ahfc-20251231

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2025


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission File Number 001-36111

AMERICAN HONDA FINANCE CORPORATION

(Exact name of registrant as specified in its charter)



California			95-3472715
(State or other jurisdiction of incorporation or organization)			(IRS Employer Identification No.)

1919 Torrance Blvd., Torrance, California			90501
(Address of principal executive offices)			(Zip Code)

(310) 972-2288

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol(s)	Name of exchange on which registered
0.750% Medium-Term Notes, Series A Due November 25, 2026	HMC/26A	New York Stock Exchange
3.500% Medium-Term Notes, Series A Due April 24, 2026	HMC/26F	New York Stock Exchange
Floating Rate Medium-Term Notes, Series A Due April 29, 2026	HMC/26G	New York Stock Exchange
Floating Rate Medium-Term Notes, Series A Due May 29, 2026	HMC/26I	New York Stock Exchange
1.500% Medium-Term Notes, Series A Due October 19, 2027	HMC/27A	New York Stock Exchange
3.750% Medium-Term Notes, Series A Due October 25, 2027	HMC/27B	New York Stock Exchange
Floating Rate Medium-Term Notes, Series A Due May 28, 2027	HMC/27F	New York Stock Exchange
0.300% Medium-Term Notes, Series A Due July 7, 2028	HMC/28A	New York Stock Exchange
2.850% Medium-Term Notes, Series A Due June 27, 2028	HMC/28G	New York Stock Exchange
3.300% Medium-Term Notes, Series A Due March 21, 2029	HMC/29C	New York Stock Exchange
5.600% Medium-Term Notes, Series A Due September 6, 2030	HMC/30A	New York Stock Exchange
3.650% Medium-Term Notes, Series A Due April 23, 2031	HMC/31B	New York Stock Exchange
3.500% Medium-Term Notes, Series A Due June 27, 2031	HMC/31D	New York Stock Exchange
5.050% Medium-Term Notes, Series A Due August 20, 2031	HMC/31E	New York Stock Exchange
3.950% Medium-Term Notes, Series A Due March 19, 2032	HMC/32	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of January 31, 2026, the number of outstanding shares of common stock of the registrant was 13,660,000, all of which shares were held by American Honda Motor Co., Inc. None of the shares are publicly traded.

REDUCED DISCLOSURE FORMAT

American Honda Finance Corporation, a wholly-owned subsidiary of American Honda Motor Co., Inc., which in turn is a wholly-owned subsidiary of Honda Motor Co., Ltd., meets the requirements set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this Form 10-Q with the reduced disclosure format.

AMERICAN HONDA FINANCE CORPORATION

QUARTERLY REPORT ON FORM 10-Q

For the quarter ended December 31, 2025

Table of Contents


		Page
PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Consolidated Balance Sheets	1
	Consolidated Statements of Income	2
	Consolidated Statements of Comprehensive Income	2
	Consolidated Statements of Changes in Equity	3
	Consolidated Statements of Cash Flows	4
	Notes to Consolidated Financial Statements	6
	Note 1 – Summary of Business and Significant Accounting Policies	6
	Note 2 – Finance Receivables	7
	Note 3 – Investment in Operating Leases	12
	Note 4 – Debt	14
	Note 5 – Derivative Instruments	16
	Note 6 – Transactions Involving Related Parties	17
	Note 7 – Income Taxes	19
	Note 8 – Commitments and Contingencies	20
	Note 9 – Securitizations and Variable Interest Entities	21
	Note 10 – Other Assets	22
	Note 11 – Other Liabilities	22
	Note 12 – Fair Value Measurements	22
	Note 13 – Segment and Geographic Information	26
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
	Overview	30
	Results of Operations	31
	Financial Condition	38
	Liquidity and Capital Resources	44
	Derivatives	49
	Off-Balance Sheet Arrangements	49
	New Accounting Standards	49
	Critical Accounting Estimates	50
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	50
Item 4.	Controls and Procedures	51
PART II – OTHER INFORMATION		52
Item 1.	Legal Proceedings	52
Item 1A.	Risk Factors	52
Item 2.	Unregistered Sale s of Equity Securities and Use of Proceeds	52
Item 3.	Defaults Upon Senior Securities	52
Item 4.	Mine Safety Disclosures	52
Item 5.	Other Information	52
Item 6.	Exhibits	53
Exhibit Index
Signature

Cautionary Statement Regarding Forward-Looking Statements

Certain statements included herein constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that involve a number of risks and uncertainties. Certain such forward-looking statements can be identified by the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “scheduled,” or “anticipates” or similar expressions or the negative thereof or other variations thereof or comparable terminology, or by discussions of strategy, plans, or intentions. In addition, all information included herein with respect to projected or future results of operations, cash flows, financial condition, financial performance, or other financial or statistical matters constitute forward-looking statements. Such forward-looking statements are necessarily dependent on assumptions, data, or methods that may be incorrect or imprecise and that may be incapable of being realized. The following factors, among others, could cause actual results and other matters to differ materially from those in such forward-looking statements:

•duration and severity of supply chain disruptions on the production of new vehicles and other products and related impact on dealer inventory levels;

•declines in the financial condition or performance of Honda Motor Co., Ltd. or the sales of Honda and/or Acura products;

•risks with Honda Motor Co., Ltd.’s current business alliances and joint ventures and any future potential business alliances, joint ventures, or business combinations;

•changes in economic and business conditions, both domestically and internationally, including, but not limited to, inflationary pressures, changes in interest rates, changes in international trade policy, declining consumer sentiment and market uncertainty;

•the impact of tariffs enacted or proposed by governments applicable to the automotive industry in countries which Honda Motor Co., Ltd. operates;

•fluctuations in interest rates and currency exchange rates;

•failure of our customers, dealers or counterparties to meet the terms of any contracts with us, or otherwise fail to perform as agreed;

•our inability to recover the estimated residual value of leased vehicles at the end of their lease terms;

•changes, volatility or disruption in our funding sources or access to the capital markets;

•changes in the ownership and structure of our parent entity;

•changes in our, or Honda Motor Co., Ltd.’s, credit ratings;

•increases in competition from other financial institutions seeking to increase their share of financing of Honda and Acura products;

•impact of pandemics, epidemics, and other public health crises, and efforts to contain them, on our operations, liquidity and financial condition;

•changes in laws and regulations, including the result of financial services legislation, and related costs;

•changes in accounting standards;

•failure or interruption in our operations; and

•security breaches or cyber-attacks.

Additional information regarding these and other risks and uncertainties to which our business is subject is contained in our Annual Report on Form 10-K for the fiscal year ended March 31, 2025 filed with the Securities and Exchange Commission (SEC) on June 18, 2025. Readers of this Quarterly Report should review the information contained in that report, and in any subsequent reports that we file with the SEC, as such risks and uncertainties may be amended, supplemented or superseded from time to time. We do not intend, and undertake no obligation to, update any forward-looking information to reflect actual results or future events or circumstances, except as required by applicable law.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

AMERICAN HONDA FINANCE CORPORATION

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(U.S. dollars in millions, except share data)


	December 31, 2025		March 31, 2025
Assets
Cash and cash equivalents	$	2,808	$	4,052
Finance receivables, net of allowance for credit losses of $463 and $396	54,214		52,516
Investment in operating leases, net	32,458		30,596
Due from Parent and affiliated companies	96		146
Income taxes receivable	430		—
Other assets	1,267		1,270
Derivative instruments	898		389
Total assets	$	92,171	$	88,969
Liabilities and Equity
Debt	$	65,813	$	62,547
Due to Parent and affiliated companies	144		181
Income taxes payable	123		505
Deferred income taxes	5,685		5,302
Other liabilities	1,569		1,635
Derivative instruments	719		1,120
Total liabilities	74,053		71,290
Commitments and contingencies (Note 8)
Shareholder’s equity:
Common stock, $100 par value. Authorized 15,000,000 shares; issued and outstanding 13,660,000 shares as of December 31, 2025 and March 31, 2025	1,366		1,366
Retained earnings	15,773		15,448
Accumulated other comprehensive loss	(153)		(209)
Total shareholder’s equity	16,986		16,605
Noncontrolling interest in subsidiary	1,132		1,074
Total equity	18,118		17,679
Total liabilities and equity	$	92,171	$	88,969

The following table presents the assets and liabilities of consolidated variable interest entities. These assets and liabilities are included in the consolidated balance sheets presented above. Refer to Note 9 for additional information.


	December 31, 2025		March 31, 2025
Finance receivables, net	$	15,190	$	12,969

Other assets	723		755
Total assets	$	15,913	$	13,724

Secured debt	$	14,433	$	12,384
Other liabilities	25		22
Total liabilities	$	14,458	$	12,406

See accompanying Notes to Consolidated Financial Statements (Unaudited).

AMERICAN HONDA FINANCE CORPORATION

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(U.S. dollars in millions)


	Three months ended December 31,				Nine months ended December 31,
	2025		2024		2025		2024
Revenues:
Retail	$	788	$	713	$	2,336	$	2,027
Dealer	69		74		209		222
Operating leases	1,812		1,625		5,382		4,751
Total revenues	2,669		2,412		7,927		7,000
Leased vehicle expenses	1,218		1,105		3,607		3,244
Interest expense	692		632		2,072		1,799
Net revenues	759		675		2,248		1,957

Other income, net	42		37		134		117
Total net revenues	801		712		2,382		2,074
Expenses:
General and administrative expenses	150		152		510		428
Provision for credit losses	126		70		315		228
Early termination loss on operating leases	138		40		265		95

(Gain)/Loss on derivative instruments	46		551		(559)		351
(Gain)/Loss on foreign currency revaluation of debt	23		(489)		675		(230)
Total expenses	483		324		1,206		872
Income before income taxes	318		388		1,176		1,202
Income tax expense	2		95		214		326
Net income	316		293		962		876
Less: Net income attributable to noncontrolling interest	27		15		75		50
Net income attributable to American Honda Finance Corporation	$	289	$	278	$	887	$	826

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(U.S. dollars in millions)


	Three months ended December 31,				Nine months ended December 31,
	2025		2024		2025		2024
Net income	$	316	$	293	$	962	$	876
Other comprehensive income, net of tax:
Foreign currency translation adjustment	33		(137)		107		(137)
Comprehensive income	349		156		1,069		739
Less: Comprehensive income (loss) attributable to noncontrolling interest	43		(50)		126		(15)
Comprehensive income attributable to American Honda Finance Corporation	$	306	$	206	$	943	$	754

See accompanying Notes to Consolidated Financial Statements (Unaudited).

AMERICAN HONDA FINANCE CORPORATION

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)

(U.S. dollars in millions)


	Total		Retained earnings		Accumulated other comprehensive income (loss)		Common stock		Noncontrolling interest
Balance at March 31, 2024	$	18,623	$	16,254	$	(137)	$	1,366	$	1,140
Net income	267		250		—		—		17
Other comprehensive loss	(24)		—		(13)		—		(11)

Balance at June 30, 2024	$	18,866	$	16,504	$	(150)	$	1,366	$	1,146
Net income	316		298		—		—		18
Other comprehensive income	24		—		13		—		11
Dividends declared	(604)		(536)		—		—		(68)
Balance at September 30, 2024	$	18,602	$	16,266	$	(137)	$	1,366	$	1,107
Net income	293		278		—		—		15
Other comprehensive loss	(137)		—		(72)		—		(65)

Balance at December 31, 2024	$	18,758	$	16,544	$	(209)	$	1,366	$	1,057

Balance at March 31, 2025	$	17,679	$	15,448	$	(209)	$	1,366	$	1,074
Net income	375		347		—		—		28
Other comprehensive income	128		—		67		—		61

Balance at June 30, 2025	$	18,182	$	15,795	$	(142)	$	1,366	$	1,163
Net income	271		251		—		—		20
Other comprehensive loss	(54)		—		(28)		—		(26)
Dividends declared	(630)		(562)		—		—		(68)
Balance at September 30, 2025	$	17,769	$	15,484	$	(170)	$	1,366	$	1,089
Net income	316		289		—		—		27
Other comprehensive income	33		—		17		—		16

Balance at December 31, 2025	$	18,118	$	15,773	$	(153)	$	1,366	$	1,132

See accompanying Notes to Consolidated Financial Statements (Unaudited).

AMERICAN HONDA FINANCE CORPORATION

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(U.S. dollars in millions)


	Nine months ended December 31,
	2025		2024
Cash flows from operating activities:
Net income	$	962	$	876
Adjustments to reconcile net income to net cash provided by operating activities:
Debt and derivative instrument valuation adjustments	(118)		43
Provision for credit losses	315		228
Early termination loss on operating leases	265		95
Depreciation on leased vehicles	3,551		3,221
Accretion of unearned subsidy income	(1,011)		(819)
Amortization of deferred dealer participation and other deferred costs	340		308
Gain on disposition of leased vehicles	(46)		(66)
Deferred income taxes	517		(23)
Changes in operating assets and liabilities:
Income taxes receivable/payable	(728)		174
Other assets	(8)		(48)
Accrued interest/discounts on debt	46		117
Other liabilities	(137)		18
Due to/from Parent and affiliated companies	8		24
Net cash provided by operating activities	3,956		4,148
Cash flows from investing activities:
Finance receivables acquired	(21,437)		(21,779)
Principal collected on finance receivables	19,234		16,484
Net change in wholesale loans	38		(387)
Purchase of operating lease vehicles	(11,923)		(14,139)
Disposal of operating lease vehicles	6,300		7,737
Cash received for unearned subsidy income	865		1,303
Other investing activities, net	(6)		(4)
Net cash used in investing activities	(6,929)		(10,785)

Statement continues on the next page.

AMERICAN HONDA FINANCE CORPORATION

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(U.S. dollars in millions)


	Nine months ended December 31,
	2025		2024
Cash flows from financing activities:
Proceeds from issuance of commercial paper	$	20,847	$	24,222
Paydown of commercial paper	(22,571)		(22,761)
Proceeds from issuance of short-term debt	600		1,099
Paydown of short-term debt	(1,850)		(600)
Proceeds from issuance of related party debt	1,000		—
Paydown of related party debt	(2,800)		—
Proceeds from issuance of medium-term notes and other debt	11,720		9,585
Paydown of medium-term notes and other debt	(6,656)		(6,056)
Proceeds from issuance of secured debt	8,247		6,353
Paydown of secured debt	(6,236)		(4,665)
Dividends paid	(630)		(604)
Net cash provided by financing activities	1,671		6,573
Effect of exchange rate changes on cash and cash equivalents	13		(10)
Net decrease in cash and cash equivalents	(1,289)		(74)
Cash and cash equivalents and restricted cash at beginning of period	4,767		2,385
Cash and cash equivalents and restricted cash at end of period	$	3,478	$	2,311
Supplemental disclosures of cash flow information:
Interest paid	$	1,890	$	1,636
Income taxes paid	$	537	$	169

The following table provides a reconciliation of cash and cash equivalents and restricted cash from the Consolidated Balance Sheets to the Consolidated Statements of Cash Flows.


	December 31,
	2025		2024
Cash and cash equivalents	$	2,808	$	1,591
Restricted cash included in other assets (1)	670		720
Total	$	3,478	$	2,311

________________________

(1)Restricted cash balances relate to securitization arrangements (Note 9).

See accompanying Notes to Consolidated Financial Statements (Unaudited).

AMERICAN HONDA FINANCE CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

Note 1. Summary of Business and Significant Accounting Policies

Organizational Structure

American Honda Finance Corporation (AHFC) is a wholly-owned subsidiary of American Honda Motor Co., Inc. (AHM or the Parent). Honda Canada Finance Inc. (HCFI) is a majority-owned subsidiary of AHFC. Noncontrolling interest in HCFI is held by Honda Canada Inc. (HCI), an affiliate of AHFC. AHM is a wholly-owned subsidiary and HCI is an indirect wholly-owned subsidiary of Honda Motor Co., Ltd. (HMC). AHM and HCI are the sole authorized distributors of Honda and Acura products, including motor vehicles, other products, and parts and accessories, in the United States and Canada.

Unless otherwise indicated by the context, all references to the “Company”, “we”, “us”, and “our” in this report include AHFC and its consolidated subsidiaries, and references to “AHFC” refer solely to American Honda Finance Corporation (excluding AHFC’s subsidiaries).

Basis of Presentation

The unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim information, and instructions to the Quarterly Report on Form 10-Q and Rule 10-01 of Regulation S-X. In the opinion of management, these unaudited interim financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the results for the interim periods presented. Results for interim periods should not be considered indicative of results for the full year or for any other interim period. These unaudited interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements, significant accounting policies, and the other notes to the consolidated financial statements for the fiscal year ended March 31, 2025 included in the Company’s Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission (SEC) on June 18, 2025. All significant intercompany balances and transactions have been eliminated upon consolidation.

Recently Issued Accounting Standards

In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments are intended to enhance the transparency and decision-usefulness of income tax disclosures, including jurisdictional information, by requiring consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid disclosures. The amendments also eliminate certain disclosure requirements related to uncertain tax positions and unrecognized deferred tax liabilities. The amendments are effective for the Company for fiscal years beginning April 1, 2025. Aside from the additional disclosure requirements, the adoption of the amendments is not expected to materially impact the Company's consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The amendments address investor requests for more transparent information. The primary goal is to improve the decision-usefulness of expense information on public business entities’ income statements through the disaggregation of relevant expense captions in the notes to the financial statements. The amendments are effective for the Company for fiscal years beginning April 1, 2027 and for interim periods beginning April 1, 2028. The Company is currently assessing the impact of this standard on the consolidated financial statements.

All other ASUs issued but not adopted were assessed and determined to be not applicable or are not expected to have a material impact on the Company's consolidated financial statements or financial statement disclosures.

AMERICAN HONDA FINANCE CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

Note 2. Finance Receivables

Finance receivables consisted of the following:


		December 31, 2025
		Retail		Dealer		Total

	(U.S. dollars in millions)
Finance receivables		$	50,264	$	4,503	$	54,767
Allowance for credit losses		(454)		(9)		(463)
Deferred dealer participation and other deferred costs		680		—		680
Unearned subsidy income		(770)		—		(770)
Finance receivables, net		$	49,720	$	4,494	$	54,214

		March 31, 2025
		Retail		Dealer		Total

	(U.S. dollars in millions)
Finance receivables		$	48,698	$	4,344	$	53,042
Allowance for credit losses		(387)		(9)		(396)
Deferred dealer participation and other deferred costs		616		—		616
Unearned subsidy income		(746)		—		(746)
Finance receivables, net		$	48,181	$	4,335	$	52,516

Finance receivables include retail loans with a net carrying amount of $15.0 billion and $13.0 billion as of December 31, 2025 and March 31, 2025, respectively, which have been transferred to bankruptcy-remote special purpose entities (SPEs) and are considered to be legally isolated but do not qualify for sale accounting treatment. These retail loans are restricted and serve as collateral for the payment of the related secured debt obligations. Refer to Note 9 for additional information.

AMERICAN HONDA FINANCE CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

Allowance for Credit Losses

The following is a summary of the activity in the allowance for credit losses of finance receivables:


		Three and nine months ended December 31, 2025
		Retail		Dealer		Total

	(U.S. dollars in millions)
Beginning balance as of October 1, 2025		$	421	$	9	$	430
Provision		126		—		126
Charge-offs		(131)		—		(131)
Recoveries		37		—		37
Effect of translation adjustment		1		—		1
Ending balance as of December 31, 2025		$	454	$	9	$	463

Beginning balance as of April 1, 2025		$	387	$	9	$	396
Provision		315		—		315
Charge-offs		(362)		—		(362)
Recoveries		113		—		113
Effect of translation adjustment		1		—		1
Ending balance as of December 31, 2025		$	454	$	9	$	463

		Three and nine months ended December 31, 2024
		Retail		Dealer		Total

	(U.S. dollars in millions)
Beginning balance as of October 1, 2024		$	404	$	8	$	412
Provision		69		1		70
Charge-offs		(111)		—		(111)
Recoveries		32		—		32
Effect of translation adjustment		(1)		—		(1)
Ending balance as of December 31, 2024		$	393	$	9	$	402

Beginning balance as of April 1, 2024		$	345	$	8	$	353
Provision		227		1		228
Charge-offs		(287)		—		(287)
Recoveries		109		—		109
Effect of translation adjustment		(1)		—		(1)
Ending balance as of December 31, 2024		$	393	$	9	$	402

The allowance increased during the nine months ended December 31, 2025 primarily due to the expected credit losses recognized on the high volume of retail loan acquisitions during the period and the increase to the estimate of expected credit losses attributable to the increasing trend of delinquencies and net charge-offs.

AMERICAN HONDA FINANCE CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

Delinquencies

Collection experience provides an indication of the credit quality of finance receivables. For retail loans, delinquencies are a good predictor of charge-offs in the near term. The likelihood of accounts charging off is significantly higher once an account becomes 60 days delinquent. Retail loans are considered delinquent if more than 10% of a scheduled payment is contractually past due on a cumulative basis. Dealer loans are considered delinquent when any payment is contractually past due. The following is an aging analysis of past due finance receivables:


	30 – 59 days past due		60 – 89 days past due		90 days or greater past due		Total past due		Current or less than 30 days past due		Total finance receivables

	(U.S. dollars in millions)
December 31, 2025
Retail loans:
New automobile	$	450	$	120	$	29	$	599	$	39,429	$	40,028
Used and certified automobile	194		53		13		260		8,263		8,523
Motorcycle and other	26		12		7		45		1,578		1,623
Total retail loans	670		185		49		904		49,270		50,174
Dealer loans:
Wholesale flooring	1		—		—		1		2,948		2,949
Commercial loans	—		—		—		—		1,554		1,554
Total dealer loans	1		—		—		1		4,502		4,503
Total finance receivables	$	671	$	185	$	49	$	905	$	53,772	$	54,677

March 31, 2025
Retail loans:
New automobile	$	331	$	73	$	20	$	424	$	38,105	$	38,529
Used and certified automobile	155		38		10		203		8,291		8,494
Motorcycle and other	18		7		4		29		1,516		1,545
Total retail loans	504		118		34		656		47,912		48,568
Dealer loans:
Wholesale flooring	—		—		1		1		3,005		3,006
Commercial loans	—		—		—		—		1,338		1,338
Total dealer loans	—		—		1		1		4,343		4,344
Total finance receivables	$	504	$	118	$	35	$	657	$	52,255	$	52,912

Credit Quality Indicators

Credit losses are an expected cost of extending credit. The majority of our credit risk is with consumer financing and to a lesser extent with dealer financing. Exposure to credit risk in retail loans is managed through regular monitoring and periodic adjusting of underwriting standards, pricing of contracts for expected losses, and focusing collection efforts to minimize losses. Exposure to credit risk for dealers is managed through ongoing review of their financial condition and payment performance.

Retail Loan Segment

The Company utilizes proprietary credit scoring systems to evaluate the credit risk of applicants and assign internal credit grades at origination. Factors used to develop a customer’s credit grade include the terms of the contract, the loan-to-value ratio, the customer’s debt ratios, and credit bureau attributes such as the number of trade lines, utilization ratio, and number of credit inquiries. Different scorecards are utilized depending on the type of product financed. The Company regularly reviews and analyzes the performance of the consumer-financing portfolio to ensure the effectiveness of its underwriting guidelines, purchasing criteria and scorecard predictability of customers. Internal credit grades are determined only at the time of origination and are not reassessed during the life of the contract. The following describes the internal credit grade ratings.

AMERICAN HONDA FINANCE CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

A - Borrowers classified as very low credit risks. Based on their application and credit bureau report, they have the ability to pay and have shown a willingness to pay. Generally, A credit borrowers have an extensive credit history, an excellent payment record and extensive financial resources.

B - Borrowers classified as relatively low credit risks. Based on their application and credit bureau report, they have the ability to pay and have shown a willingness to pay. Generally, B credit borrowers may have one or more conditions that could reduce the internal credit score, such as a shorter credit history or a minor credit weakness.

C - Borrowers classified as moderate credit risks. Based on their application and credit bureau report, they may have limited financial resources, limited credit history, or a weakness in credit history.

D - Borrowers classified as relatively higher credit risks. Based on their application and credit bureau report, they may have very limited financial resources, very limited or no credit history, or a poor credit history.

Others - Borrowers, including businesses, without credit bureau reports.

The following table summarizes the amortized cost of retail loans by internal credit grade:


	Retail loans by vintage fiscal year

	2026		2025		2024		2023		2022		Prior		Total

	(U.S. dollars in millions)
December 31, 2025
Credit grade A	$	10,609	$	10,641	$	6,510	$	2,325	$	898	$	395	$	31,378
Credit grade B	2,899		2,972		2,123		934		371		173		9,472
Credit grade C	2,126		2,175		1,425		590		259		127		6,702
Credit grade D	628		655		354		127		61		43		1,868
Others	233		259		156		60		31		15		754
Total retail loans	$	16,495	$	16,702	$	10,568	$	4,036	$	1,620	$	753	$	50,174
Gross charge-offs for the nine months ended December 31, 2025	$	27	$	157	$	110	$	43	$	15	$	10	$	362


	Retail loans by vintage fiscal year

	2025		2024		2023		2022		2021		Prior		Total

	(U.S. dollars in millions)
March 31, 2025
Credit grade A	$	14,245	$	9,403	$	3,620	$	1,838	$	1,140	$	136	$	30,382
Credit grade B	3,800		2,919		1,365		639		371		73		9,167
Credit grade C	2,830		2,006		869		439		259		66		6,469
Credit grade D	879		516		190		103		73		38		1,799
Others	351		221		89		54		25		11		751
Total retail loans	$	22,105	$	15,065	$	6,133	$	3,073	$	1,868	$	324	$	48,568
Gross charge-offs for the fiscal year ended March 31, 2025	$	62	$	188	$	88	$	38	$	18	$	12	$	406

Dealer Loan Segment

The Company utilizes an internal risk rating system to evaluate dealer credit risk. Dealerships are assigned an internal risk rating based on an assessment of their financial condition and other factors. Factors including liquidity, financial strength, management effectiveness, and operating efficiency are evaluated when assessing their financial condition. Financing limits and interest rates are based upon these risk ratings. Monitoring activities including financial reviews and inventory inspections are performed more frequently for dealerships with weaker risk ratings. The financial conditions of dealerships are reviewed at least annually and their risk ratings are updated accordingly.

AMERICAN HONDA FINANCE CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

Dealerships have been divided into the following groups:

Group I - Dealerships in the strongest internal risk rating tier

Group II - Dealerships with internal risk ratings below the strongest tier

Group III - Dealerships with impaired loans

The following table summarizes the amortized cost of dealer loans by risk rating groups:


	Commercial loans by vintage fiscal year

	2026		2025		2024		2023		2022		Prior		Revolving loans		Wholesale Flooring		Total

	(U.S. dollars in millions)
December 31, 2025
Group I	$	38	$	134	$	105	$	50	$	8	$	129	$	976	$	1,748	$	3,188
Group II	8		17		56		2		5		26		—		1,200		1,314
Group III	—		—		—		—		—		—		—		1		1
Total dealer loans	$	46	$	151	$	161	$	52	$	13	$	155	$	976	$	2,949	$	4,503
Gross charge-offs for the nine months ended December 31, 2025	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—


	Commercial loans by vintage fiscal year

	2025		2024		2023		2022		2021		Prior		Revolving loans		Wholesale Flooring		Total

	(U.S. dollars in millions)
March 31, 2025
Group I	$	149	$	110	$	52	$	13	$	86	$	53	$	762	$	1,764	$	2,989
Group II	23		56		3		—		6		25		—		1,241		1,354
Group III	—		—		—		—		—		—		—		1		1
Total dealer loans	$	172	$	166	$	55	$	13	$	92	$	78	$	762	$	3,006	$	4,344
Gross charge-offs for the fiscal year ended March 31, 2025	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Loan Modifications

The contractual terms of loans may be modified when borrowers are experiencing financial difficulties in an effort to mitigate losses. There were no dealer loans that were modified for dealers experiencing financial difficulties during the nine months ended December 31, 2025. Payment deferrals are granted on retail loans, however the delays in payments are considered insignificant since the number of deferred payments are limited and interest continues to accrue during the deferral period. In certain situations, the Company may grant term extensions on retail loans in the United States. Term extensions extend the maturity date of the loan, which reduces the monthly payments over the remaining extended term of the loan. Term extensions do not change the contractual interest rates or reduce the outstanding principal balances. During the nine months ended December 31, 2025, term extensions were not material to the Company’s consolidated financial statements. Retail loans may also be modified in reorganization proceedings pursuant to the U.S. Bankruptcy Code, which may include interest rate adjustments, term extensions, and principal forgiveness. Retail loans modified under bankruptcy protection were not material to the Company’s consolidated financial statements during the nine months ended December 31, 2025.

AMERICAN HONDA FINANCE CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

Note 3. Investment in Operating Leases

Investment in operating leases consisted of the following:


	December 31, 2025		March 31, 2025

	(U.S. dollars in millions)
Operating lease vehicles (1)	$	40,286	$	37,647
Accumulated depreciation	(6,644)		(5,770)
Deferred dealer participation and initial direct costs	125		123
Unearned subsidy income	(1,091)		(1,291)
Estimated early termination losses	(218)		(113)
Investment in operating leases, net	$	32,458	$	30,596

________________________

(1)Net of investment tax credits. Refer to Note 7 for additional information.

Operating lease revenue consisted of the following:


	Three months ended December 31,				Nine months ended December 31,
	2025		2024		2025		2024

	(U.S. dollars in millions)
Lease payments	$	1,610	$	1,447	$	4,752	$	4,248
Subsidy income and dealer rate participation, net	191		172		586		464
Reimbursed lessor costs	11		6		44		39
Total operating lease revenue, net	$	1,812	$	1,625	$	5,382	$	4,751

Leased vehicle expenses consisted of the following:


	Three months ended December 31,				Nine months ended December 31,
	2025		2024		2025		2024

	(U.S. dollars in millions)
Depreciation expense	$	1,202	$	1,095	$	3,551	$	3,221
Initial direct costs and other lessor costs	29		24		102		89
Gain on disposition of leased vehicles (1)	(13)		(14)		(46)		(66)
Total leased vehicle expenses, net	$	1,218	$	1,105	$	3,607	$	3,244

________________________

(1)Included in the gain on disposition of leased vehicles are end of term charges of $2 million and less than $1 million for the three months ended December 31, 2025 and 2024, respectively, and $3 million and $7 million for the nine months ended December 31, 2025 and 2024, respectively.

AMERICAN HONDA FINANCE CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

Contractual operating lease payments due as of December 31, 2025 are summarized below. Based on the Company's experience, it is expected that a portion of the Company's operating leases will terminate prior to the scheduled lease term. The summary below should not be regarded as a forecast of future cash collections.


Twelve-month periods ending December 31,	(U.S. dollars in millions)

2026	$	5,851
2027	4,032
2028	1,603
2029	320
2030	52
Total	$	11,858

The Company recognized early termination losses on operating leases of $138 million and $40 million during the three months ended December 31, 2025 and 2024, respectively, and $265 million and $95 million during the nine months ended December 31, 2025 and 2024, respectively. Net realized losses totaled $66 million and $34 million during the three months ended December 31, 2025 and 2024, respectively, and $160 million and $75 million during the nine months ended December 31, 2025 and 2024, respectively.

The general allowance for uncollectible operating lease receivables was recorded through a reduction to revenue of $12 million and $8 million for the three months ended December 31, 2025 and 2024, respectively, and $31 million and $20 million for the nine months ended December 31, 2025 and 2024, respectively.

No impairment losses due to declines in estimated residual values were recognized during both the three and nine months ended December 31, 2025 and 2024.

AMERICAN HONDA FINANCE CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

Note 4. Debt

The Company issues debt in various currencies with floating or fixed interest rates. Outstanding debt, net of discounts and fees, weighted average contractual interest rates and range of contractual interest rates were as follows:


					Weighted average contractual interest rate (1)				Contractual interest rate ranges
	December 31, 2025		March 31, 2025		December 31, 2025		March 31, 2025		December 31, 2025	March 31, 2025

	(U.S. dollars in millions)
Unsecured debt:
Commercial paper	$	4,341	$	6,022	3.86	%	4.36	%	2.40 - 4.23%	2.73 - 4.70%
Related party debt	—		1,800		—	%	4.59	%	— - —%	4.59 - 4.60%
Bank loans	2,219		2,100		3.79	%	4.56	%	3.05 - 4.60%	3.59 - 5.27%
Public MTN Program	41,365		37,153		3.97	%	4.02	%	0.30 - 5.85%	0.30 - 5.85%
Other debt	3,455		3,088		3.51	%	3.53	%	1.34 - 5.73%	1.34 - 5.73%
Total unsecured debt	51,380		50,163
Secured debt	14,433		12,384		4.49	%	4.77	%	3.16 - 5.67%	0.88 - 5.87%
Total debt	$	65,813	$	62,547

_______________________

(1)Weighted average contractual interest rates for commercial paper are bond equivalent yields. Contractual interest rates approximate effective yields. Weighted average contractual interest rate of short-term debt was 3.95% and 4.54% as of December 31, 2025 and March 31, 2025, respectively.

As of December 31, 2025, the outstanding principal balance of long-term debt with floating interest rates totaled $14.7 billion, long-term debt with fixed interest rates totaled $45.7 billion, and short-term debt with floating or fixed interest rates totaled $5.5 billion. As of March 31, 2025, the outstanding principal balance of long-term debt with floating interest rates totaled $9.7 billion, long-term debt with fixed interest rates totaled $42.7 billion, and short-term debt with floating or fixed interest rates totaled $10.1 billion.

Commercial Paper

As of December 31, 2025 and March 31, 2025, the Company had commercial paper programs that provide the Company with available funds of up to $8.8 billion and $8.7 billion, respectively, at prevailing market interest rates for terms up to one year. The commercial paper programs are supported by the Keep Well Agreements with HMC described in Note 6.

Outstanding commercial paper averaged $5.7 billion and $5.6 billion during the nine months ended December 31, 2025 and 2024, respectively. The maximum balance outstanding at any month-end during the nine months ended December 31, 2025 and 2024 was $7.3 billion and $6.7 billion, respectively.

Related Party Debt

From time to time, AHFC issues fixed rate short-term debt to AHM to fund AHFC's general corporate operations. The Company did not incur interest expense on related party debt for the three months ended December 31, 2025 and incurred $28 million for the nine months ended December 31, 2025.

Bank Loans

Outstanding bank loans at December 31, 2025 were long-term, with floating interest rates, and denominated in U.S. dollars or Canadian dollars. Outstanding bank loans have prepayment options. No outstanding bank loans as of December 31, 2025 were supported by the Keep Well Agreements with HMC described in Note 6. Outstanding bank loans contain certain covenants, including limitations on liens, mergers, consolidations and asset sales.

AMERICAN HONDA FINANCE CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

Public Medium-Term Note (MTN) Program (the Public MTN Program)

In August 2025, AHFC renewed its Public MTN Program by filing a registration statement with the SEC under which it may issue from time to time up to $45.0 billion aggregate principal amount of MTNs. The aggregate principal amount of MTNs offered under the Public MTN Program may be increased from time to time. MTNs outstanding under the Public MTN Program as of December 31, 2025 were short-term and long-term, with either fixed or floating interest rates, and denominated in U.S. dollars, Euro or Sterling. MTNs under the Public MTN Program are issued pursuant to an indenture which contains certain covenants, including negative pledge provisions and limitations on mergers, consolidations and asset sales. The Public MTN Program is supported by the Keep Well Agreement with HMC described in Note 6.

Other Debt

The outstanding balances as of December 31, 2025 consisted of private placement debt issued by HCFI which are long-term, with either fixed or floating interest rates, and denominated in Canadian dollars. Private placement debt is supported by the Keep Well Agreement with HMC described in Note 6. The notes are issued pursuant to the terms of an indenture which contain certain covenants, including negative pledge provisions.

Secured Debt (Asset-Backed Securities)

The Company issues secured debt through financing transactions that are secured by assets held by issuing SPEs. Secured debt outstanding as of December 31, 2025 was long-term and short-term with either fixed or floating interest rates, and denominated in U.S. dollars or Canadian dollars. Repayment of the secured debt is dependent on the performance of the underlying retail loans. Refer to Note 9 for additional information on the Company’s secured financing transactions.

Credit Agreements

Syndicated Bank Credit Facilities

AHFC maintains a $7.0 billion syndicated bank credit facility that includes a $3.5 billion credit agreement, which expires on February 20, 2026, a $2.1 billion credit agreement, which expires on February 25, 2028, and a $1.4 billion credit agreement, which expires on February 25, 2030. As of December 31, 2025 and since its inception, no amounts were drawn upon under any of the AHFC credit agreements. AHFC intends to renew or replace these credit agreements prior to or on their respective expiration dates.

HCFI maintains a $1.5 billion syndicated bank credit facility that includes a $729 million credit agreement, which expires on March 25, 2026 and a $729 million credit agreement, which expires on March 25, 2027. As of December 31, 2025, no amounts were drawn upon under any of the HCFI credit agreements. HCFI intends to renew or replace these credit agreements prior to or on the expiration dates.

Each of the AHFC and HCFI credit agreements contains customary covenants, including limitations on liens, mergers, consolidations and asset sales and affiliate transactions. Loans, if any, under such credit agreements will be supported by the Keep Well Agreement described in Note 6.

Other Credit Agreements

AHFC maintains other committed lines of credit that allow the Company access to an additional $1.0 billion in unsecured funding with two banks. These credit agreements contain customary covenants, including limitations on liens, mergers, consolidations and asset sales. As of December 31, 2025 and since their inception, no amounts were drawn upon under these credit agreements. These credit agreements expire in September 2026. The Company intends to renew or replace these credit agreements prior to or on their respective expiration dates.

AMERICAN HONDA FINANCE CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

Note 5. Derivative Instruments

The notional balances and fair values of the Company’s derivatives are presented below. The derivative instruments are presented on a gross basis in the Company’s consolidated balance sheets. Refer to Note 12 regarding the valuation of derivative instruments.


	December 31, 2025						March 31, 2025
	Notional balances		Assets		Liabilities		Notional balances		Assets		Liabilities

	(U.S. dollars in millions)
Interest rate swaps	$	75,036	$	351	$	544	$	73,058	$	338	$	676
Cross currency swaps	10,807		547		175		8,225		51		444
Gross derivative assets/liabilities			898		719				389		1,120
Collateral posted/held			24		(3)				43		—
Counterparty netting adjustment			(558)		(558)				(429)		(429)
Net derivative assets/liabilities			$	364	$	158			$	3	$	691

The income statement impact of derivative instruments is presented below. There were no derivative instruments designated as part of a hedge accounting relationship during the periods presented.


	Three months ended December 31,				Nine months ended December 31,
	2025		2024		2025		2024

	(U.S. dollars in millions)
Interest rate swaps	$	(22)	$	7	$	24	$	(26)
Cross currency swaps	(24)		(558)		535		(325)
Total gain/(loss) on derivative instruments	$	(46)	$	(551)	$	559	$	(351)

The fair value of derivative instruments is subject to fluctuations in market interest rates and foreign currency exchange rates. Since the Company has elected not to apply hedge accounting, the volatility in the changes in fair value of these derivative instruments is recognized in earnings. All periodic interest settlements of derivative instruments are presented within cash flows from operating activities in the consolidated statements of cash flows. The final notional exchange of cross currency swaps are presented within cash flows from financing activities along with the paydowns of the related foreign currency-denominated debt.

These derivative instruments also contain an element of credit risk in the event the counterparties are unable to meet the terms of the agreements. However, the Company minimizes the risk exposure by limiting the counterparties to major financial institutions that meet established credit guidelines. In the event of default, all counterparties are subject to legally enforceable master netting agreements. In Canada, HCFI is a party to credit support annexes that require posting of cash collateral to mitigate counterparty credit risk on derivative positions. Posted collateral is recognized in other assets and held collateral is recognized in other liabilities.

AMERICAN HONDA FINANCE CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

Note 6. Transactions Involving Related Parties

The following tables summarize the income statement and balance sheet impact of transactions with the Parent and affiliated companies:


	Three months ended December 31,				Nine months ended December 31,
Income Statement	2025		2024		2025		2024

	(U.S. dollars in millions)
Revenue:
Subsidy income	$	328	$	293	$	1,001	$	812
Interest expense:
Related party debt	—		—		28		—
General and administrative expenses:
Support Compensation Agreement fees	25		21		72		62
Benefit plan expenses	1		1		4		4
Shared services	20		19		59		58
Lease expense	1		1		3		3


Balance Sheet	December 31, 2025		March 31, 2025

	(U.S. dollars in millions)
Assets:
Finance receivables, net:
Unearned subsidy income	$	(749)	$	(731)
Investment in operating leases, net:
Unearned subsidy income	(1,090)		(1,290)
Due from Parent and affiliated companies	96		146
Liabilities:
Debt:
Related party debt	—		1,800
Due to Parent and affiliated companies	144		181
Accrued interest expense:
Related party debt	—		11
Other liabilities:
Accrued benefit expenses	65		65

Operating lease liabilities	6		8

Support Agreements

HMC and AHFC are parties to a Keep Well Agreement, effective as of September 9, 2005. This Keep Well Agreement provides that HMC will (1) maintain (directly or indirectly) at least 80% ownership in AHFC’s voting stock and not pledge (directly or indirectly), or in any way encumber or otherwise dispose of, any such stock of AHFC that it is required to hold (or permit any of HMC’s subsidiaries to do so), (2) cause AHFC to have a positive consolidated tangible net worth with tangible net worth defined as (a) shareholders' equity less (b) any intangible assets, determined on a consolidated basis in accordance with GAAP, and (3) ensure that AHFC has sufficient liquidity to meet its payment obligations for debt HMC has confirmed in writing is covered by this Keep Well Agreement, in accordance with its terms, or where necessary make available to AHFC, or HMC shall procure for AHFC, sufficient funds to enable AHFC to meet such obligations in accordance with such terms. This Keep Well Agreement is not a guarantee by HMC.

AMERICAN HONDA FINANCE CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

HMC and HCFI are parties to a Keep Well Agreement effective as of September 26, 2005. This Keep Well Agreement provides that HMC will (1) maintain (directly or indirectly) at least 80% ownership in HCFI’s voting stock and not pledge (directly or indirectly), or in any way encumber or otherwise dispose of, any such stock of HCFI that it is required to hold (or permit any of HMC’s subsidiaries to do so), (2) cause HCFI to have a positive consolidated tangible net worth with tangible net worth defined as (a) shareholders' equity less (b) any intangible assets, determined on a consolidated basis in accordance with generally accepted accounting principles in Canada, and (3) ensure that HCFI has sufficient liquidity to meet its payment obligations for debt HMC has confirmed in writing is covered by this Keep Well Agreement, in accordance with its terms, or where necessary make available to HCFI, or HMC shall procure for HCFI, sufficient funds to enable HCFI to meet such obligations in accordance with such terms. This Keep Well Agreement is not a guarantee by HMC.

Debt programs supported by the Keep Well Agreements consist of the Company’s commercial paper programs, Public MTN Program, and HCFI’s private placement debt and loans, if any, under AHFC's and HCFI's syndicated bank credit facilities. In connection with the above agreements, AHFC and HCFI have entered into separate Support Compensation Agreements, where each has agreed to pay HMC a quarterly fee based on the amount of outstanding debt that benefits from the Keep Well Agreements. Support Compensation Agreement fees are recognized in general and administrative expenses.

Incentive Financing Programs

The Company receives subsidy payments from AHM and HCI, which supplement the revenues on financing products offered under incentive programs. Subsidy payments received on retail loans and leases are deferred and recognized as revenue over the term of the related contracts. The unearned balance is recognized as reductions to the carrying value of finance receivables and investment in operating leases. Subsidy payments on dealer loans are received as earned.

Related Party Debt

AHFC issues fixed rate short-term debt to AHM to fund AHFC's general corporate operations. Interest rates are based on prevailing rates of debt with comparable terms. Refer to Note 4 for additional information.

Shared Services

The Company shares certain common expenditures with AHM and HCI, including information technology services and facilities. The allocated costs for shared services are included in general and administrative expenses.

Benefit Plans

The Company participates in various employee benefit plans that are sponsored by AHM and HCI. The allocated benefit plan expenses are included in general and administrative expenses.

Income taxes

The Company’s U.S. income taxes are recognized on a modified separate return basis pursuant to an intercompany income tax allocation agreement with AHM. Income tax related items are not included in the tables above. Refer to Note 7 for additional information.

Other

The majority of the amounts due from the Parent and affiliated companies at December 31, 2025 and March 31, 2025 were related to incentive financing program subsidies. The majority of the amounts due to the Parent and affiliated companies at December 31, 2025 and March 31, 2025 were related to wholesale flooring payable to the Parent. These receivable and payable accounts are non-interest-bearing and short-term in nature and are expected to be settled in the normal course of business.

AHFC leases its premises from AHM and HCFI leases its premises from HCI.

AMERICAN HONDA FINANCE CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

AHFC declared cash dividends to its parent, AHM, of $562 million and $536 million during the nine months ended December 31, 2025 and 2024, respectively.

HCFI declared cash dividends to AHFC of $74 million during both the nine months ended December 31, 2025 and 2024. HCFI declared cash dividends to HCI of $68 million during both the nine months ended December 31, 2025 and 2024.

Note 7. Income Taxes

On August 16, 2022, the Inflation Reduction Act of 2022 (IRA) was enacted into law. The IRA includes tax provisions for a corporate alternative minimum tax (CAMT) of 15% on adjusted financial statement income of corporations with profits greater than $1.0 billion, effective for taxable years beginning after December 31, 2022, in addition to a tax credit for qualified commercial clean vehicles (QCCV) that applies to vehicles acquired after December 31, 2022. At December 31, 2025, based on proposed guidance and regulations issued to date, the Company does not expect to incur CAMT liability for fiscal year 2026 and expects to generate QCCV tax credits during fiscal year 2026 based on the tax laws as of the reporting date. The Company accounts for the QCCV tax credits using the deferral method. QCCV tax credits are initially deferred as reductions to the acquisition cost of the related operating lease assets and subsequently recognized over the lease terms as reductions to depreciation expense. QCCV tax credits totaling $236 million were deferred during the nine months ended December 31, 2025. The Company will continue to evaluate the effects of IRA as additional guidance and regulations are issued.

During fiscal years 2024 and 2025, several countries, including Japan and Canada, enacted tax laws to adopt various aspects of the Organization for Economic Cooperation and Development (OECD) Global Anti-Base Erosion Model Rules (GloBE Rules). The GloBE Rules are designed to ensure large multinational enterprises (MNEs) pay a minimum level of tax (“Minimum Tax”) on income in each of the jurisdictions in which they operate. These rules generally apply to MNE groups with annual revenue of €750 million or more. The Company falls within the scope of the GloBE Rules, effective as of April 1, 2024, as a result of our affiliation with HMC. On June 20, 2024, Canada, where the Company’s Canadian subsidiary, HCFI, is incorporated, enacted the Global Minimum Tax Act, implementing the Income Inclusion Rule and Qualified Domestic Minimum Top-up Tax under the GloBE Rules, effective from April 1, 2024. Since HCFI is expected to have an effective tax rate that exceeds the 15% minimum rate, the Company has no related current tax expense associated with the Minimum Tax as of December 31, 2025. To date, the U.S., where we have the majority of our operations and conduct business, has not enacted laws to adopt the GloBE Rules. Based on guidance and analysis to date, we do not expect a material tax impact as a result of the GloBE Rules. The Company will continue to monitor legislative developments and changes in business for potential impacts of the GloBE Rules on future periods.

On July 4, 2025, the One Big Beautiful Bill Act of 2025 (OBBBA) was enacted into law in the U.S. Key tax provisions of the OBBBA include the permanent restoration of 100 percent bonus depreciation, the termination of the QCCV tax credit for vehicles acquired after September 30, 2025, the immediate expensing of domestic research costs, and changes to various international tax rules. The Company analyzed the impacts of the OBBBA related to 100 percent bonus depreciation and remeasured domestic federal deferred taxes at the date of enactment. Deferred tax liability as of the date of enactment increased by $680 million due to the restoration of 100 percent bonus depreciation. The increase in deferred tax liability is fully offset, primarily by a decrease in income taxes payable, such that there is no impact to total income tax expense. The Company has evaluated other provisions of the OBBBA and does not expect a material effect on the fiscal year 2026 financial statements.

The Company’s effective tax rate was 0.6% and 24.5% for the three months ended December 31, 2025 and 2024, respectively and 18.2% and 27.2% for the nine months ended December 31, 2025 and 2024, respectively. The decrease in effective tax rate for the three and nine months ended December 31, 2025 was primarily attributable to tax benefits recognized upon release of tax reserves due to the expiration of statutes of limitations, partially offset by non-deductible permanent items.

The Company does not provide for income taxes on its share of the undistributed earnings of HCFI which are intended to be indefinitely reinvested outside the United States. At December 31, 2025, $1.0 billion of accumulated undistributed earnings of HCFI were intended to be so reinvested. If the undistributed earnings as of December 31, 2025 were to be distributed, the tax liability associated with these earnings would be $105 million, inclusive of currency translation adjustments.

As of December 31, 2025, the Company is subject to examination for U.S. federal returns filed for the taxable years ended March 31, 2022 through 2024, and for various U.S. state returns filed for the taxable years ended March 31, 2014 through 2024. The Company’s Canadian subsidiary, HCFI, is subject to examination for federal returns for taxable years ended March 31, 2019 through 2025 and provincial returns filed for the taxable years ended March 31, 2018 through 2025. The Company believes appropriate provision has been made for all outstanding issues for all open years.

AMERICAN HONDA FINANCE CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

Note 8. Commitments and Contingencies

Operating Leases

The Company leases certain premises and equipment through operating leases. AHFC leases its premises and equipment from AHM and third parties, and HCFI leases its premises from HCI.

Many of the Company's leases contain renewal options, and generally have no residual value guarantees or material covenants. When it is reasonably certain that the Company will exercise the option to renew a lease, the Company will include the renewal option in the evaluation of the lease term. The Company has elected not to recognize right-of-use assets or liabilities for leases with a lease term of less than one year. As most of the Company's leases do not provide an implicit rate, the incremental borrowing rate is used in determining the present value of lease payments. The right-of-use assets in operating lease arrangements are reported in other assets on the Company's consolidated balance sheets.

Operating lease liabilities are reported in other liabilities on the Company's consolidated balance sheets. At December 31, 2025, maturities of operating lease liabilities were as follows:


Twelve-month periods ending December 31,	(U.S. dollars in millions)

2026	$	10
2027	10
2028	8
2029	7
2030	8
Thereafter	11
Total undiscounted future lease obligations	54
Less: imputed interest	(5)
Operating lease liabilities	$	49

Lease expense under operating leases was $2 million for both the three months ended December 31, 2025 and 2024, and $7 million for both the nine months ended December 31, 2025, and 2024. Lease expense is included within general and administrative expenses.

As of December 31, 2025, the weighted average remaining lease term for operating leases was 6.0 years and the weighted average remaining discount rate for operating leases was 3%.

Revolving Lines of Credit to Dealerships

The Company extends commercial revolving lines of credit to dealerships to support their business activities including facilities refurbishment and meeting general working capital requirements. The amounts borrowed are generally secured by the assets of the borrowing entity. The unused balance of commercial revolving lines of credit was $814 million as of December 31, 2025. The Company also has commitments to finance the construction of automobile dealership facilities. The remaining unfunded balance for these construction loans was less than $1 million as of December 31, 2025.

AMERICAN HONDA FINANCE CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

Legal Proceedings and Regulatory Matters

The Company establishes accruals for legal and regulatory claims when payments associated with the claims become probable and the costs can be reasonably estimated. When able, the Company will determine estimates of reasonably possible loss or range of loss, whether in excess of any related accrued liability or where there is no accrued liability. Given the inherent uncertainty associated with legal and regulatory matters, the actual costs of resolving such claims and associated costs of defense may be substantially higher or lower than the amounts for which accruals have been established.

The Company is involved, in the ordinary course of business, in various legal proceedings including claims of individual customers and purported class action lawsuits. Certain of these actions are similar to suits filed against other financial institutions and captive finance companies concerning business practices and policies. In October 2025, the Company settled a legal action for approximately $130 million related to the financing of add-on products. The Company is also subject to regulation, supervision, and licensing under various federal, state, provincial, and local statutes, ordinances and regulations which involve governmental reviews and inquiries from time to time. Based on available information and established accruals, management does not believe it is reasonably possible that the results of these proceedings, in the aggregate, will have a material adverse effect on the Company’s consolidated financial statements.

Note 9. Securitizations and Variable Interest Entities (VIE)

The Company utilizes SPEs for its asset-backed securitizations and these SPEs are considered VIEs, which are required to be consolidated by their primary beneficiary. The Company is considered to be the primary beneficiary of these SPEs due to (i) the power to direct the activities of the SPEs that most significantly impact the SPEs’ economic performance through the Company's role as servicer, and (ii) the obligation to absorb losses or the right to receive residual returns that could potentially be significant to the SPEs through the subordinated certificates and residual interest retained. The secured debt issued by the SPEs to third-party investors along with the assets of the SPEs are included in the Company’s consolidated financial statements.

During the nine months ended December 31, 2025 and 2024, the Company issued secured debt through asset-backed securitizations, which were accounted for as secured financing transactions totaling $8.3 billion and $6.4 billion, respectively. The secured debt was secured by assets with an initial balance of $9.0 billion and $6.9 billion, respectively.

The table below presents the carrying amounts of assets and liabilities of consolidated SPEs as they are reported in the Company’s consolidated balance sheets. All amounts exclude intercompany balances, which have been eliminated upon consolidation. Investors in secured debt issued by a SPE only have recourse to the assets of such SPE and do not have recourse to the assets of AHFC, HCFI, or its other subsidiaries or to other SPEs. The assets of SPEs are the only source of funds for repayment on the secured debt.


	December 31, 2025

	Assets						Liabilities

	(U.S. dollars in millions)
	Securitized assets		Restricted cash (1)		Other		Secured debt		Other
Retail loan securitizations	$	15,190	$	670	$	53	$	14,433	$	25

	March 31, 2025

	Assets						Liabilities

	(U.S. dollars in millions)
	Securitized assets		Restricted cash (1)		Other		Secured debt		Other
Retail loan securitizations	$	12,969	$	715	$	40	$	12,384	$	22

________________________

(1)Included with other assets in the Company’s consolidated balance sheets (Note 10).

AMERICAN HONDA FINANCE CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

In their role as servicers, AHFC and HCFI collect payments on the underlying securitized assets on behalf of the SPEs. Cash collected during a calendar month is required to be remitted to the SPEs in the following month. AHFC and HCFI are not restricted from using the cash collected for their general purposes prior to the remittance to the SPEs. As of December 31, 2025 and March 31, 2025, AHFC and HCFI had combined cash collections of $815 million and $688 million, respectively, which were required to be remitted to the SPEs.

Note 10. Other Assets

Other assets consisted of the following:


	December 31, 2025		March 31, 2025

	(U.S. dollars in millions)
Accrued interest and fees on finance receivables	$	205	$	186
Accrued lease payments and fees on operating leases	89		72
Vehicles held for disposition	151		133
Restricted cash	670		715
Operating lease right-of-use assets	41		46
Other miscellaneous assets	111		118
Total	$	1,267	$	1,270

Note 11. Other Liabilities

Other liabilities consisted of the following:


	December 31, 2025		March 31, 2025

	(U.S. dollars in millions)
Dealer payables	$	214	$	295
Accrued interest expense	592		439
Accounts payable and accrued expenses	343		330
Lease security deposits	46		44
Unearned income, operating leases	311		288
Operating lease liabilities	49		55
Uncertain tax positions	1		114

Other liabilities	13		70
Total	$	1,569	$	1,635

Note 12. Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. Level 1 inputs are quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 inputs are those other than quoted prices included within Level 1 that are observable for the asset or liability. Level 3 inputs are unobservable inputs for the asset or liability. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). Nonperformance risk is also required to be reflected in the fair value measurement, including an entity’s own credit standing when measuring the fair value of a liability.

AMERICAN HONDA FINANCE CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

Recurring Fair Value Measurements

The following tables summarize the fair value hierarchy of assets and liabilities measured at fair value on a recurring basis:


	December 31, 2025
	Level 1		Level 2		Level 3		Total

	(U.S. dollars in millions)
Assets:
Derivative instruments:
Interest rate swaps	$	—	$	351	$	—	$	351
Cross currency swaps	—		547		—		547
Total assets	$	—	$	898	$	—	$	898
Liabilities:
Derivative instruments:
Interest rate swaps	$	—	$	544	$	—	$	544
Cross currency swaps	—		175		—		175
Total liabilities	$	—	$	719	$	—	$	719

	March 31, 2025
	Level 1		Level 2		Level 3		Total

	(U.S. dollars in millions)
Assets:
Derivative instruments:
Interest rate swaps	$	—	$	338	$	—	$	338
Cross currency swaps	—		51		—		51
Total assets	$	—	$	389	$	—	$	389
Liabilities:
Derivative instruments:
Interest rate swaps	$	—	$	676	$	—	$	676
Cross currency swaps	—		444		—		444
Total liabilities	$	—	$	1,120	$	—	$	1,120

The valuation techniques used in measuring assets and liabilities at fair value on a recurring basis are described below:

Derivative Instruments

The Company’s derivatives are transacted in over-the-counter markets and quoted market prices are not readily available. The Company uses third-party developed valuation models to value derivative instruments. These models estimate fair values using discounted cash flow modeling techniques, which utilize the contractual terms of the derivative instruments and market-based inputs, including interest rates and foreign exchange rates. Discount rates incorporate counterparty and HMC specific credit default spreads to reflect nonperformance risk.

The Company’s derivative instruments are classified as Level 2 since all significant inputs are observable and do not require management judgment. There were no transfers between fair value hierarchy levels during the nine months ended December 31, 2025 and 2024. Refer to Note 5 for additional information on derivative instruments.

AMERICAN HONDA FINANCE CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

Nonrecurring Fair Value Measurements

The following tables summarize nonrecurring fair value measurements recognized for assets still held at the end of the reporting periods presented:


	Level 1		Level 2		Level 3		Total		Lower-of-cost or fair value adjustment

	(U.S. dollars in millions)
December 31, 2025
Vehicles held for disposition	$	—	$	—	$	138	$	138	$	54
December 31, 2024
Vehicles held for disposition	$	—	$	—	$	128	$	128	$	51

The following describes the methodologies and assumptions used in nonrecurring fair value measurements, which relate to the application of lower of cost or fair value accounting on long-lived assets.

Vehicles Held for Disposition

Vehicles held for disposition consist of returned and repossessed vehicles. They are valued at the lower of their carrying value or estimated fair value, less estimated disposition costs. The fair value is based on current average selling prices of like vehicles at wholesale used vehicle auctions.

AMERICAN HONDA FINANCE CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

Fair Value of Financial Instruments

The following tables summarize the carrying values and fair values of the Company’s financial instruments except for those measured at fair value on a recurring basis. Certain financial instruments and all nonfinancial assets and liabilities are excluded from fair value disclosure requirements including the Company’s investment in operating leases. The carrying values of cash and cash equivalents, restricted cash, and short-term investments approximate fair values due to the short-term nature and limited credit risk of the instruments.


	December 31, 2025
	Carrying		Fair value
	value		Level 1	Level 2		Level 3		Total

	(U.S. dollars in millions)
Assets:
Dealer loans, net	$	4,494	—	—		$	4,093	$	4,093
Retail loans, net	49,720		—	—		50,015		50,015
Liabilities:
Commercial paper	$	4,341	—	$	4,341	—		$	4,341

Bank loans	2,219		—	2,224		—		2,224
Public MTN Program	41,365		—	41,474		—		41,474
Other debt	3,455		—	3,513		—		3,513
Secured debt	14,433		—	14,560		—		14,560

	March 31, 2025
	Carrying		Fair value
	value		Level 1	Level 2		Level 3		Total

	(U.S. dollars in millions)
Assets:
Dealer loans, net	$	4,335	—	—		$	3,940	$	3,940
Retail loans, net	48,181		—	—		48,102		48,102
Liabilities:
Commercial paper	$	6,022	—	$	6,023	—		$	6,023
Related party debt	1,800		—	1,800		—		1,800
Bank loans	2,100		—	2,099		—		2,099
Public MTN Program	37,153		—	36,795		—		36,795
Other debt	3,088		—	3,130		—		3,130
Secured debt	12,384		—	12,472		—		12,472

Fair value information presented in the tables above is based on information available at December 31, 2025 and March 31, 2025. Although the Company is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been updated since those dates, and therefore, the current estimates of fair value at dates subsequent to those dates may differ significantly from the amounts presented herein.

AMERICAN HONDA FINANCE CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

Note 13. Segment and Geographic Information

The Company’s reportable segments are based on the two geographic regions where the Company operates: the United States and Canada. The Company provides financing to purchasers, lessees and authorized independent dealers of Honda and Acura products. The financing products and services offered throughout the United States and Canada are substantially similar.

The Company's chief operating decision maker (CODM) is the President of AHFC. The measure of segment profit or loss the CODM uses to assess segment performance and allocate resources is income before income taxes and the effect of valuation adjustments on derivative instruments and revaluations of foreign currency-denominated debt. Since the Company does not elect to apply hedge accounting, the impact to earnings resulting from these valuation adjustments as reported under GAAP is not representative of segment performance as evaluated by the CODM. Realized gains and losses on derivative instruments, net of realized gains and losses on foreign currency-denominated debt, are included in the measure of segment profit or loss when evaluating segment performance. No adjustments are made to segment performance to allocate any revenues or expenses. Segment revenues from the various financing products are reported on the same basis as GAAP consolidated results. The CODM uses segment profit and loss to assess forecast to actual variances, monitor trends, and to make strategic operating decisions.

Financial information for the three and nine months ended December 31, 2025 and 2024 is summarized in the following tables:


	United States		Canada		Total

	(U.S. dollars in millions)
Three months ended December 31, 2025
Revenues:
Retail	$	706	$	82	$	788
Dealer	65		4		69
Operating leases	1,614		198		1,812
Total revenues	2,385		284		2,669
Leased vehicle expenses	1,077		141		1,218
Interest expense	640		52		692
Realized (gains)/losses on derivatives and foreign currency denominated debt	78		8		86
Net revenues	590		83		673
Other income, net	37		5		42
Total net revenues	627		88		715
Expenses:
General and administrative expenses	136		14		150
Provision for credit losses	123		3		126
Early termination loss on operating leases	137		1		138
Income before income taxes and valuation adjustments	$	231	$	70	$	301
Reconciliation to consolidated income before income taxes:
Gain/(loss) on derivative instruments					(46)
Gain/(loss) on foreign currency revaluation of debt					(23)
Less: Realized (gains)/losses included in segment profit					86
Consolidated income before income taxes					$	318
Income tax expense	$	(19)	$	21	$	2

AMERICAN HONDA FINANCE CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)


	United States		Canada		Total

	(U.S. dollars in millions)

Nine months ended December 31, 2025
Revenues:
Retail	$	2,094	$	242	$	2,336
Dealer	195		14		209
Operating leases	4,776		606		5,382
Total revenues	7,065		862		7,927
Leased vehicle expenses	3,172		435		3,607
Interest expense	1,909		163		2,072
Realized (gains)/losses on derivatives and foreign currency denominated debt	213		20		233
Net revenues	1,771		244		2,015
Other income, net	118		16		134
Total net revenues	1,889		260		2,149
Expenses:
General and administrative expenses	468		42		510
Provision for credit losses	292		23		315
Early termination loss on operating leases	263		2		265
Income before income taxes and valuation adjustments	$	866	$	193	$	1,059
Reconciliation to consolidated income before income taxes:
Gain/(loss) on derivative instruments					559
Gain/(loss) on foreign currency revaluation of debt					(675)
Less: Realized (gains)/losses included in segment profit					233
Consolidated income before income taxes					$	1,176
Income tax expense	$	157	$	57	$	214

December 31, 2025
Finance receivables, net	$	48,789	$	5,425	$	54,214
Investment in operating leases, net	28,995		3,463		32,458
Total assets	82,896		9,275		92,171

AMERICAN HONDA FINANCE CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)


	United States		Canada		Total

	(U.S. dollars in millions)
Three months ended December 31, 2024
Revenues:
Retail	$	642	$	71	$	713
Dealer	68		6		74
Operating leases	1,424		201		1,625
Total revenues	2,134		278		2,412
Leased vehicle expenses	956		149		1,105
Interest expense	573		59		632
Realized (gains)/losses on derivatives and foreign currency denominated debt	34		(1)		33
Net revenues	571		71		642
Other income, net	33		4		37
Total net revenues	604		75		679
Expenses:
General and administrative expenses	138		14		152
Provision for credit losses	67		3		70
Early termination loss on operating leases	39		1		40
Income before income taxes and valuation adjustments	$	360	$	57	$	417
Reconciliation to consolidated income before income taxes:
Gain/(loss) on derivative instruments					(551)
Gain/(loss) on foreign currency revaluation of debt					489
Less: Realized (gains)/losses included in segment profit					33
Consolidated income before income taxes					388
Income tax expense	$	84	$	11	$	95

AMERICAN HONDA FINANCE CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)


	United States		Canada		Total

	(U.S. dollars in millions)
Nine months ended December 31, 2024
Revenues:
Retail	$	1,823	$	204	$	2,027
Dealer	203		19		222
Operating leases	4,129		622		4,751
Total revenues	6,155		845		7,000
Leased vehicle expenses	2,779		465		3,244
Interest expense	1,615		184		1,799
Realized (gains)/losses on derivatives and foreign currency denominated debt	94		(16)		78
Net revenues	1,667		212		1,879
Other income, net	105		12		117
Total net revenues	1,772		224		1,996
Expenses:
General and administrative expenses	386		42		428
Provision for credit losses	218		10		228
Early termination loss on operating leases	94		1		95
Income before income taxes and valuation adjustments	$	1,074	$	171	$	1,245
Reconciliation to consolidated income before income taxes:
Gain/(loss) on derivative instruments					(351)
Gain/(loss) on foreign currency revaluation of debt					230
Less: Realized (gains)/losses included in segment profit					78
Consolidated income before income taxes					$	1,202
Income tax expense	$	288	$	38	$	326

December 31, 2024
Finance receivables, net	$	47,061	$	4,905	$	51,966
Investment in operating leases, net	26,294		3,304		29,598
Total assets	76,691		8,495		85,186

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

Our primary focus, in collaboration with AHM and HCI, is to provide support for the sale of Honda and Acura products and maintain customer and dealer satisfaction and loyalty. To deliver this support effectively, we seek to maintain competitive cost of funds, efficient operations, and effective risk and compliance management. The primary factors influencing our results of operations, cash flows, and financial condition include the volume of Honda and Acura sales and the portion of those sales that we finance, our cost of funds, competition from other financial institutions, consumer credit defaults, and used motor vehicle prices.

A substantial portion of our consumer financing business is acquired through incentive financing programs sponsored by AHM and HCI. The volume of these incentive financing programs and the allocation of those programs between retail loans and leases may vary from fiscal period to fiscal period depending upon the respective marketing strategies of AHM and HCI. AHM and HCI’s marketing strategies are based in part on their business planning and control, in which we do not participate. Therefore, we cannot predict the level of incentive financing programs AHM and HCI may sponsor in the future. Our consumer financing acquisition volumes are substantially dependent on the extent to which incentive financing programs are offered. Increases in incentive financing programs generally increase our financing penetration rates, which typically results in increased financing acquisition volumes for us. The amount of subsidy payments we receive from AHM and HCI is dependent on the terms of the incentive financing programs and the interest rate environment. Subsidy payments are received upon acquisition and recognized in revenue throughout the life of the loan or lease; therefore, a significant change in the level of incentive financing programs in a fiscal period typically only has a limited impact on our results of operations for that period. The amount of subsidy income we recognize in a fiscal period is dependent on the cumulative level of subsidized contracts outstanding that were acquired through incentive financing programs.

We seek to maintain high quality consumer and dealer account portfolios, which we support with strong underwriting standards, risk-based pricing, and effective collection practices. Our cost of funds is facilitated by the diversity of our funding sources, and effective interest rate and foreign currency exchange risk management. We manage expenses to support our profitability, including adjusting staffing needs based upon our business volumes and centralizing certain functions. Additionally, we use risk and compliance management practices to optimize credit and residual value risk levels and maintain compliance with our pricing, underwriting and servicing policies at the United States, Canadian, state and provincial levels.

References in this report to our “fiscal year 2026” and “fiscal year 2025” refer to our fiscal year ending March 31, 2026 and our fiscal year ended March 31, 2025, respectively.

Results of Operations

We assess the performance of our operations based on the two geographic regions where we operate: the United States and Canada. The measure of profit or loss used to assess the performance of our United States and Canada segments is income before income taxes and the effect of valuation adjustments on derivative instruments and revaluations of foreign currency-denominated debt. For additional information regarding our segments, see Note 13—Segment and Geographic Information of Notes to Consolidated Financial Statements (Unaudited). The following tables and related discussion are presented based on the measure used to assess the performance of our United States and Canada segments.

Operating Environment Overview

Despite a decline in total consumer financing acquisition volumes and consumer financing penetration rates in the United States, acquisition volumes benefited from strong new automobile sales volumes, resulting in continued growth in our financing assets during the first nine months of fiscal year 2026.

Benchmark interest rates have generally declined since the first quarter of fiscal year 2025 and the effective interest rate on our debt has generally declined since the third quarter of fiscal year 2025. Returns on our consumer financing assets continued to increase, however, as older vintages with lower returns mature.

The trend in delinquencies and charge-offs continued to increase as the negative effects of higher monthly loan and lease payments caused by higher transaction prices, inflationary pressures, rising insurance premiums, and other factors are affecting consumers’ ability to perform on their obligations. Our leased vehicle values remained elevated with return rates at low levels. The lower volume of lease maturities may also be contributing to elevated values of our leased vehicles.

There remains significant uncertainty surrounding tariffs and trade policies amid the revisions to and suspension of tariffs by the Trump Administration and the various retaliatory measures taken or threatened by foreign countries. On July 4, 2025, the OBBBA was enacted into law. See Note 7—Income Taxes of Notes to Consolidated Financial Statements (Unaudited) for more information.

Segment Results—Comparison of the Three months ended December 31, 2025 and 2024

Results of operations for the United States segment and the Canada segment are summarized below:


	United States Segment								Canada Segment								Total Segments
	Three months ended December 31,				Difference				Three months ended December 31,				Difference				Three months ended December 31,
	2025		2024		Amount		%		2025		2024		Amount		%		2025		2024

	(U.S. dollars in millions)
Revenues:
Retail	$	706	$	642	$	64	10	%	$	82	$	71	$	11	15	%	$	788	$	713
Dealer	65		68		(3)		(4)	%	4		6		(2)		(33)	%	69		74
Operating leases	1,614		1,424		190		13	%	198		201		(3)		(1)	%	1,812		1,625
Total revenues	2,385		2,134		251		12	%	284		278		6		2	%	2,669		2,412
Leased vehicle expenses	1,077		956		121		13	%	141		149		(8)		(5)	%	1,218		1,105
Interest expense	640		573		67		12	%	52		59		(7)		(12)	%	692		632
Realized losses/(gains) on derivatives and foreign currency debt	78		34		44		129	%	8		(1)		9		n/m		86		33
Net revenues	590		571		19		3	%	83		71		12		17	%	673		642
Other income	37		33		4		12	%	5		4		1		25	%	42		37
Total net revenues	627		604		23		4	%	88		75		13		17	%	715		679
Expenses:
General and administrative expenses	136		138		(2)		(1)	%	14		14		—		—	%	150		152
Provision for credit losses	123		67		56		84	%	3		3		—		—	%	126		70
Early termination loss on operating leases	137		39		98		n/m		1		1		—		—	%	138		40
Income before income taxes and valuation adjustments	$	231	$	360	$	(129)	(36)	%	$	70	$	57	$	13	23	%	$	301	$	417

______________________

n/m = not meaningful

The following table summarizes average outstanding asset balances, units, and yields and average outstanding debt and interest rates.


	United States Segment										Canada Segment
	Three months ended December 31,						Difference				Three months ended December 31,						Difference
	2025			2024			Amount		%		2025			2024			Amount		%

	(U.S. dollars in millions except as noted, units in thousands) (1)
Retail loans:
Average outstanding balance	$	44,980		$	42,780		$	2,200	5	%	$	5,110		$	4,667		$	443	9	%
Average outstanding units	2,265			2,235			30		1	%	298			287			11		4	%
Effective yield	6.3		%	6.0		%					6.4		%	6.1		%

Dealer loans:
Average outstanding balance	$	4,323		$	4,079		$	244	6	%	$	343		$	366		$	(23)	(6)	%
Effective yield	6.1		%	6.8		%					4.8		%	6.0		%

Operating leases:
Average outstanding balance	$	28,931		$	25,733		$	3,198	12	%	$	3,427		$	3,393		$	34	1	%
Average outstanding units	955			860			95		11	%	146			161			(15)		(9)	%
Average monthly revenue(2)	$	563		$	552		$	11	2	%	$	453		$	419		$	34	8	%
Average monthly depreciation(2),(3)	$	379		$	374		$	5	1	%	$	331		$	316		$	15	5	%

Debt:
Average outstanding balance	$	59,793		$	51,707		$	8,086	16	%	$	6,150		$	5,656		$	494	9	%
Effective interest rate	4.3		%	4.4		%					3.4		%	4.2		%

_______________________

(1)Average outstanding balances and units based on month end amounts during respective periods. Effective yields and interest rates based on average outstanding month end balances.

(2)U.S. dollars per unit. Average monthly revenue and depreciation based on average outstanding month end units.

(3)Excludes gains on disposition of leased vehicles.

United States Segment

Revenues

–Revenue from retail loans increased due to higher average outstanding balances and higher yields.

–Revenue from dealer loans decreased due to lower yields, which was partially offset by higher average outstanding balances.

–Operating lease revenue increased due to higher average outstanding units and the increase in average revenue per unit.

Leased vehicle expenses

Leased vehicle expenses increased due to higher average outstanding units and the increase in average depreciation expense per unit.

Interest expense

Interest expense increased due to higher average outstanding debt which was partially offset by lower average interest rates. See “—Liquidity and Capital Resources” below for more information.

Realized (gains)/losses on derivatives and foreign currency debt

Net realized losses during the third quarter of fiscal year 2026 consisted of losses on pay-float interest rate swaps of $43 million and losses on cross-currency interest rate swaps of $63 million, which were partially offset by gains on pay-fixed interest rate swaps of $28 million.

Provision for credit losses

Provision for credit losses increased due to the larger increase to our estimate of expected credit losses on our retail loans reflecting the increasing trend of delinquencies and net charge-offs. See “—Financial Condition—Credit Risk” below for more information.

Early termination loss on operating leases

Early termination losses on operating leases increased due to increases in realized losses and the larger increase to our estimate of early termination losses as a result of higher loss severities. See “—Financial Condition—Credit Risk” below for more information.

Canada Segment

Revenues

–Revenue from retail loans increased due to higher average outstanding balances and higher yields.

–Revenue from dealer loans decreased due to lower yields and lower average outstanding balances.

–Operating lease revenue decreased primarily due to lower average outstanding units.

Leased vehicle expenses

Leased vehicle expenses decreased due to lower average outstanding units.

Interest expense

Interest expense decreased due to lower average interest rates which were partially offset by higher average outstanding debt. See “—Liquidity and Capital Resources” below for more information.

Realized (gains)/losses on derivative instruments

Net realized losses during the third quarter of fiscal year 2026 were attributable to realized losses on pay-fixed interest rate swaps of $8 million.

Provision for credit losses

We recognized provision for credit losses of $3 million during both the third quarter of fiscal years 2026 and 2025. See “—Financial Condition—Credit Risk” below for more information.

Early termination loss on operating leases

We recognized early termination losses on operating leases of $1 million during both the third quarter of fiscal years 2026 and 2025. See “—Financial Condition—Credit Risk” below for more information.

Income tax expense

The consolidated effective tax rate was 0.6% for the third quarter of fiscal year 2026 compared to 24.5% for the same period in fiscal year 2025. The decrease in the effective tax rate was primarily attributable to tax benefits recognized upon release of tax reserves due to the expiration of statutes of limitations, partially offset by non-deductible permanent items. For additional information regarding income taxes, see Note 7—Income Taxes of Notes to Consolidated Financial Statements (Unaudited).

Segment Results—Comparison of the Nine months ended December 31, 2025 and 2024

Results of operations for the United States segment and the Canada segment are summarized below:


	United States Segment								Canada Segment								Total Segments
	Nine months ended December 31,				Difference				Nine months ended December 31,				Difference				Nine months ended December 31,
	2025		2024		Amount		%		2025		2024		Amount		%		2025		2024

	(U.S. dollars in millions)
Revenues:
Retail	$	2,094	$	1,823	$	271	15	%	$	242	$	204	$	38	19	%	$	2,336	$	2,027
Dealer	195		203		(8)		(4)	%	14		19		(5)		(26)	%	209		222
Operating leases	4,776		4,129		647		16	%	606		622		(16)		(3)	%	5,382		4,751
Total revenues	7,065		6,155		910		15	%	862		845		17		2	%	7,927		7,000
Leased vehicle expenses	3,172		2,779		393		14	%	435		465		(30)		(6)	%	3,607		3,244
Interest expense	1,909		1,615		294		18	%	163		184		(21)		(11)	%	2,072		1,799
Realized losses/(gains) on derivatives and foreign currency debt	213		94		119		127	%	20		(16)		36		n/m		233		78
Net revenues	1,771		1,667		104		6	%	244		212		32		15	%	2,015		1,879
Other income	118		105		13		12	%	16		12		4		33	%	134		117
Total net revenues	1,889		1,772		117		7	%	260		224		36		16	%	2,149		1,996
Expenses:
General and administrative expenses	468		386		82		21	%	42		42		—		—	%	510		428
Provision for credit losses	292		218		74		34	%	23		10		13		130	%	315		228
Early termination loss on operating leases	263		94		169		180	%	2		1		1		—	%	265		95
Income before income taxes and valuation adjustments	$	866	$	1,074	$	(208)	(19)	%	$	193	$	171	$	22	13	%	$	1,059	$	1,245

_______________________

n/m = not meaningful

The following table summarizes average outstanding asset balances, units, and yields and average outstanding debt and interest rates.


	United States Segment										Canada Segment
	Nine months ended December 31,						Difference				Nine months ended December 31,						Difference
	2025			2024			Amount		%		2025			2024			Amount		%

	(U.S. dollars in millions except as noted, units in thousands) (1)
Retail loans:
Average outstanding balance	$	44,830		$	41,423		$	3,407	8	%	$	5,057		$	4,585		$	472	10	%
Average outstanding units	2,278			2,181			97		4	%	298			284			14		5	%
Effective yield	6.2		%	5.9		%					6.4		%	5.9		%

Dealer loans:
Average outstanding balance	$	4,177		$	3,873		$	304	8	%	$	368		$	372		$	(4)	(1)	%
Effective yield	6.2		%	7.0		%					5.1		%	6.6		%

Operating leases:
Average outstanding balance	$	28,450		$	24,804		$	3,646	15	%	$	3,437		$	3,466		$	(29)	(1)	%
Average outstanding units	936			850			86		10	%	150			166			(16)		(10)	%
Average monthly revenue(2)	$	567		$	540		$	27	5	%	$	449		$	415		$	34	8	%
Average monthly depreciation(2),(3)	$	381		$	371		$	10	3	%	$	331		$	316		$	15	5	%

Debt:
Average outstanding balance	$	58,707		$	49,140		$	9,567	19	%	$	6,098		$	5,595		$	503	9	%
Effective interest rate	4.3		%	4.4		%					3.6		%	4.4		%

_______________________

(1)Average outstanding balances and units based on month end amounts during respective periods. Effective yields and interest rates based on average outstanding month end balances.

(2)U.S. dollars per unit. Average monthly revenue and depreciation based on average outstanding month end units.

(3)Excludes gains on disposition of leased vehicles.

United States Segment

Revenues

–Revenue from retail loans increased due to higher average outstanding balances and higher yields.

–Revenue from dealer loans decreased due to lower yields, which was partially offset by higher average outstanding balances.

–Operating lease revenue increased due to higher average outstanding units and the increase in average revenue per unit.

Leased vehicle expenses

Leased vehicle expenses increased due to higher average outstanding units and higher average depreciation expense per unit.

Interest expense

Interest expense increased due to higher average outstanding debt, which was partially offset by lower average interest rates. See “—Liquidity and Capital Resources” below for more information.

Realized (gains)/losses on derivatives and foreign currency debt

Net realized losses during the first nine months of fiscal year 2026 consisted of losses on pay-float interest rate swaps of $170 million and losses on cross-currency interest rate swaps of $195 million, which were partially offset by gains on pay-fixed interest rate swaps of $152 million.

General and administrative expenses

General and administrative expenses increased primarily due to accruals recognized during the first nine months of fiscal year 2026 for a legal action related to the financing of add-on products.

Provision for credit losses

Provision for credit losses increased primarily due to the larger increase in our estimate of expected credit losses on our retail loans reflecting the increasing trend of delinquencies and net charge-offs. See “—Financial Condition—Credit Risk” below for more information.

Early termination loss on operating leases

Canada Segment

Revenues

–Revenue from retail loans increased due to higher average outstanding balances and higher yields.

–Revenue from dealer loans decreased due to lower yields and lower average outstanding balances.

–Operating lease revenue decreased primarily due to lower average outstanding units and the effect of foreign currency translation adjustments.

Leased vehicle expenses

Leased vehicle expenses decreased due to lower average outstanding units.

Interest expense

Interest expense decreased due to lower average interest rates which were partially offset by higher average outstanding debt. See “—Liquidity and Capital Resources” below for more information.

Realized (gains)/losses on derivative instruments

Net realized losses during the first nine months of fiscal year 2026 were attributable to realized losses on pay-fixed interest rate swaps of $15 million and realized losses on pay-float interest rate swaps of $5 million.

Provision for credit losses

Provision for credit losses increased due to the increase in provision for retail loans as a result of higher expected losses due to an increase in the trend of delinquencies and charge-offs. See “—Financial Condition—Credit Risk” below for more information.

Early termination loss on operating leases

Early termination losses on operating leases increased due to increases in realized losses and the larger increase to our estimate of early termination losses. See “—Financial Condition—Credit Risk” below for more information.

Income tax expense

The consolidated effective tax rate was 18.2% for the first nine months of fiscal year 2026 compared to 27.2% for the same period in fiscal year 2025. The decrease in the effective tax rate was primarily attributable to tax benefits recognized upon release of tax reserves due to the expiration of statutes of limitations, partially offset by non-deductible permanent items. For additional information regarding income taxes, see Note 7—Income Taxes of Notes to Consolidated Financial Statements (Unaudited).

Financial Condition

Consumer Financing

Consumer Financing Acquisition Volumes

The following table summarizes the number of retail loans and leases we acquired and the number of such loans and leases acquired through incentive financing programs sponsored by AHM and HCI:


	Three months ended December 31,				Nine months ended December 31,
	2025		2024		2025		2024
	Acquired	Sponsored (2)	Acquired	Sponsored (2)	Acquired	Sponsored (2)	Acquired	Sponsored (2)

	(Units (1) in thousands)
United States Segment
Retail loans:
New automobile	139	75	146	107	410	246	444	311
Used automobile	25	5	28	5	87	22	104	28
Motorcycle and other	17	8	20	8	59	22	68	27
Total retail loans	181	88	194	120	556	290	616	366
Leases	86	82	108	102	279	218	333	321

Canada Segment
Retail loans	16	6	21	14	68	37	70	40
Leases	10	9	14	13	36	31	37	32

Consolidated
Retail loans	197	94	215	134	624	327	686	406
Leases	96	91	122	115	315	249	370	353

_______________________

(1)A unit represents one retail loan or lease contract, as noted, that was originated in the United States and acquired by AHFC or its subsidiaries, or that was originated in Canada and acquired by HCFI, in each case during the period shown.

(2)Represents the number of retail loans and leases acquired through incentive financing programs sponsored by AHM and/or HCI and only those contracts with subsidy payments. Excludes contracts where contractual rates met or exceeded AHFC’s yield requirements and subsidy payments were not required.

Consumer Financing Penetration Rates

The following table summarizes the percentage of AHM and/or HCI sales of new automobiles and motorcycles that were financed with either retail loans or leases that we acquired:


	Three months ended December 31,		Nine months ended December 31,
	2025	2024	2025	2024
United States Segment
New automobile	67%	69%	64%	71%
Motorcycle	39%	42%	40%	42%

Canada Segment
New automobile	67%	79%	72%	76%
Motorcycle	28%	32%	32%	33%

Consolidated
New automobile	67%	70%	64%	72%
Motorcycle	38%	41%	39%	41%

Consumer Financing Asset Balances

The following table summarizes our outstanding retail loan and lease asset balances and units:


	December 31, 2025		March 31, 2025		December 31, 2025	March 31, 2025

	(U.S. dollars in millions)				(Units (1) in thousands)
United States Segment
Retail loans:
New automobile	$	35,819	$	34,738	1,655	1,658
Used automobile	7,319		7,404		398	410
Motorcycle and other	1,474		1,412		209	205
Total retail loans	$	44,612	$	43,554	2,262	2,273
Investment in operating leases	$	28,995	$	27,316	961	899

Securitized retail loans (2)	$	14,471	$	12,350	875	768

Canada Segment
Retail loans	$	5,108	$	4,627	296	293
Investment in operating leases	$	3,463	$	3,280	145	155

Securitized retail loans (2)	$	719	$	619	59	56


Consolidated
Retail loans	$	49,720	$	48,181	2,558	2,566
Investment in operating leases	$	32,458	$	30,596	1,106	1,054

Securitized retail loans (2)	$	15,190	$	12,969	934	824

_______________________

(1)A unit represents one retail loan or lease contract, as noted, that was outstanding as of the date shown.

(2)Securitized retail loans represent the portion of total managed assets that have been sold in securitization transactions but continue to be recognized on our balance sheet.

In the United States segment, retail loan acquisition volumes decreased by 10% and lease acquisition volumes decreased by 16% during the first nine months of fiscal year 2026 compared to the same period in fiscal year 2025 due to the decrease in sponsored program volumes. The decline in the penetration rate was attributable to increased competition from other financial institutions and the allocation of incentive support. Despite the decline in consumer financing penetration rates, acquisition volumes benefited from strong new automobile sales volumes during the first nine months of fiscal year 2026.

In the Canada segment, retail loan acquisition volumes decreased by 3% and lease acquisition volumes decreased by 3% during the first nine months of fiscal year 2026 compared to the same period in fiscal year 2025 primarily due to the decrease in sponsored program volumes.

Dealer Financing

Wholesale Flooring Financing Penetration Rates

The following table summarizes the number of dealerships with wholesale flooring financing agreements as a percentage of total Honda and Acura dealerships in the United States and/or Canada, as applicable:


	December 31, 2025		March 31, 2025
United States Segment
Automobile	30	%	29	%
Motorcycle	98	%	98	%
Other	16	%	17	%

Canada Segment
Automobile	28	%	29	%
Motorcycle	95	%	95	%
Other	95	%	94	%

Consolidated
Automobile	29	%	29	%
Motorcycle	97	%	98	%
Other	19	%	20	%

Wholesale Flooring Financing Percentage of Sales

The following table summarizes the percentage of AHM unit sales in the United States and/or HCI unit sales in Canada, as applicable, that we financed through wholesale flooring loans with dealerships:


	Three months ended December 31,		Nine months ended December 31,
	2025	2024	2025	2024
United States Segment
Automobile	22%	24%	23%	22%
Motorcycle	98%	98%	98%	98%
Other	10%	9%	7%	10%

Canada Segment
Automobile	25%	24%	24%	24%
Motorcycle	93%	92%	89%	89%
Other	98%	96%	95%	95%

Consolidated
Automobile	22%	24%	23%	23%
Motorcycle	98%	98%	97%	97%
Other	17%	14%	14%	15%

Dealer Financing Asset Balances

The following table summarizes our outstanding dealer financing asset balances and units:


	December 31, 2025		March 31, 2025		December 31, 2025	March 31, 2025

	(U.S. dollars in millions)				(Units (1) in thousands)
United States Segment
Wholesale flooring loans:
Automobile	$	2,070	$	2,057	62	60
Motorcycle	570		555		64	62
Other	29		32		14	19
Total wholesale flooring loans	$	2,669	$	2,644	140	141
Commercial loans	$	1,508	$	1,295

Canada Segment
Wholesale flooring loans	$	277	$	359	32	42
Commercial loans	$	40	$	37

Consolidated
Wholesale flooring loans	$	2,946	$	3,003	172	183
Commercial loans	$	1,548	$	1,332

_______________________

(1) A unit represents one automobile, motorcycle, power equipment, or marine engine, as applicable, financed through a wholesale flooring loan that was outstanding as of the date shown.

Credit Risk

Credit losses are an expected cost of extending credit. The majority of our credit risk is in consumer financing and to a lesser extent in dealer financing. Credit risk of our portfolio of consumer finance receivables can be affected by general economic conditions. Adverse changes, such as a rise in unemployment or an increase in inflationary pressures, can increase the likelihood of defaults. Declines in used vehicle prices can reduce the amount of recoveries on repossessed collateral. We manage our exposure to credit risk in retail loans by monitoring and adjusting our underwriting standards, which affect the level of credit risk that we assume, pricing contracts for expected losses and focusing collection efforts to minimize losses. We manage our exposure to credit risk for dealers through ongoing reviews of their financial condition and payment performance.

We are also exposed to credit risk on our portfolio of operating lease assets. We expect a portion of our operating leases to terminate prior to their scheduled maturities when lessees default on their contractual obligations. Losses are generally realized upon the disposition of the repossessed operating lease vehicles. The factors affecting credit risk on our operating leases and our management of the risk are similar to that of our consumer finance receivables.

Credit risk on dealer loans is affected primarily by the financial strength of the dealers within the portfolio, the value of collateral securing the financings, and economic and market factors that could affect the creditworthiness of dealers. We manage our exposure to credit risk in dealer financing by performing comprehensive reviews of dealers prior to establishing financing arrangements and monitoring the payment performance and creditworthiness of these dealers on an ongoing basis. In the event of default by a dealer, we seek all available legal remedies pursuant to related dealer agreements, guarantees, security interests on collateral, or liens on dealership assets. Additionally, we have agreements with AHM and HCI that provide for their repurchase of new, unused, undamaged and unregistered vehicles or equipment that have been repossessed from dealers who defaulted under the terms of their respective wholesale flooring agreements.

The allowance for credit losses is management’s estimate of lifetime expected credit losses on the amortized cost basis of finance receivables. Additional information regarding credit losses is provided in the discussion of “—Critical Accounting Estimates—Allowance for Credit Losses and Estimated Early Termination Losses on Operating Lease Assets” below.

The following table presents information with respect to our allowance for credit losses and credit loss experience of our finance receivables and losses related to lessee defaults on our operating leases:


	United States Segment						Canada Segment						Consolidated

	As of or for the three months ended December 31,
	2025			2024			2025			2024			2025			2024

	(U.S. dollars in millions)
Finance receivables:
Allowance for credit losses at beginning of period	$	405		$	397		$	25		$	15		$	430		$	412
Provision for credit losses	123			67			3			3			126			70
Charge-offs, net of recoveries	(89)			(75)			(5)			(4)			(94)			(79)
Effect of translation adjustment	—						1			(1)			1			(1)
Allowance for credit losses at end of period	$	439		$	389		$	24		$	13		$	463		$	402

Charge-offs as a percentage of average receivable balance (1), (3)	0.72		%	0.64		%	0.37		%	0.30		%	0.69		%	0.60		%

Operating leases:
Early termination loss on operating leases	$	137		$	39		$	1		$	1		$	138		$	40


	United States Segment						Canada Segment						Consolidated

	As of or for the nine months ended December 31,
	2025			2024			2025			2024			2025			2024

	(U.S. dollars in millions)
Finance receivables:
Allowance for credit losses at beginning of period	$	383		$	339		$	13		$	14		$	396		$	353
Provision for credit losses	292			218			23			10			315			228
Charge-offs, net of recoveries	(236)			(168)			(13)			(10)			(249)			(178)
Effect of translation adjustment	—			—			1			(1)			1			(1)
Allowance for credit losses at end of period	$	439		$	389		$	24		$	13		$	463		$	402

Charge-offs as a percentage of average receivable balance (1), (3)	0.64		%	0.50		%	0.32		%	0.28		%	0.61		%	0.47		%
Allowance as a percentage of ending receivable balance (1)	0.89		%	0.82		%	0.44		%	0.27		%	0.84		%	0.77		%
Delinquencies (60 or more days past due):
Delinquent amount (2)	$	224		$	205		$	9		$	9		$	233		$	214
As a percentage of ending receivable balance (1),(2)	0.45		%	0.43		%	0.16		%	0.18		%	0.42		%	0.41		%

Operating leases:
Early termination loss on operating leases	$	263		$	94		$	2		$	1		$	265		$	95

________________________

(1)Ending and average receivable balances exclude the allowance for credit losses, unearned subvention income related to our incentive financing programs and deferred origination costs. Average receivable balances are calculated based on the average of each month’s ending receivables balance for that fiscal year.

(2)For the purposes of determining whether a contract is delinquent, payment is generally considered to have been made, in the case of (i) dealer loans, upon receipt of 100% of the payment when due and (ii) consumer finance receivables, upon receipt of 90% of the sum of the current monthly payment plus any overdue monthly payments. Delinquent amounts presented are the aggregated principal balances of delinquent finance receivables. Payments that were granted deferrals are not considered delinquent during the deferral period.

(3)Percentages for both the three and nine months ended December 31, 2025 and 2024 have been annualized.

In the United States segment, we recognized a provision for credit losses on our finance receivables of $292 million and $218 million during the first nine months of fiscal year 2026 and 2025, respectively. The increase in the provision for credit losses was due to the larger increase to our estimate of expected credit losses on our retail loans reflecting the increasing trend of delinquencies and net charge-offs. The increase in net charge-offs primarily was due to an increase in the frequency of defaults as higher transaction prices, inflationary pressures, rising insurance premiums, and other factors are affecting consumers' ability to perform on their obligations. We recognized early termination losses on operating leases of $263 million and $94 million during the first nine months of fiscal year 2026 and 2025, respectively. Early termination losses on operating leases increased due to the increases in realized losses, and the larger increase to our estimate of early termination losses. The increase in operating lease delinquencies and higher loss severities primarily on our leases of battery electric vehicles contributed to the increase in our estimate of early termination losses.

In the Canada segment, we recognized a provision for credit losses on our finance receivables of $23 million and $10 million during the first nine months of fiscal year 2026 and 2025, respectively. Provision for credit losses increased due to the increase in provision for retail loans as a result of higher expected losses due to an increase in the trend of delinquencies and charge-offs. We recognized early termination losses on operating leases of $2 million and $1 million during the first nine months of fiscal year 2026 and fiscal year 2025, respectively. Early termination losses on operating leases increased due to increases in realized losses and the larger increase to our estimate of early termination losses.

Lease Residual Value Risk

Contractual residual values of lease vehicles are determined at lease inception based on our expectations of used vehicle values at the end of their lease term. Lease customers have the option at the end of the lease term to return the vehicle to the dealer or to buy the vehicle at the contractual residual value (or if purchased prior to lease maturity, for the outstanding contractual balance). Returned lease vehicles can be purchased by the grounding dealer at the contractual residual value (or if purchased prior to lease maturity, for the outstanding contractual balance) or a market based price. Returned lease vehicles that are not purchased by the grounding dealers are sold through online and physical auctions. We are exposed to a risk of loss on the disposition of returned lease vehicles if the market values of leased vehicles at the end of their lease terms are less than their contractual residual values.

Operating lease vehicles are depreciated on a straight-line basis over the lease term to the lower of contract residual values or estimated end of term residual values. Adjustments to estimated end of term residual values are made prospectively on a straight-line basis over the remaining lease term. A review for impairment of our operating lease assets is performed whenever events or changes in circumstances indicate that their carrying values may not be recoverable. If impairment conditions are met, impairment losses are measured as to the amounts by which carrying amounts exceed their fair values. We did not recognize impairment losses due to declines in estimated residual values during the first nine months of fiscal year 2026. Additional information regarding lease residual values is provided in the discussion of “—Critical Accounting Estimates—Estimated End of Term Residual Values” below.

The following table summarizes our number of lease terminations and the method of disposition:


	Three months ended December 31,		Nine months ended December 31,
	2025	2024	2025	2024

	(Units (1) in thousands)
United States Segment
Termination units:
Sales at outstanding contractual balances (2)	63	78	195	294
Sales through auctions and dealer direct programs (3)	2	3	4	9
Total termination units	65	81	199	303

Canada Segment
Termination units:
Sales at outstanding contractual balances (2)	14	17	47	52
Sales through auctions and dealer direct programs (3)	—	—	—	—
Total termination units	14	17	47	52

Consolidated
Termination units:
Sales at outstanding contractual balances (2)	77	95	242	346
Sales through auctions and dealer direct programs (3)	2	3	4	9
Total termination units	79	98	246	355

_______________________

(1)A unit represents one terminated lease by their method of disposition during the period shown. Unit counts do not include leases that were terminated due to lessee defaults.

(2)Includes vehicles purchased by lessees or dealers for the contractual residual value at lease maturity or the outstanding contractual balance if purchased prior to lease maturity.

(3)Includes vehicles sold through online auctions and market based pricing options under our dealer direct programs or through physical auctions.

Liquidity and Capital Resources

Our liquidity strategy is to fund current and future obligations through our cash flows from operations and our diversified funding programs in a cost and risk effective manner. Our cash flows are generally impacted by cash requirements related to the volume of finance receivable and operating lease acquisitions, various operating and funding costs, and dividend payments, which are largely funded through payments received on our assets and our funding sources outlined below. As noted, the levels of incentive financing sponsored by AHM and HCI can impact our financial results and liquidity from period to period. Increases or decreases in incentive financing programs typically increase or decrease our financing penetration rates, respectively, which result in increased or decreased acquisition volumes and increased or decreased liquidity needs, respectively. At acquisition, we receive the subsidy payments, which reduce the cost of consumer loan and lease contracts acquired, and we recognize such payments as revenue over the term of the loan or lease.

In an effort to minimize liquidity risk and interest rate risk and the resulting negative effects on our margins, results of operations and cash flows, our funding strategy incorporates investor diversification and the utilization of multiple funding sources including commercial paper, medium-term notes, bank loans and asset-backed securities and loans. From time to time, AHFC also issues fixed rate short-term debt to AHM to fund general corporate operations. We incorporate a funding strategy that takes into consideration factors such as the interest rate environment, domestic and foreign capital market conditions, maturity profiles, and economic conditions. We believe that our funding sources, combined with cash provided by operating and investing activities, will provide sufficient liquidity for us to meet our debt service and working capital requirements over the next twelve months.

The summary of outstanding debt presented in the tables and discussion below in this section “—Liquidity and Capital Resources” as of December 31, 2025 and March 31, 2025 includes foreign currency-denominated debt, which was translated into U.S. dollars using the relevant exchange rates as of December 31, 2025 and March 31, 2025, as applicable. Additionally, the amounts in this section that are presented in “C$” (Canadian dollar) were converted into U.S. dollars solely for the convenience based on the exchange rate on December 31, 2025. These translations should not be construed as representations that the converted amounts actually represent such U.S. dollar amounts or that they could be converted into U.S. dollars at the rates indicated.

Summary of Outstanding Debt

The table below presents a summary of our outstanding debt by various funding sources:


					Weighted average contractual interest rate (1)
	December 31, 2025		March 31, 2025		December 31, 2025		March 31, 2025

	(U.S. dollars in millions)
United States Segment
Unsecured debt:
Commercial paper	$	3,521	$	4,836	4.17	%	4.64	%
Related party debt	—		1,800		—	%	4.59	%
Bank loans	1,000		1,250		4.56	%	5.15	%
Public MTN Program	41,365		37,153		3.97	%	4.02	%
Total unsecured debt	$	45,886	$	45,039
Secured debt	13,770		11,816		4.55	%	4.81	%
Total debt	$	59,656	$	56,855

Canada Segment
Unsecured debt:
Commercial paper	$	820	$	1,186	2.53	%	3.20	%
Bank loans	1,219		850		3.17	%	3.70	%
Other debt	3,455		3,088		3.51	%	3.53	%
Total unsecured debt	5,494		5,124
Secured debt	663		568		3.21	%	3.88	%
Total debt	$	6,157	$	5,692

Consolidated
Unsecured debt:
Commercial paper	$	4,341	$	6,022	3.86	%	4.36	%
Related party debt	—		1,800		—	%	4.59	%
Bank loans	2,219		2,100		3.79	%	4.56	%
Public MTN Program	41,365		37,153		3.97	%	4.02	%
Other debt	3,455		3,088		3.51	%	3.53	%
Total unsecured debt	51,380		50,163
Secured debt	14,433		12,384		4.49	%	4.77	%
Total debt	$	65,813	$	62,547

______________________

(1)Weighted average contractual interest rates for commercial paper are bond equivalent yields. Contractual interest rates approximate effective yields.

Commercial Paper

As of December 31, 2025, we had commercial paper programs in the United States of $7.0 billion and in Canada of C$2.5 billion ($1.8 billion). Interest rates on the commercial paper are fixed at the time of issuance. During the nine months ended December 31, 2025, consolidated commercial paper month-end outstanding principal balances ranged from $4.3 billion to $7.3 billion.

Related Party Debt

From time to time, AHFC issues fixed rate debt to AHM to fund AHFC's general corporate operations. Interest rates are based on prevailing rates of debt with comparable terms. Generally, the term of related party debt is less than 185 days.

Bank Loans

During the nine months ended December 31, 2025, AHFC entered into a $500 million fixed rate term loan agreement and a $500 million floating rate term loan agreement. HCFI entered into a 2-year floating rate loan for C$350 million ($255 million), a 4-year floating rate loan for C$350 million ($255 million) and a 4-year floating rate loan for C$150 million ($109 million). As of December 31, 2025, we had bank loans denominated in U.S. dollars and Canadian dollars with floating interest rates, in principal amounts ranging from $109 million to $500 million. As of December 31, 2025, the remaining maturities of all bank loans outstanding ranged from 240 days to approximately 5.0 years. The weighted average remaining maturities of all bank loans was 2.5 years as of December 31, 2025.

Our bank loans contain customary restrictive covenants, including limitations on liens, mergers, consolidations and asset sales, and a financial covenant that requires us to maintain positive consolidated tangible net worth. In addition to other customary events of default, the bank loans include cross-default provisions and provisions for default if HMC does not maintain ownership, whether directly or indirectly, of at least 80% of the outstanding capital stock of AHFC or HCFI, as applicable. All of these covenants and events of default are subject to important limitations and exceptions under the agreements governing the bank loans. As of December 31, 2025, management believes that AHFC and HCFI were in compliance with all covenants contained in our bank loan agreements.

Public Medium-Term Note (MTN) Program (the Public MTN Program)

AHFC is a well-known seasoned issuer under SEC rules and issues MTNs pursuant to a registration statement on Form S-3 filed with the SEC. In August 2025, AHFC renewed its Public MTN Program by filing a registration statement with the SEC under which it may issue from time to time up to $45.0 billion aggregate principal amount of MTNs, which includes the issuance of foreign currency-denominated notes into international markets. The aggregate principal amount of MTNs offered under the Public MTN Program may be increased from time to time.

MTNs may have original maturities of 9 months or more from the date of issue, may be interest-bearing with either fixed or floating interest rates, or may be discounted notes. During the nine months ended December 31, 2025, AHFC issued $5.6 billion of floating rate notes ranging from 12 months to 3 years in both USD and EUR. Additionally, AHFC also issued $4.9 billion of fixed rate notes ranging from 2 years to 7 years in USD, EUR and GBP. The weighted average remaining maturities of all MTNs was 2.5 years as of December 31, 2025.

MTNs are issued pursuant to an indenture, which requires AHFC to comply with certain covenants, including negative pledge provisions and restrictions on AHFC’s ability to merge, consolidate or transfer substantially all of its assets or the assets of its subsidiaries, and includes customary events of default. As of December 31, 2025, management believes that AHFC was in compliance with all covenants under the indenture.

The table below presents a summary of outstanding debt issued under our Public MTN Program by currency:


	December 31, 2025		March 31, 2025

	(U.S. dollars in millions)
U.S. dollar	$	30,167	$	29,196
Euro	8,847		6,090
Sterling	2,351		1,867
Total	$	41,365	$	37,153

Other Debt

HCFI issues privately placed Canadian dollar denominated notes, with either fixed or floating interest rates. During the nine months ended December 31, 2025, HCFI issued C$1.1 billion ($765 million) of fixed rate notes. As of December 31, 2025, the remaining maturities of all of HCFI’s Canadian notes outstanding ranged from 76 days to approximately 4.7 years. The weighted average remaining maturities of these notes was 2.5 years as of December 31, 2025.

The notes are issued pursuant to the terms of an indenture, which requires HCFI to comply with certain covenants, including negative pledge provisions, and includes customary events of default. As of December 31, 2025, management believes that HCFI was in compliance with all covenants contained in the privately placed notes.

Secured Debt

Asset-Backed Securities and Loans

We enter into securitization transactions for funding purposes. Our securitization transactions involve transferring pools of retail loans to bankruptcy-remote special purpose entities (SPEs). The SPEs are established to accommodate securitization structures, which have the limited purpose of acquiring assets, issuing asset-backed securities or loans, and making payments on the secured debt. Assets transferred to SPEs are considered legally isolated from us and the claims of our creditors. We continue to service the retail loans transferred to the SPEs. Investors in the secured debt issued by an SPE only have recourse to the assets of such SPE and do not have recourse to the assets of AHFC, HCFI, or our other subsidiaries or to other SPEs. The assets of SPEs are the only source of funds for repayment on the secured debt.

Our securitizations are structured to provide credit enhancements to investors in the secured debt issued by the SPEs. Credit enhancements can include the following:

•Subordinated certificates— securities issued by SPEs that are retained by us and are subordinated in priority of payment to the secured debt.

•Overcollateralization— securitized asset balances that exceed the balance of secured debt issued by SPEs.

•Excess interest— excess interest collections to be used to cover losses on defaulted loans.

•Reserve funds— restricted cash accounts held by the SPEs to cover shortfalls in payments of interest and principal required to be paid on the secured debt.

•Yield supplement accounts— restricted cash accounts held by SPEs to supplement interest payments on secured debt.

The risk retention regulations in Regulation RR of the Securities Exchange Act of 1934, as amended (Exchange Act), require the sponsor to retain an economic interest in the credit risk of the securitized assets, either directly or through one or more majority-owned affiliates. Standard risk retention options allow the sponsor to retain either an eligible vertical interest, an eligible horizontal residual interest, or a combination of both. AHFC has satisfied this obligation by retaining an eligible vertical interest of an amount equal to at least 5% of the principal amount of each class of note and certificate issued for the securitization transactions that were subject to this rule but may choose to use other structures in the future.

We are required to consolidate the SPEs in our financial statements, which results in the securitizations being accounted for as on-balance sheet secured financings. The securitized assets remain on our consolidated balance sheet along with the secured debt issued by the SPEs.

During the nine months ended December 31, 2025, we issued secured debt through asset-backed securitizations totaling $8.3 billion, which were secured by assets with an initial balance of $9.0 billion.

Credit Agreements

Syndicated Bank Credit Facilities

AHFC maintains a $7.0 billion syndicated bank credit facility that includes a $3.5 billion 364-day credit agreement, which expires on February 20, 2026, a $2.1 billion credit agreement, which expires on February 25, 2028, and a $1.4 billion credit agreement, which expires on February 25, 2030. As of December 31, 2025, no amounts were drawn upon under the AHFC credit agreements. AHFC intends to renew or replace these credit agreements prior to or on their respective expiration dates.

HCFI maintains a C$2.0 billion ($1.5 billion) syndicated bank credit facility that includes a C$1.0 billion ($729 million) credit agreement, which expires on March 25, 2026 and a C$1.0 billion ($729 million) credit agreement, which expires on March 25, 2027. As of December 31, 2025, no amounts were drawn upon under the HCFI credit agreements. HCFI intends to renew or replace these credit agreements prior to or on the expiration dates.

Each of the AHFC and HCFI credit agreements contains customary conditions to borrowing and customary restrictive covenants, including limitations on liens and limitations on mergers, consolidations and asset sales, and limitations on affiliate transactions. These credit agreements also require AHFC and HCFI to maintain a positive consolidated tangible net worth as defined in their respective credit agreements. These credit agreements, in addition to other customary events of default, include cross-default provisions and provisions for default if HMC does not maintain ownership, whether directly or indirectly, of at least 80% of the outstanding capital stock of AHFC or HCFI, as applicable. In addition, each of the AHFC and HCFI credit agreements contain provisions for default if HMC’s obligations under the HMC-AHFC Keep Well Agreement or the HMC-HCFI Keep Well Agreement, as applicable, become invalid, voidable, or unenforceable. All of these conditions, covenants and events of default are subject to important limitations and exceptions under the agreements governing the credit agreements. As of December 31, 2025, management believes that AHFC and HCFI were in compliance with all covenants contained in the respective credit agreements.

Other Credit Agreements

AHFC maintains other committed lines of credit that allow the Company access to an additional $1.0 billion in unsecured funding with two banks. These credit agreements contain customary covenants, including limitations on liens, mergers, consolidations and asset sales and a requirement for AHFC to maintain a positive consolidated tangible net worth. As of December 31, 2025, no amounts were drawn upon under these credit agreements. These credit agreements expire in September 2026. The Company intends to renew or replace these credit agreements prior to or on their respective expiration dates.

Keep Well Agreements

HMC has entered into separate Keep Well Agreements with AHFC and HCFI. Pursuant to the Keep Well Agreements, HMC has agreed to, among other things:

•own and hold, at all times, directly or indirectly, at least 80% of each of AHFC’s and HCFI’s issued and outstanding shares of voting stock and not pledge, directly or indirectly, encumber, or otherwise dispose of any such shares or permit any of HMC’s subsidiaries to do so, except to HMC or wholly-owned subsidiaries of HMC;

•cause each of AHFC and HCFI to, on the last day of each of AHFC’s and HCFI’s respective fiscal years, have a positive consolidated tangible net worth (with “tangible net worth” meaning (a) shareholders’ equity less (b) any intangible assets, as determined in accordance with GAAP with respect to AHFC and generally accepted accounting principles in Canada with respect to HCFI); and

•ensure that, at all times, each of AHFC and HCFI has sufficient liquidity and funds to meet their payment obligations under any Debt (with “Debt” defined as AHFC’s or HCFI’s debt, as applicable, for borrowed money that HMC has confirmed in writing is covered by the respective Keep Well Agreement) in accordance with the terms of such Debt, or where necessary, HMC will make available to AHFC or HCFI, as applicable, or HMC will procure for AHFC or HCFI, as applicable, sufficient funds to enable AHFC or HCFI, as applicable, to pay its Debt in accordance with its terms. AHFC or HCFI Debt does not include the notes issued by SPEs in connection with AHFC’s or HCFI’s secured financing transactions, any related party debt or any indebtedness outstanding as of December 31, 2025 under AHFC’s and HCFI’s bank loan agreements.

As consideration for HMC’s obligations under the Keep Well Agreements, we have agreed to pay HMC a quarterly fee based on the amount of outstanding Debt pursuant to Support Compensation Agreements, dated April 1, 2019. We incurred expenses of $25 million and $21 million during the three months ended December 31, 2025 and 2024, respectively, and $72 million and $62 million during the nine months ended December 31, 2025 and 2024, respectively, pursuant to these Support Compensation Agreements.

Indebtedness of Consolidated Subsidiaries

As of December 31, 2025, AHFC and its consolidated subsidiaries had $74.1 billion of outstanding indebtedness and other liabilities, including current liabilities, of which $21.7 billion consisted of indebtedness and liabilities of our consolidated subsidiaries. None of AHFC’s consolidated subsidiaries had any outstanding preferred equity.

Material Cash Requirements

The following table summarizes our material cash requirements from contractual obligations, excluding lending commitments to dealers and derivative obligations, for the periods indicated:


	Payments due for the twelve-month periods ending December 31,
	Total		2026		2027		2028		2029		2030		Thereafter

	(U.S. dollars in millions)
Unsecured debt obligations (1)	$	51,490	$	17,529	$	10,470	$	8,419	$	4,097	$	4,221	$	6,754
Secured debt obligations (1)	14,455		7,494		4,646		2,077		238		—		—
Interest payments on debt (2)	6,189		2,199		1,462		926		604		456		542
Total	$	72,134	$	27,222	$	16,578	$	11,422	$	4,939	$	4,677	$	7,296

_______________________

(1)Debt obligations reflect the remaining principal obligations of our outstanding debt and do not reflect unamortized debt discounts and fees. Repayment schedule of secured debt reflects payment performance assumptions on underlying receivables. Foreign currency-denominated debt principal is based on exchange rates as of December 31, 2025.

(2)Interest payments on floating rate and foreign currency-denominated debt based on the applicable floating rates and/or exchange rates as of December 31, 2025.

The obligations in the above table do not include certain lending commitments to dealers since the amount and timing of future payments is uncertain. Refer to Note 8—Commitments and Contingencies of Notes to Consolidated Financial Statements for additional information on these commitments.

Our contractual obligations on derivative instruments are also excluded from the table above because our future cash obligations under these contracts are inherently uncertain. We recognize all derivative instruments on our consolidated balance sheets at fair value. The amounts recognized as fair value do not represent the amounts that will be ultimately paid or received upon settlement under these contracts. Refer to Note 5—Derivative Instruments of Notes to Consolidated Financial Statements for additional information on derivative instruments.

Derivatives

We utilize derivative instruments to manage exposures to interest rate and foreign currency risks. Our assets consist primarily of fixed rate receivables and operating lease assets. Our liabilities consist of both floating and fixed rate debt, denominated in various currencies. Interest rate and basis swaps are used to match the interest rate characteristics of our assets and debt. Currency swaps are used to manage currency risk exposure on foreign currency-denominated debt. Derivative instruments are not used for trading or any other speculative purposes. The derivative instruments contain an element of credit risk in the event the counterparties are unable to meet the terms of the agreements.

All derivative financial instruments are recorded on our consolidated balance sheets at fair value. Changes in the fair value of derivatives are recognized in our consolidated statements of income in the period of the change. Since we do not elect to apply hedge accounting, the impact to earnings resulting from these valuation adjustments as reported under GAAP is not representative of our results of operations as evaluated by management. Realized gains and losses on derivative instruments, net of realized gains and losses on foreign currency-denominated debt, are included in the measure of segment profit or loss when we evaluate segment performance. Refer to Note 13—Segment and Geographic Information of Notes to Consolidated Financial Statements (Unaudited) for additional information about segment information and Note 5—Derivative Instruments of Notes to Consolidated Financial Statements (Unaudited) for additional information on derivative instruments.

Off-Balance Sheet Arrangements

We are not a party to off-balance sheet arrangements.

New Accounting Standards

Refer to Note 1—Summary of Business and Significant Accounting Policies of Notes to Consolidated Financial Statements (Unaudited).

Critical Accounting Estimates

The application of certain accounting policies may require management to make estimates that affect our financial condition and results of operations. Critical accounting estimates require our most difficult, subjective, or complex judgments, often requiring us to make estimates about the effects of matters that are inherently uncertain and may change in subsequent periods, or for which the use of different estimates that could have reasonably been used in the current period would have had a material impact on the presentation of our financial condition and results of operations. Actual results could differ from these estimates which could have a material effect on our financial condition and results of operations in subsequent periods.

Allowance for Credit Losses on Retail Loans

Retail loans are evaluated on a collective basis and grouped into pools with similar risk characteristics such as origination quarter, internal credit grade at origination, product type, and original term. The allowance for retail loans is measured using econometric regression models that correlate vintage age, credit quality, economic, and other variables to historical vintage-level credit loss performance. Statistically relevant economic factors such as unemployment rates, bankruptcies, and used vehicle price indexes are applied in the analysis of the economic environment. Current and forecasted economic conditions are applied in the models to project monthly gross loss rates in terms of origination dollars for the remaining contractual life of each vintage. Recoveries are projected as a percentage of the cumulative forecasted loss dollar of each vintage. The contractual term is the estimated lifetime of retail loans and is considered to be a reasonable and supportable forecast period of future economic conditions. Economic forecasts and macroeconomic variables are obtained from a third party economic research firm that extend through the lifetime of retail loans and converge to long-run equilibrium trends. Baseline forecasts that reflect the most likely economic future is the single economic scenario applied in the models. Qualitative adjustments may also be applied if management believes the quantitative models do not reflect the best estimate of lifetime expected credit losses.

Sensitivity Analysis

We applied the baseline economic scenarios for the United States and Canada that were obtained from a third party economic research firm in our models to determine our allowance for credit losses on retail loans and estimated early termination losses on operating lease assets as of December 31, 2025. These baseline economic scenarios represent forecasts of the most likely economic future, with an equal probability of economic conditions being better or worse than forecasted. Alternative economic scenarios were also obtained from the third party economic research firm. As an example of the sensitivity of our accounting estimates, we applied upside and downside economic scenarios in our models. The peak unemployment rate over the next 24 month period under the upside and downside economic scenarios in the United States was 4.1% and 8.4%, respectively. The resulting allowance for credit losses on retail loans under the upside and downside economic scenarios was $410 million and $660 million, respectively.

Estimated End of Term Residual Values

Estimated end of term residual values are dependent on the expected market values of leased vehicles at the end of their lease terms and the percentage of leased vehicles expected to be returned by lessees. Factors considered in this evaluation include, among other factors, economic conditions, external market information on new and used vehicles, historical trends, and recent auction values. Estimated return rates are dependent on expected market values of leased vehicles since declines in used vehicle prices generally increase the probability of vehicles being returned to us at the end of their lease terms. We also review our investment in operating leases for impairment whenever events or changes in circumstances indicate that the carrying values may not be recoverable. If impairment conditions are met, impairment losses are measured by the amount the carrying values exceed their fair values.

Sensitivity Analysis

If future expected end of term market values for all outstanding operating leases as of December 31, 2025 were to decrease by $100 per unit from our current estimates, the total impact would be an increase of approximately $33 million in depreciation expense, which would be recognized over the remaining lease terms. If future return rates for all operating leases were to increase by one percentage point from our current estimates, the total impact would be an increase of approximately $13 million in depreciation expense, which would be recognized over the remaining lease terms. This sensitivity analysis is specific to the conditions in effect as of December 31, 2025 and does not consider the effect declines in estimated end of term market values may have on return rates.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We have omitted this section pursuant to General Instruction H(2) of Form 10-Q.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our Principal Executive Officer and Principal Financial Officer have performed an evaluation of our disclosure controls and procedures, as that term is defined in Rule 13a-15(e) of the Exchange Act, as of December 31, 2025, and each has concluded that such disclosure controls and procedures are effective, at the reasonable assurance level, to ensure that information required to be disclosed in our periodic reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms, and such information is accumulated and communicated to management, including our Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosures. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Changes in Internal Control over Financial Reporting

There were no changes in the internal control over financial reporting during the quarter ended December 31, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

For information on our material legal proceedings, see Note 8—Commitments and Contingencies—Legal Proceedings and Regulatory Matters of Notes to Consolidated Financial Statements (Unaudited), which is incorporated by reference herein.

Item 1A. Risk Factors

There are no material changes to the risk factors set forth under “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended March 31, 2025, which was filed with the SEC on June 18, 2025.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

We have omitted this section pursuant to General Instruction H(2) of Form 10-Q.

Item 3. Defaults Upon Senior Securities

We have omitted this section pursuant to General Instruction H(2) of Form 10-Q.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits



Exhibit Number	Description	Method of Filing
1.1	Fourth Amended and Restated Distribution Agreement, dated August 8, 2025, between the Company and BofA Securities, Inc., ANZ Securities, Inc., Barclays Capital Inc., BNP Paribas Securities Corp., BNY Mellon Capital Markets, LLC, Citigroup Global Markets Inc., Deutsche Bank Securities Inc., ING Financial Markets LLC, J.P. Morgan Securities LLC, Mizuho Securities USA LLC, MUFG Securities Americas Inc., SG Americas Securities, LLC, SMBC Nikko Securities America, Inc., TD Securities (USA) LLC, U.S. Bancorp Investments, Inc. an Wells Fargo Securities, LLC.	Incorporated herein by reference to the same numbered Exhibit filed with our registration statement on Form 8-K, dated August 8, 2025.
3.1	Articles of Incorporation of American Honda Finance Corporation, dated February 6, 1980, and Certificates of Amendment to the Articles of Incorporation, dated March 29, 1984, November 13, 1988, December 4, 1989, July 2, 1991, April 3, 1997, November 30, 1999, and December 17, 2003.	Incorporated herein by reference to the same numbered Exhibit filed with our registration statement on Form 10, dated June 28, 2013.
3.2	Amended and Restated Bylaws of American Honda Finance Corporation, dated April 27, 2010.	Incorporated herein by reference to the same numbered Exhibit filed with our registration statement on Form 10, dated June 28, 2013.
4.1	Form of Specimen Common Stock of American Honda Finance Corporation.	Incorporated herein by reference to the same numbered Exhibit filed with our registration statement on Form 10, dated June 28, 2013.
4.2	American Honda Finance Corporation agrees to furnish to the Securities and Exchange Commission upon request a copy of each instrument with respect to issues of long-term debt of American Honda Finance Corporation and its subsidiaries, the authorized principal amount of which does not exceed 10% of the consolidated assets of the American Honda Finance Corporation and its subsidiaries.
4.3	Amended and Restated Issuing and Paying Agency Agreement between American Honda Finance Corporation and The Bank of New York Mellon, dated as of August 27, 2012.	Incorporated herein by reference to the same numbered Exhibit filed with our registration statement on Form 10, amendment No. 1, dated August 7, 2013.
4.4	Trust Indenture between Honda Canada Finance Inc., as issuer, and BNY Trust Company of Canada (as successor to CIBC Mellon Trust Company), as trustee, dated as of September 26, 2005, as supplemented by supplemental indentures from time to time, and the Form of Debenture.	Incorporated herein by reference to Exhibit number 4.5 filed with our registration statement on Form 10, amendment No. 1, dated August 7, 2013. Incorporated herein by reference to the same numbered Exhibit filed with our quarterly report on Form 10-Q, dated February 12, 2015.
4.5	Indenture, dated September 5, 2013, between American Honda Finance Corporation and Deutsche Bank Trust Company Americas, as trustee.	Incorporated herein by reference to Exhibit number 4.1 filed with our registration statement on Form S-3, dated September 5, 2013.
4.6	First Supplemental Indenture, dated February 8, 2018, between American Honda Finance Corporation and Deutsche Bank Trust Company Americas, as trustee.	Incorporated herein by reference to Exhibit number 4.6 filed with our quarterly report on Form 10-Q, dated February 8, 2018.
4.7	Form of Fixed Rate Medium-Term Note, Series A.	Incorporated herein by reference to Exhibit number 4.1 filed with our current report on Form 8-K, dated August 8, 2025.
4.8	Form of Floating Rate Medium-Term Note, Series A.	Incorporated herein by reference to Exhibit number 4.2 filed with our current report on Form 8-K, dated August 8, 2025.
4.9	Description of 5.050% Medium-Term Notes, Series A due August 20, 2031.	Filed herewith.
31.1	Certification of Principal Executive Officer	Filed herewith.
31.2	Certification of Principal Financial Officer	Filed herewith.
32.1	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350	Furnished herewith.
32.2	Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350	Furnished herewith.
101.INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.	Filed herewith.
101.SCH	XBRL Taxonomy Extension Schema Document	Filed herewith.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document	Filed herewith.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document	Filed herewith.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document	Filed herewith.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document	Filed herewith.
104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)	Filed herewith.

Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: February 11, 2026

AMERICAN HONDA FINANCE CORPORATION

By:

/s/ Paul C. Honda

Paul C. Honda

Vice President, Treasurer, Assistant Secretary, Compliance Officer and Director
(Principal Financial Officer and Principal Accounting Officer)

ATTACHMENTS / EXHIBITS

ATTACHMENTS / EXHIBITS