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TRANSFERS OF RECEIVABLES AND VARIABLE INTEREST ENTITIES
 12 Months Ended
Dec. 31, 2025
Transfers and Servicing [Abstract]  
TRANSFERS OF RECEIVABLES AND VARIABLE INTEREST ENTITIES TRANSFERS OF RECEIVABLES AND VARIABLE INTEREST ENTITIES
We securitize finance receivables and net investment in operating leases through a variety of programs using amortizing, variable funding, and revolving structures. We also sell finance receivables or pledge them as collateral in certain transactions outside of the United States, in other types of structured financing transactions. Due to the similarities between securitization and structured financing, we refer to structured financings as securitization transactions. Our securitization programs are targeted to institutional investors in both public and private transactions in capital markets primarily in the United States, Canada, Mexico, Germany, Italy, the United Kingdom, and China.

The finance receivables sold for legal purposes and net investment in operating leases included in securitization transactions are available only for payment of the debt issued by, and other obligations of, the securitization entities that are parties to those securitization transactions. They are not available to pay our other obligations or the claims of our other creditors. The debt is the obligation of our consolidated securitization entities and not the obligation of Ford Credit or our other subsidiaries. We hold the right to receive the excess cash flows not needed to pay the debt issued by, and other obligations of, the securitization entities that are parties to those securitization transactions.

We use special purpose entities (“SPEs”) to issue asset-backed securities in our securitization transactions. We have deemed most of these SPEs to be VIEs of which we are the primary beneficiary, and therefore, are consolidated. The SPEs are established for the sole purpose of financing the securitized financial assets. The SPEs are generally financed through the issuance of notes or commercial paper into the public or private markets or directly with conduits.

We continue to recognize our financial assets related to our sales of receivables when the financial assets are sold to a consolidated VIE or a consolidated voting interest entity. We derecognize our financial assets when the financial assets are sold to a non-consolidated entity and we do not maintain control over the financial assets.
NOTE 6. TRANSFERS OF RECEIVABLES AND VARIABLE INTEREST ENTITIES (Continued)

A VIE is an entity that either (i) has insufficient equity to finance its activities without additional subordinated financial support, or (ii) has equity investors who lack the characteristics of a controlling financial interest. We consolidate VIEs of which we are the primary beneficiary. We consider ourselves the primary beneficiary of a VIE when we have both the power to direct the activities that most significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive benefits from the entity that could potentially be significant to the VIE. Assets recognized as a result of consolidating these VIEs do not represent additional assets that could be used to satisfy claims against our general assets. Liabilities recognized as a result of consolidating these VIEs do not represent additional claims on our general assets; rather, they represent claims against the specific assets of the consolidated VIEs.

We have the power to direct significant activities of our SPEs when we have the ability to exercise discretion in the servicing of financial assets, issue additional debt, exercise a unilateral call option, add assets to revolving structures, or control investment decisions. We generally retain a portion of the economic interests in the asset-backed securitization transactions, which could be retained in the form of a portion of the senior interests, the subordinated interests, cash reserve accounts, residual interests, and servicing rights. The transfers of assets in our securitization transactions do not qualify for accounting sale treatment.

The transactions create and pass along risks to the variable interest holders, depending on the assets securing the debt and the specific terms of the transactions. We aggregate and analyze the asset-backed securitization transactions based on the risk profile of the product and the type of funding structure, including:

•Retail financing – consumer credit risk and pre-payment risk;
•Wholesale financing – dealer credit risk and Ford risk, as the receivables owned by the VIEs primarily arise from the financing provided by us to Ford-franchised dealers; therefore, the collections depend upon the sale of Ford vehicles; and
•Net investment in operating leases – vehicle residual value risk, consumer credit risk, and pre-payment risk.

As residual interest holder, we are exposed to the underlying residual and credit risk of the collateral and are exposed to interest rate risk in some transactions. The amount of risk absorbed by our residual interests generally is represented by and limited to the amount of overcollateralization of the assets securing the debt and any cash reserves.

We have no obligation to repurchase or replace any securitized asset that subsequently becomes delinquent in payment or otherwise is in default, except when representations and warranties about the eligibility of the securitized assets are breached, or when certain changes are made to the underlying asset contracts. Securitization investors have no recourse to us or our other assets other than as provided above and have no right to require us to repurchase the asset-backed securities. We generally have no obligation to provide liquidity or contribute cash or additional assets to the VIEs and do not guarantee any asset-backed securities. We may choose to support the performance of certain securitization transactions, however, by increasing cash reserves.

Although not contractually required, we regularly support our wholesale securitization programs by repurchasing receivables of a dealer from a VIE when the dealer’s performance is at risk, which transfers the corresponding risk of loss from the VIE to us. In order to continue to fund the wholesale receivables, we also may contribute additional cash or wholesale receivables if the collateral falls below the required levels. The balance of cash related to these contributions was zero at both December 31, 2024 and 2025, and was zero for all of 2024 and 2025.
NOTE 6. TRANSFERS OF RECEIVABLES AND VARIABLE INTEREST ENTITIES (Continued)

Most of our securitization transactions utilize VIEs. The following tables show the assets and debt related to our securitization transactions that were included in our consolidated financial statements at December 31 (in billions):
2024
Cash and Cash EquivalentsFinance Receivables and Net Investment in Operating Leases (a)Related Debt
(c)
Before Allowance
for Credit Losses		Allowance for
Credit Losses		After Allowance
for Credit Losses
VIE (b)
Retail financing $1.7 $37.0 $(0.3)$36.7 $31.6 
Wholesale financing0.3 24.0 — 24.0 10.8 
Finance receivables2.0 61.0 (0.3)60.7 42.4 
Net investment in operating leases0.5 13.3 — 13.3 8.5 
Total VIE$2.5 $74.3 $(0.3)$74.0 $50.9 
Non-VIE
Retail financing$0.5 $10.6 $(0.1)$10.5 $9.3 
Wholesale financing— 0.4 — 0.4 0.2 
Finance receivables0.5 11.0 (0.1)10.9 9.5 
Net investment in operating leases— — — — — 
Total Non-VIE$0.5 $11.0 $(0.1)$10.9 $9.5 
Total securitization transactions
Retail financing$2.2 $47.6 $(0.4)$47.2 $40.9 
Wholesale financing 0.3 24.4 — 24.4 11.0 
Finance receivables2.5 72.0 (0.4)71.6 51.9 
Net investment in operating leases0.5 13.3 — 13.3 8.5 
Total securitization transactions$3.0 $85.3 $(0.4)$84.9 $60.4 
__________
(a)Unearned interest supplements and residual support are excluded from securitization transactions.
(b)Includes assets to be used to settle the liabilities of the consolidated VIEs.
(c)Includes unamortized discount and debt issuance costs.
NOTE 6. TRANSFERS OF RECEIVABLES AND VARIABLE INTEREST ENTITIES (Continued)

2025
Cash and Cash EquivalentsFinance Receivables and Net Investment in Operating Leases (a)Related Debt
(c)
Before Allowance
for Credit Losses		Allowance for
Credit Losses		After Allowance
for Credit Losses
VIE (b)
Retail financing$1.7 $36.2 $(0.3)$35.9 $29.9 
Wholesale financing0.2 19.9 — 19.9 13.5 
Finance receivables1.9 56.1 (0.3)55.8 43.4 
Net investment in operating leases0.6 13.6 — 13.6 8.7 
Total VIE$2.5 $69.7 $(0.3)$69.4 $52.1 
Non-VIE
Retail financing$0.4 $7.6 $(0.1)$7.5 $7.0 
Wholesale financing— 0.4 — 0.4 0.4 
Finance receivables0.4 8.0 (0.1)7.9 7.4 
Net investment in operating leases— — — — — 
Total Non-VIE$0.4 $8.0 $(0.1)$7.9 $7.4 
Total securitization transactions
Retail financing$2.1 $43.8 $(0.4)$43.4 $36.9 
Wholesale financing0.2 20.3 — 20.3 13.9 
Finance receivables2.3 64.1 (0.4)63.7 50.8 
Net investment in operating leases0.6 13.6 — 13.6 8.7 
Total securitization transactions$2.9 $77.7 $(0.4)$77.3 $59.5 
__________
(a)Unearned interest supplements and residual support are excluded from securitization transactions.
(b)Includes assets to be used to settle the liabilities of the consolidated VIEs.
(c)Includes unamortized discount and debt issuance costs.

Interest expense related to securitization debt for the years ended December 31 was as follows (in millions):
202320242025
VIE$1,872 $2,165 $2,027 
Non-VIE591 610 466 
Total securitization transactions$2,463 $2,775 $2,493 
NOTE 6. TRANSFERS OF RECEIVABLES AND VARIABLE INTEREST ENTITIES (Continued)
Certain of our securitization entities may enter into derivative transactions to mitigate interest rate exposure, primarily resulting from fixed-rate assets securing floating-rate debt. In certain instances, the counterparty enters into offsetting derivative transactions with us to mitigate its interest rate risk resulting from derivatives with our securitization entities. These related derivatives are not the obligations of our securitization entities. See Note 7 for additional information regarding the accounting for derivatives. Our exposures based on the fair value of derivative instruments with external counterparties related to securitization programs at December 31 were as follows (in millions):
20242025
Derivative
Asset		Derivative
Liability		Derivative
Asset		Derivative
Liability
Derivatives of the VIEs$34 $100 $21 $40 
Derivatives related to the VIEs29 32 8 23 
Other securitization related derivatives39 27 1 40 
Total exposures related to securitization$102 $159 $30 $103 
Derivative expense/(income) related to our securitization transactions for the years ended December 31 was as follows (in millions):
202320242025
Derivatives of the VIEs$25 $14 $(9)
Derivatives related to the VIEs(38)12 26 
Other securitization related derivatives(26)(82)19 
Total derivative expense/(income) related to securitization$(39)$(56)$36