

Distribution of the Receivables Pool by Vehicle Model

 

Vehicle Model		Percentage of Aggregate Amount Financed
Silverado			7.54	%
1500			4.28	%
F-150			3.43	%
Sierra			3.17	%
Equinox			2.23	%
Grand Cherokee			2.19	%
Cherokee			1.80	%
2500			1.78	%
Transit Van			1.38	%
Civic			1.36	%

No other vehicle model accounts for more than 1.34% of the aggregate amount financed.

Depositor Review of the Receivables Pool

The depositor is required to perform a review (the “pool review”) of the pool of receivables in order to provide reasonable assurance that the information contained in this prospectus regarding the pool of receivables is accurate in all material respects. The pool review entailed consideration of ongoing processes and procedures used by Ally Financial and Ally Bank (the “process review”), as well as the performance of specified actions with respect to disclosure about the pool of receivables and the underlying data on which that disclosure was based (the “data and disclosure review”). For certain aspects of the pool review, the depositor engaged a third party to assist. The depositor designed the procedures used in the pool review, assumes the responsibility for the sufficiency of those procedures and attributes to itself all findings and conclusions of the pool review.

For the process review, the depositor monitored internal reports and developments with respect to processes and procedures that are designed to maintain and enhance the quality of decision-making, the quality of originated assets and the accuracy, efficiency and reliability of receivables systems and operations. Ally Financial and Ally Bank have internal functions that carry out these processes and procedures, such as:

 

37

•

Quality assurance, which tests previously originated receivables to check for compliance with applicable underwriting criteria and documentation requirements and accurate entry of data into the principal databases and other management information systems of the sponsor and the servicer (the “information databases”),

 

•

Contract review, which tests, among other things, the quality of originated portfolios and the adherence of originations to established policies,

 

•

Risk reporting, which monitors losses, delinquencies, credit quality and exceptions to servicing policies, and

 

•

Internal audit, which independently performs periodic internal control reviews of various processes including the auto contract origination and reporting system processes.

The first part of the data and disclosure review tested the accuracy of the individual receivables data contained in the information databases. The depositor uses the information databases to assemble an electronic data tape containing relevant data on the receivables pool. From this tape, the depositor constructs the pool composition and stratification tables in “The Receivables Pool” in this prospectus, prepares the information disclosed on Form ABS-EE, as further described in “Asset-Level Data for the Receivables” in this prospectus, verifies the eligibility criteria in “The Receivables Pool—Criteria Applicable to the Selection of Receivables” in this prospectus and validates the representations and warranties in “The Transfer Agreements and the Servicing Agreements—Sale and Assignment of Receivables” in this prospectus.

Through random processes, 185 receivables (the “reviewed receivables”) from the pool were selected. The servicer and the sponsor made available an electronic copy of the pertinent underlying documentation and data records for each reviewed receivable (collectively, the “receivable document file”).

First, approximately 32 different aspects, or data points, of each receivable document file, including values such as FICO score, origination date, APR and loan-to-value ratio, along with elements such as evidence of a perfected lien, were noted. These data points were either compared to the corresponding information in the electronic data tape or evaluated for compliance with an eligibility criterion or a representation and warranty, to determine whether any inaccuracies existed. In some cases, the depositor specified permissible tolerances for variances. Of the approximately 5,920 aggregate data points checked, 14 data points appeared to be erroneous related to 13 receivables. One error related to the APR per the contract exceeding the APR per the data tape. Three errors related to an incorrect buyer name. Two errors related to the scheduled payment amount per the contract exceeding the scheduled payment per the data tape. One error related to the new or used financed vehicle indicator. Six errors related to a missing co-buyer. The remaining error related to an incorrect vehicle make.

In addition, selected values associated with the reviewed receivables were recomputed to assess their accuracy. The servicer provided records regarding payments made by the related obligors prior to the cutoff date so that the amount financed and remaining term for each reviewed receivable could be recomputed. Based on information in the receivable document file, the loan-to-value ratio for the related financed vehicle was also recomputed. These recomputations did not indicate any errors.

A second aspect of the data and disclosure review consisted of a comparison of the statistics contained in “The Receivables Pool” in this prospectus and the data related to the reviewed receivables disclosed on Form ABS-EE to data in, or derived from, the information databases. The review consisted of a recalculation from the data in the information databases of the number of contracts, monetary amounts, amounts and percentages displayed in “The Receivables Pool” in this prospectus. Matters not exceeding plus or minus 0.5 percent of the number of contracts, monetary amounts, amounts or percentages were not considered exceptions. This comparison found no exceptions within the specified parameters.

The third aspect of the data and disclosure review evaluated the information contained in this prospectus regarding the pool of receivables under “Acquisition and Underwriting,” “The Receivables Pool,” “Servicing Procedures,” “The Transfer Agreements and the Servicing Agreements—Sale and Assignment of Receivables” and “Legal Aspects of the Receivables.” The depositor confirmed with the responsible personnel of the sponsor and the

 

38

servicer that the description of the business practices, contract terms and legal and regulatory considerations, and the other information with respect to the pool of receivables, contained in those sections is accurate. The depositor also reviewed internal management reports periodically generated by these personnel that bear on the matters discussed in those sections of this prospectus.

The depositor has concluded that the findings of the pool review provide it with reasonable assurance that:

 

•

the errors identified in the first aspect of the data and disclosure review are not indicative of any systemic problems with the processes of the sponsor and the servicer that generate information regarding the receivables for use in this prospectus;

 

•

the pool composition and stratification tables contained in this prospectus are accurate in all material respects;

 

•

the pool of receivables satisfies the selection criteria and the representations and warranties in all material respects; and

 

•

the disclosure regarding the pool of receivables contained in this prospectus is accurate in all material respects.

Exceptions to Underwriting Guidelines

As described in “Acquisition and Underwriting—Underwriting Exceptions,” Ally Bank utilizes a proprietary scorecard approach for its credit underwriting. This platform assigns applicants a “score” that is used to assess the risk level and appropriate pricing tier for an application. Any applications not approved by this system are reviewed by a credit underwriter. A credit underwriter with the appropriate approval authority may approve an application outside Ally Bank’s guidelines. When deciding whether to approve an application, the credit underwriter reviews all of the factors related to the receivable and typically will not approve an application unless the credit underwriter also determines that compensating factors exist in the application that indicate a strong ability to repay the loan.

As a result of the sponsor’s use of a credit underwriter to make the determination of whether to approve an application based on all of the characteristics of the receivable taken together, the credit underwriter does not identify the specific characteristics that caused him or her to approve an application and therefore the sponsor does not have the ability to track or disclose the specific compensating factors related to each receivable. The depositor elected to include these receivables in the pool of receivables for the offering on the basis that the depositor has historically securitized receivables with these characteristics and the exceptions are immaterial.

As used in the table below, a “collateral characteristic” is an underwriting criterion primarily related to the financed vehicle, such as loan-to-value ratio (“Loan-to-Value Ratio”) or, for used vehicles, a limit on the maximum mileage or age of the vehicle (“Vehicle Characteristic”), and a “credit characteristic” is an underwriting criterion primarily related to the creditworthiness of the obligor, such as credit score related exceptions (“Related to Credit Score”), exceptions based on the payment-to-income ratio or debt-to-income ratio (“Payment Amount”) or other factors related to the creditworthiness of the obligor (“Other Factors Related to the Creditworthiness of the Obligor”).

As shown in the table below, 2,554 of the receivables, having an aggregate balance of $42,287,732 constituted exceptions to Ally’s underwriting criteria.

 

Nature of Exception		Number of Contracts				Percentage of Aggregate Amount Financed
Collateral: Loan-to-Value Ratio			39				0.06	%
Collateral: Vehicle Characteristic			1,482				1.99	%
Credit: Related to Credit Score			181				0.35	%
Credit: Payment Amount			798				1.60	%
Credit: Other Factors Related to the Creditworthiness of the Obligor			54				0.11	%
Total			2,554				4.11	%

 

39

Asset Representations Review

The asset representations reviewer will conduct a review of 60 day or more delinquent receivables for their compliance with asset level representations and warranties provided by the sponsor and the depositor upon the satisfaction of each of the following conditions:

 

•

the delinquency trigger (as defined below) is met or exceeded, and

 

•

the noteholders (including beneficial owners of the notes) vote to cause a review of delinquent receivables by:

 

•

at least 5% of the noteholders, measured by the outstanding principal balance of their respective notes, demanding a vote of the noteholders to determine if a review should be performed, and

 

•

at least a majority of the noteholders, measured by the outstanding principal balance of the notes of the noteholders voting, choosing to initiate an asset representations review, and at least 5% of the noteholders by aggregate principal balance of the notes outstanding cast a vote.

For more information regarding the asset representations reviewer, see “Asset Representations Reviewer” in this prospectus.

Asset Representations Review Delinquency Trigger

A “delinquent receivable” is a receivable for which payment of the required payment amount within $25 has not been received by the servicer by the payment due date as of the end of the monthly period. Charged off and repossessed receivables, and receivables for which the related obligor is subject to bankruptcy, are not considered delinquent receivables and therefore are not included in the delinquency trigger calculation. The sponsor does not treat a charged off receivable as delinquent because the related vehicle is no longer in the possession of the obligor and any loss would have been realized.

The “delinquency trigger” is calculated as a percentage equivalent of a fraction, the numerator of which is equal to the aggregate amount financed of 61 day or more delinquent receivables and the denominator of which is equal to the aggregate amount financed of all outstanding receivables, measured as of the end of the monthly period.

The following table sets forth the delinquency trigger applicable to each monthly period:

 

Monthly Period		Delinquency Trigger
1 to 12			1.70	%
13 to 24			2.60	%
25 to 36			3.10	%
37 to 48			4.10	%
49 and after			4.10	%

The sponsor believes that the delinquency trigger is appropriate based on an analysis of the historical 61 day or more delinquency rate over the life of the sponsor’s other transactions. For each of the 39 registered and selected private offerings of notes backed by retail installment sale contracts completed by the sponsor from 2009 to 2019, the sponsor calculated a maximum delinquency ratio for each annual period and then calculated this ratio for each annual period from the related cutoff date. The maximum of the maximum delinquency ratio was utilized to account for typical seasonal increases in delinquencies. The sponsor then multiplied this historical delinquency maximum by four times and rounded to the nearest 0.05% to derive the delinquency trigger for each annual period. Because the sponsor’s other transactions have not experienced significant historical delinquencies and given the relatively stable economic period for these transactions, the multiple is intended to account for future volatility and stressed economic conditions. Based on its experience in historical transactions, the sponsor believes that this method will incorporate shifts in delinquencies for each annual period that the notes are outstanding and will align the delinquency trigger with changes in delinquency rates. Additionally, the four times multiple is expected to generate a delinquency trigger which would

 

40

be met before any losses on the notes would occur. The chart below compares the delinquency trigger to the delinquency statistics for prior securitized pools.

 

For more information regarding 61 day or more delinquent asset statistics for the sponsor’s prior securitized pools, see “Appendix A—Static Pool Data” in this prospectus.

The servicer will monitor delinquent receivables and will include on the monthly statement to securityholders the percentage of receivables that are delinquent in each monthly period in 30 or 31 day increments up to 120 days and whether the delinquency trigger has been met or exceeded for the related monthly period. If the delinquency trigger has been met or exceeded for the related monthly period, the servicer will provide a notice to the sponsor, the depositor and the indenture trustee, and will include a notice on the monthly servicer report and on the Form 10-D, that such trigger has been met or exceeded.

Voting

Within 90 days of publication that the delinquency trigger has been met or exceeded in the monthly statement to securityholders on Form 10-D, the noteholders may determine whether to initiate a vote to determine whether a review of 60 day or more delinquent receivables should be performed by the asset representations reviewer. Noteholders may exercise this right by contacting the indenture trustee. For the purpose of the vote, notes held by the sponsor or any affiliates thereof are not included in the calculation of determining whether the noteholders have elected to initiate a vote.

If the requesting noteholder is the record holder of any notes, no verification procedures will be required. If the requesting noteholder is not the record holder of any notes and is instead a beneficial owner of notes, the indenture trustee may require no more verification than (1) a written certification from the noteholder that it is a beneficial owner of a specified principal balance of the notes and (2) an additional form of documentation, such as a trade confirmation, an account statement, a letter from the broker or dealer or other similar document. If less than 5% of the noteholders by aggregate principal balance of the notes demand that a review be initiated within 90 days of publication of the delinquency trigger being met, no additional vote will be required and no asset representations review will be conducted.

 

41

If at least 5% of the noteholders by aggregate principal balance of the notes outstanding demand that a vote be conducted, the indenture trustee will post a notice through The Depository Trust Company (“DTC”), initiating a vote of all the noteholders. On the Form 10-D related to the monthly period in which the noteholders demand that a vote be conducted, the issuing entity will disclose the voting procedures that will be used and how to cast a vote. The noteholders will be allowed to vote for at least 150 days after the initial Form 10-D including disclosure that the trigger has been met or exceeded is filed. The votes will be tabulated by either the indenture trustee in the capacity of tabulation agent or by a third party acting as tabulation agent (in each case, the “Vote Tabulation Agent”). If at the end of that 150-day period, at least a majority of the noteholders by aggregate principal balance of the notes who have voted choose to approve initiating the asset representations review and at least 5% of the noteholders by aggregate principal balance of the notes outstanding cast a vote, the asset representations reviewer will be notified to conduct a review as set forth below under “—The Asset Representations Review Process.”

The Asset Representations Review Process

Upon the approval of the noteholders as set forth above under “—Voting,” the issuing entity will instruct the servicer and the custodian to provide the asset representations reviewer with access to copies of documents necessary to perform its review within 60 days of the conclusion of the vote approving the review. The asset representations reviewer will then conduct its review of all receivables 60 days or more delinquent as of the end of the most recent monthly period. The asset representations reviewer will compare such delinquent receivables to the asset level representations and warranties provided by the sponsor on the closing date with respect to the receivables. The related representations and warranties are measured as of the time of origination, the cutoff date or the closing date as specified in the pooling agreement. For a description of the representations and warranties the asset representations reviewer will review, see “—Criteria Applicable to the Selection of Receivables” and “The Transfer Agreements and The Servicing Agreements—Sale and Assignment of Receivables” in this prospectus. A copy of the final asset representations review agreement will be filed no later than the date of the filing of the final prospectus for the notes.

The asset representations reviewer will only determine whether:

 

•

a receivable sold on the closing date satisfied the asset level representations and warranties,

 

•

a receivable failed to satisfy such representations or warranties, or

 

•

there is missing or insufficient documentation with respect to whether a representation or warranty was satisfied.

The asset representations reviewer will not determine whether any failures to meet the representations and warranties resulted in breaches of the representations and warranties or whether the sponsor or the depositor would be required to repurchase any such receivables. Additionally, the asset representations reviewer will not determine the reason for the delinquency of any receivable, the creditworthiness of any obligor, the overall quality of any receivable or the compliance of the servicer with its covenants with respect to the servicing of the receivables. If a receivable is paid off, satisfied or repurchased due to a breach of a covenant, representation or warranty, the asset representations reviewer will not review that receivable.

The fees and expenses of the asset representations review will be paid by the issuing entity from monthly collections on the receivables. See “The Notes—Distributions.” The review fee will be $200 per receivable.

The asset representations reviewer will be required to complete its review within 60 days of receiving the documents necessary to start its review. The review period may be extended by up to an additional 30 days if the asset representations reviewer requests missing review materials that are subsequently provided within the 60-day period or requires clarification of any review materials or testing procedures. If any requested missing information is not provided to the asset representations reviewer, the asset representations reviewer will consider the affected test to be failed due to missing or insufficient documentation. The asset representations reviewer will provide the indenture trustee, the sponsor, the depositor and the servicer with a detailed report of its findings within 30 days of completing its review. A summary of the asset representations reviewer’s report will be included in the statement to securityholders on the Form 10-D for the monthly period in which that summary report was provided. A noteholder will have the right to request a copy of the detailed report of the findings from the sponsor.

 

42

The sponsor and the depositor will evaluate the asset representations reviewer’s report and any repurchase request received from the indenture trustee, any noteholder or any party to the transaction documents in order to determine whether a repurchase of a receivable is required. After reviewing the report, the sponsor and the depositor will determine if there were breaches of the representations and warranties, and the sponsor and the depositor will then decide whether to repurchase the receivable. None of the indenture trustee, the owner trustee, the asset representations reviewer or the servicer is otherwise obligated to investigate the accuracy of the representations and warranties with respect to the receivables subject to the asset representations review. The transaction documents require that any breach of the representations and warranties must materially and adversely affect the interest of the noteholders or the certificateholders before the sponsor or the depositor would be required to repurchase such receivables. Any noteholder, however, will be entitled to make a repurchase request regarding a breach of the representations and warranties related to a receivable to the indenture trustee. The sponsor or the depositor will report any repurchase request received from a noteholder, the indenture trustee or the owner trustee, and the disposition of the request, on a Form ABS-15G that will be filed with the SEC. For more information regarding the exercise of rights by the indenture trustee, see “The Indenture Trustee.”

Dispute Resolution

The depositor, the sponsor, the owner trustee, the servicer, the indenture trustee or any noteholder may, upon discovery of a breach of a representation or warranty related to a receivable made by the depositor or the sponsor in the transaction documents, which materially and adversely affects the interest of the depositor, the sponsor, the owner trustee, the servicer, the indenture trustee or the certificateholders in the related receivable, or in the case of a noteholder (including a beneficial owner of the notes), which results in that noteholder not being made whole, demand that the depositor or the sponsor repurchase the related receivable from the trust. In order to make a repurchase demand, a noteholder will be required to provide a notice to the indenture trustee. If any such party provides sufficient notice as provided in the transaction documents within the applicable statute of limitations period of an alleged breach of a representation or warranty with respect to a receivable made by the depositor or the sponsor in the transaction documents, and the sponsor or the depositor fails to resolve such request within 180 days of receipt, the requesting party has the right to refer the matter to a dispute resolution process described below. This right applies to all repurchase requests made in accordance with the transaction documents and is not limited to repurchase requests made in connection with a review pursuant to the asset representations review process described under “—Asset Representations Review—The Asset Representations Review Process.” This right is not a mechanism for requesting repurchase or other relief from losses resulting from changes in the credit quality of the receivable or other market conditions. The sponsor or the depositor will not repurchase a receivable with respect to which the related breach of a representation or warranty did not result in a material and adverse effect on the interests of the noteholders and the certificateholders taken as a whole. Each notice must be given in writing to the other parties in accordance with the transaction documents and must specifically identify the receivable to be repurchased and specify the representations or warranties allegedly breached. The notice must also identify the alleged loss related to the receivable and the material adverse effect on the requesting party. General allegations relating to the entire pool of receivables or an unspecified subset of the pool are not a sufficient description for purposes of the notice. If a receivable is paid off, satisfied or repurchased, no demands to repurchase are permitted, and there is no further right to mediation or arbitration regarding that receivable. None of the representations and warranties related to the receivables relate to the performance of the receivables or to any credit losses that may occur as a result of a default by the related obligor on the receivable. Furthermore, the dispute resolution procedures described below apply only to the specific receivables that are related to the dispute. In order for a receivable to be subject to repurchase, there must be a breach of a representation or warranty related to such receivable which materially and adversely affects the requesting party. In the event that the asset representations reviewer determines that the representations and warranties related to a receivable have not failed, any repurchase request related to that receivable will be deemed to be resolved.

The requesting party may choose either mediation (including non-binding arbitration) or third-party binding arbitration at its discretion. In each case, the process will be administrated by the American Arbitration Association (“AAA”) pursuant to the AAA’s Commercial Arbitration Rules and Mediation Procedures, as applicable, or any successor rules or procedures (the “AAA Rules”). The mediation or arbitration will take place in New York, New York. The indenture trustee, after direction from the depositor, will notify the requesting party at the end of the 180-day period if a repurchase demand is unresolved. Within 30 days of the delivery of the notice indicating that a repurchase demand has not been resolved following the end of the 180-day period, the requesting party must initiate the proceedings and provide notice (as defined by the AAA Rules) to the sponsor and the depositor of its intent to

 

43

pursue resolution through mediation or arbitration at securitization@ally.com. The sponsor or the depositor must respond to the notice within 30 days and must submit to the method of dispute resolution requested.

If the requesting party chooses to refer the matter to mediation, the sponsor or depositor and the requesting party will agree on a neutral mediator approved by the AAA within 15 days of notice service. If the parties cannot agree on a mediator, one will be appointed by the AAA in accordance with the applicable AAA Rules. For a mediation, the proceeding will start within 15 days after the selection of the mediator and conclude within 30 days after the start of the mediation. The parties will mutually agree on the allocation of expenses incurred in connection with the mediation. If the requesting party is unsatisfied with the result of the mediation, the requesting party may choose to submit the matter to binding arbitration or adjudicate the dispute in court.

If the requesting party chooses to refer the matter to binding arbitration, the matter will be referred to a panel of three arbitrators. The panel will be comprised of one arbitrator appointed by the requesting party, one arbitrator appointed by the depositor and a third arbitrator appointed by the two arbitrators that are appointed by the requesting party and the depositor, in each case selected in accordance with the transaction documents. The sponsor and the depositor will provide a notice of the commencement of any arbitration on the Form 10-D related to the monthly period in which the arbitration proceeding commences and will give other noteholders or parties to the transaction documents the right to participate in the arbitration proceeding. The arbitrator will have the authority to schedule, hear and determine any motions, including dispositive and discovery motions, according to New York law, and will do so at the motion of any party. Discovery will be completed within 30 days of appointment of the panel and will be limited for each party to two witness depositions not to exceed five hours, two interrogatories, one document request and one request for admissions. The arbitrator, however, may grant additional discovery on a showing of good cause that the additional discovery is reasonable and necessary. Briefs will be limited to no more than ten pages each, and will be limited to initial statements of the case, discovery motions and a pre-hearing brief. The evidentiary hearing on the merits will commence no later than 60 days following the appointment of the panel and will proceed for no more than 10 consecutive business days, with equal time allotted to each side for the presentation of direct evidence and cross examination. The panel will render its decision on the matter within 90 days of the selection of the panel. In each case, the panel will have discretion to modify these timeframes if, based on the facts and circumstances of the particular dispute, good cause exists, there is an unavoidable delay or with the consent of all of the relevant parties. The panel will decide the matter in accordance with the terms of the contract, including choice-of-law provisions, and will not be permitted to award punitive or special damages. The panel will also determine which party will be responsible for paying the dispute resolution fees, including attorneys’ fees, incurred in this process. Judgment on the award will be entered in any court having jurisdiction. Once the representations and warranties with respect to a receivable have been reviewed by a panel, the panel’s decision will be binding with respect to that receivable, and such receivable may not be the subject of any additional mediation or binding arbitration. By selecting binding arbitration, the requesting party will be giving up its right to adjudicate the dispute in court, including the right to a trial by jury.

In all cases, the proceedings of the mediation or binding arbitration, including the occurrence of such proceedings, the nature and amount of any relief sought or granted and the results of any discovery taken in the matter, will be kept strictly confidential by each of the parties to the dispute, except as necessary in connection with the investor communications and reports to securityholders described under “Reports to Securityholders” below, in connection with a judicial challenge to or enforcement of an award, or as otherwise required by law.

REPURCHASE HISTORY

The transaction documents contain covenants requiring the depositor and Ally Bank to repurchase a receivable for the breach of representation or warranty in certain circumstances. In the prior three years, none of Ally Bank, Ally Financial, the depositor, the indenture trustee or the owner trustee received a demand to repurchase any retail auto installment sale contract securitized by Ally Bank or the depositor. The depositor, as a securitizer, discloses all demands to repurchase any retail auto installment sale contract securitized by it on Form ABS-15G.

The depositor filed its most recent Form ABS-15G with the Securities and Exchange Commission (“SEC”) on January 31, 2022. The depositor’s CIK number is 0001477336. For more information on obtaining a copy of the report, see “Where You Can Find More Information” in this prospectus.

 

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ASSET-LEVEL DATA FOR THE RECEIVABLES

The depositor and the issuing entity have provided asset-level data for the receivables and filed this information on Form ABS-EE. Form ABS-EE is incorporated by reference into this prospectus. The asset-level data includes information about the receivables, the vehicles, the obligors, activity on the receivables, charge offs, repossessions and modifications of the receivables. Asset-level data will be provided each month as an exhibit to the monthly distribution reports filed on Form 10-D.

 

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THE SPONSOR’S PORTFOLIO DATA

Delinquencies, Repossessions, Bankruptcies and Net Losses

For Ally Bank’s U.S. consumer automotive portfolio of new and used retail car and light truck receivables, the table on the following page shows Ally Bank’s experience for both new and used retail car and light truck receivables on a combined basis for:

 

•

delinquencies,

 

•

repossessions,

 

•

bankruptcies, and

 

•

net losses.

In addition, for Ally Bank’s U.S. consumer automotive portfolio of new and used retail car and light truck receivables with an original term to maturity of 76 to 84 months, the table on the second following page shows Ally Bank’s experience for both new and used retail car and light truck receivables on a combined basis for:

 

•

delinquencies,

 

•

repossessions, and

 

•

net losses.

Fluctuations in delinquencies, repossessions, bankruptcies and net losses generally follow trends in the overall economic environment and may be affected by such factors as:

 

•

competition for obligors,

 

•

the supply and demand for both new and used cars and light trucks,

 

•

consumer debt burden per household, and

 

•

personal bankruptcies.

Ally Bank’s historical performance trends are consistent with expectations and reflective of a more balanced and profitable asset composition. Recent performance is consistent with, or better than, expectations as a result of various factors including, but not limited to: elevated used car prices and consumer trends with respect to spending and saving.

There can be no assurance that the delinquency, repossession, bankruptcy and net loss experience on the receivables will be comparable to that set forth below or that the factors or beliefs described above will remain applicable. For a description of how the sponsor defines a delinquent receivable, see “The Receivables Pool—Asset Representations Review—Asset Representations Review Delinquency Trigger.” Because a pandemic such as COVID-19 has not occurred in recent years, the delinquency, repossession, bankruptcy and net loss experience for 2020 and 2021 is unlikely to accurately predict the performance of the pool of receivables. During 2020 and 2021, the COVID-19 pandemic impacted obligors nationwide and had a materially more significant impact on Ally Bank’s consumer automotive portfolio of new and used retail car and light truck receivables than even the most severe historical natural disasters, as reflected in the tables below.

 

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New and Used Car and Light Truck Contracts		Nine Months Ended September 30(1),								Year Ended December 31,
		2022				2021				2021				2020				2019				2018				2017
Total Retail Contracts Outstanding at the End of the Period (excluding bankruptcies) (in thousands)
New Vehicles (in thousands)			1,004				1,153				1,105				1,224				1,273				1,262				1,173
Used Vehicles (in thousands)			2,532				2,534				2,527				2,461				2,213				1,823				1,299
Total (in thousands)			3,536				3,687				3,632				3,685				3,486				3,085				2,472
Month-End Delinquency Dollars(2)
31-60 Days			2.57	%			1.80	%			2.00	%			2.22	%			2.69	%			2.30	%			1.79	%
61-90 Days			0.78	%			0.48	%			0.58	%			0.70	%			0.68	%			0.53	%			0.38	%
91-120 Days			0.20	%			0.11	%			0.15	%			0.18	%			0.17	%			0.12	%			0.07	%
121 Days or More			0.01	%			0.01	%			0.02	%			0.06	%			0.00	%			0.00	%			0.00	%
Repossessions as a Percent of Average Number of Contracts Outstanding (including bankruptcies)			1.88	%			1.64	%			1.62	%			1.53	%			2.25	%			2.02	%			1.69	%
Net Losses as a Percent of Liquidations			1.42	%			1.24	%			1.23	%			1.75	%			1.85	%			1.64	%			1.38	%
Net Losses as a Percent of Average Gross Receivables			0.74	%			0.64	%			0.64	%			0.74	%			0.83	%			0.71	%			0.59	%
Net Losses as a Percent of Average Net Receivables(3)			0.78	%			0.37	%			0.41	%			1.06	%			1.24	%			1.04	%			0.87	%
Total Retail Contracts Outstanding at End of the Period (including bankruptcies) (in thousands)			3,572				3,727				3,670				3,730				3,541				3,123				2,499
Bankruptcies as a Percent of Average Number of Contracts Outstanding (including bankruptcies)			1.03	%			1.13	%			1.11	%			1.29	%			1.38	%			1.15	%			0.98	%
Bankruptcies Month-End Delinquency Dollars—31 Days or More			0.24	%			0.24	%			0.24	%			0.36	%			0.45	%			0.33	%			0.26	%

 

(1)	Net loss figures are annualized.

(2)	Month-end delinquency dollars represent the remaining principal balance as of the ledger closing date for the month.

(3)	Net Losses as a Percent of Average Net Receivables is an accounting-based metric and, therefore, reflects write-downs that occur based on Federal Financial Institutions Examination Council guidance.

 

New and Used Car and Light Truck Contracts		Nine Months Ended September 30,								Year Ended December 31,
		2022				2021				2021				2020				2019				2018				2017
Average Bankruptcies			37,247				42,100				41,303				47,064				47,025				33,093				22,610
Average Retail Contracts (including bankruptcies)			3,609,803				3,729,456				3,721,030				3,661,332				3,401,271				2,879,492				2,299,989

 

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New and Used Car and Light Truck Contracts		Nine Months Ended September 30(1),								Year Ended December 31,
		2022				2021				2021				2020				2019				2018				2017
Total Retail Contracts Outstanding at the End of the Period (excluding bankruptcies) (in thousands)
New Vehicles (in thousands)			309				317				313				311				283				245				206
Used Vehicles (in thousands)			196				136				149				101				71				49				30
Total (in thousands)			504				453				462				412				354				294				236
Month-End Delinquency Dollars(2)
31-60 Days			1.51	%			1.00	%			1.08	%			1.25	%			1.69	%			1.60	%			1.38	%
61-90 Days			0.38	%			0.23	%			0.27	%			0.35	%			0.39	%			0.34	%			0.24	%
91-120 Days			0.08	%			0.05	%			0.07	%			0.08	%			0.09	%			0.07	%			0.06	%
121 Days or More			0.00	%			0.01	%			0.01	%			0.02	%			0.01	%			0.00	%			0.00	%
Repossessions as a Percent of Average Number of Contracts Outstanding (including bankruptcies)			0.86	%			0.92	%			0.87	%			0.99	%			1.47	%			1.44	%			1.32	%
Net Losses as a Percent of Liquidations			0.59	%			0.64	%			0.61	%			0.99	%			1.22	%			1.21	%			1.01	%
Net Losses as a Percent of Average Gross Receivables			0.28	%			0.30	%			0.29	%			0.36	%			0.47	%			0.46	%			0.37	%

 

(1)	Net loss figures are annualized.

(2)	Month-end delinquency dollars represent the remaining principal balance as of the ledger closing date for the month.

Our current practice is generally to write off receivables, other than those with respect to which the related obligor is in bankruptcy, at the point amounts are deemed to be uncollectible or have been repossessed and sold. We will normally begin repossession activity once the receivable becomes 60 days past due. The “Month-End Delinquency Dollars” represent the remaining principal balance (adjusted for write downs) as of the ledger closing date for the month. The “Net Losses as a Percent of Liquidations” and the “Net Losses as a Percent of Average Gross Receivables” percentages in the preceding table are based on the gross balance of the receivables, which includes unearned finance charges. Liquidations represent all reductions to the receivables based on cash receipts from all sources as well as charge-offs. Ally Bank’s liquidation expenses and other out-of-pocket costs related to liquidation are deducted from the calculation of net losses in an amount equal to $550 per receivable. The “Net Losses as a Percent of Average Net Receivables” percentages in the preceding table are based on the net balance of the receivables, which is the principal amount outstanding less unearned income. Unearned income, which includes unearned rate support received from an automotive manufacturer on certain automotive contracts and deferred origination fees reduced by origination costs, is amortized over the contractual life of the related receivable or retail installment sale contract using the effective interest method. The “Bankruptcies as a Percent of Average Number of Contracts Outstanding (including bankruptcies)” percentages in the preceding table represent the number of bankruptcies on the last day of each month and averaged for the indicated period divided by the number of receivables outstanding on the last day of each month and averaged for the indicated period.

The “Net Losses as a Percent of Average Net Receivables” represent accounting write-downs net of recoveries on Ally Bank’s U.S. automotive portfolio of new and used retail car and light and medium duty truck receivables. Net losses include the initial write-down to estimated fair market value of all repossessed vehicles in the month of repossession, as well as accounts that are 120 days past due and bankruptcies that are 60 days past due and past notification.

The “Average Bankruptcies” is the number of receivables in bankruptcy outstanding on the last day of each month and averaged for the indicated period.

The “Average Retail Contracts (including bankruptcies)” is calculated by averaging the month-end retail contracts outstanding (including bankruptcies) for each month in the indicated period.

 

48

STATIC POOL INFORMATION

Information regarding publicly offered retail securitized pools acquired by Ally Bank within the preceding five years is included in Appendix A of this prospectus. This static pool information is incorporated by reference into this prospectus.

 

49

WEIGHTED AVERAGE LIFE OF THE OFFERED NOTES

The weighted average life of the notes will generally be influenced by the rate at which the principal balances of the receivables are paid, which payment may be in the form of scheduled amortization or prepayments. For this purpose, the term “prepayment” includes charge-offs, liquidations due to defaults and repurchases by the depositor or the seller or purchases by the servicer pursuant to the servicing agreement, as well as receipt of proceeds from credit life and casualty insurance policies. All of the receivables are prepayable at any time without penalty to the obligor. The rate of prepayment of automotive receivables is influenced by a variety of economic, social and other factors, including the fact that an obligor generally may not sell or transfer the financed vehicle securing a receivable without the consent of the servicer. Any reinvestment risk resulting from prepayment of receivables will be borne entirely by the holders of the notes. See also “Legal Aspects of the Receivables—Transfer of Vehicles” in this prospectus.

Prepayments on automotive receivables can be measured relative to a prepayment standard or model. The model used in this prospectus to present the projected weighted average life of the offered notes, the Absolute Prepayment Model, or “ABS,” assumes a rate of prepayment each month relative to the original number of receivables in a pool of receivables. ABS further assumes that all the receivables are uniform as to size and maturity and amortize at the same rate and that each receivable in each month of its life will either be paid as scheduled or be prepaid in full. For example, in a pool of receivables assumed to originally contain 10,000 uniform receivables, a 1% ABS rate means that 100 receivables prepay each month. ABS does not purport to be a historical description of prepayment experience or a prediction of the anticipated rate of prepayment of any pool of receivables, including the receivables owned by the trust.

As the rate of payment of principal of the notes will depend on the rate of payment, including prepayments, of the principal balance of the receivables, final payment of the offered notes could occur significantly earlier than the final scheduled distribution date for the offered notes.

The tables under the heading “—Percent of Initial Note Principal Balance Outstanding at Various ABS Percentages” have been prepared on the basis of indicated ABS percentages. The indicated ABS percentages have been applied to the hypothetical pool of receivables consisting of a hypothetical pool of discounted receivables and a hypothetical pool of non-discounted receivables.

The “hypothetical pool of discounted receivables” is a pool of receivables equal to those receivables owned by the issuing entity on the closing date with annual percentage rates of the receivables less than 8.50%. The table below represents a pool of receivables that have been further disaggregated into 45 smaller hypothetical pools having the characteristics set forth in the table below. The level scheduled monthly payment for each of the hypothetical pools is based on aggregate principal balance, annual percentage rate and remaining term to maturity as of the cutoff date such that each hypothetical pool set forth below will be fully amortized by the end of its remaining term to maturity. The initial aggregate principal balance of the hypothetical pool of discounted receivables is equal to $871,356,401.82.

 

50

Hypothetical Pool		Aggregate Principal Balance				Annual Percentage Rate				Weighted Average Remaining Term to Maturity (in Months)				Weighted Average Age (in Months)
1		$	540,173.68				0.146	%			16				31
2		$	1,295,061.55				0.111	%			33				13
3		$	3,471,600.27				0.154	%			44				6
4		$	1,650,502.91				0.859	%			56				4
5		$	19,515.26				0.000	%			71				1
6		$	36,483.13				1.926	%			10				30
7		$	125,252.60				1.914	%			33				24
8		$	538,586.12				1.907	%			40				20
9		$	1,115,734.42				1.905	%			58				12
10		$	4,878,057.98				1.900	%			69				3
11		$	400,300.58				2.935	%			12				51
12		$	226,670.26				2.801	%			33				26
13		$	551,843.39				2.870	%			42				19
14		$	563,392.85				2.905	%			56				11
15		$	893,550.99				2.870	%			69				5
16		$	11,254,220.47				3.754	%			15				49
17		$	10,390,421.13				3.706	%			31				29
18		$	15,447,530.33				3.708	%			42				22
19		$	17,056,903.32				3.757	%			54				16
20		$	9,608,958.56				3.759	%			65				11
21		$	18,949,452.31				4.668	%			16				48
22		$	20,428,182.34				4.638	%			31				33
23		$	31,084,342.10				4.637	%			43				24
24		$	38,619,030.12				4.640	%			54				18
25		$	28,790,999.56				4.652	%			66				11
26		$	20,859,454.76				5.671	%			16				49
27		$	23,208,587.17				5.673	%			31				34
28		$	41,600,443.45				5.685	%			43				25
29		$	66,672,727.66				5.680	%			55				17
30		$	56,009,678.22				5.652	%			66				11
31		$	17,396,053.72				6.598	%			17				48
32		$	24,045,490.44				6.601	%			31				36
33		$	47,477,279.21				6.571	%			43				26
34		$	87,849,023.43				6.552	%			55				17
35		$	71,650,670.45				6.551	%			66				9
36		$	9,833,467.84				7.527	%			17				50
37		$	13,714,778.60				7.502	%			31				36
38		$	24,823,158.22				7.493	%			43				26
39		$	48,462,687.49				7.514	%			55				16
40		$	52,171,668.01				7.558	%			67				7
41		$	2,689,407.20				8.247	%			17				51
42		$	3,702,066.51				8.254	%			31				36
43		$	6,959,420.07				8.262	%			43				24
44		$	15,359,772.89				8.260	%			55				15
45		$	18,933,800.25				8.265	%			68				6

The “hypothetical pool of non-discounted receivables” is a pool of receivables that have been further disaggregated into five smaller hypothetical pools having the characteristics set forth in the table below. The level scheduled monthly payment for each of the hypothetical pools is based on aggregate principal balance, annual percentage rate and remaining term to maturity as of the cutoff date such that each hypothetical pool set forth below will be fully amortized by the end of its remaining term to maturity.

 

51