v3.26.3
FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES
 9 Months Ended
Sep. 30, 2026
Receivables [Abstract]  
FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES
We manage finance receivables as “consumer” and “non-consumer” portfolios. The receivables are generally secured by the vehicles, inventory, or other property being financed.

Finance receivables are recorded at the time of origination or purchase at fair value and are subsequently reported at amortized cost, net of any allowance for credit losses.

For all finance receivables, we define “past due” as any payment, including principal and interest, that is at least 31 days past the contractual due date.

Total Finance Receivables, Net

Total finance receivables, net were as follows (in millions):
December 31,
2025		September 30,
2026
Consumer
Retail installment contracts, gross$80,584 $77,886 
Finance leases, gross9,274 8,945 
Retail financing, gross89,858 86,831 
Unearned interest supplements from Ford and affiliated companies(4,486)(3,866)
Consumer finance receivables 85,372 82,965 
Non-Consumer
Dealer financing 32,933 33,621 
Other financing2,402 2,499 
Non-Consumer finance receivables 35,335 36,120 
Total recorded investment $120,707 $119,085 
Recorded investment in finance receivables$120,707 $119,085 
Allowance for credit losses(911)(984)
Total finance receivables, net$119,796 $118,101 
Net finance receivables subject to fair value (a)$111,039 $109,701 
Fair value (b)111,716 109,087 
__________
(a)Net finance receivables subject to fair value exclude finance leases. 
(b)The fair value of finance receivables is categorized within Level 3 of the fair value hierarchy.

Finance leases are comprised of sales-type and direct financing leases. Financing revenue from finance leases for the third quarter of 2025 and 2026 was $146 million and $152 million, respectively, and for the first nine months of 2025 and 2026 was $431 million and $459 million, respectively, and is included in Retail financing on our consolidated income statements.

At December 31, 2025 and September 30, 2026, accrued interest was $315 million and $287 million, respectively, which we report in Other assets on our consolidated balance sheets.

Included in the recorded investment in finance receivables were consumer and non-consumer receivables that have been sold for legal purposes in securitization transactions but continue to be reported in our consolidated financial statements. See Note 6 for additional information.
NOTE 4. FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES (Continued)

Credit Quality

Consumer Portfolio. Credit quality ratings for consumer receivables are based on aging. Receivables over 60 days past due are in intensified collection status.

The credit quality analysis of consumer receivables at December 31, 2025 and gross charge-offs during the year ended December 31, 2025 were as follows (in millions):

Amortized Cost Basis by Origination Year
Prior to 202120212022202320242025TotalPercent
Consumer
31-60 days past due$61 $65 $139 $228 $275 $166 $934 1.1 %
Greater than 60 days past due21 24 51 75 89 60 320 0.4 
Total past due82 89 190 303 364 226 1,254 1.5 
Current1,139 2,206 6,299 15,096 26,754 32,624 84,118 98.5 
Total$1,221 $2,295 $6,489 $15,399 $27,118 $32,850 $85,372 100.0 %
Gross charge-offs$54 $54 $124 $187 $205 $42 $666 

The credit quality analysis of consumer receivables at September 30, 2026 and gross charge-offs during the first nine months of 2026 were as follows (in millions):
Amortized Cost Basis by Origination Year
Prior to 202220222023202420252026TotalPercent
Consumer
31-60 days past due$60 $93 $172 $234 $213 $100 $872 1.0 %
Greater than 60 days past due24 34 60 82 77 35 312 0.4 
Total past due84 127 232 316 290 135 1,184 1.4 
Current1,184 3,294 9,089 19,415 25,923 22,876 81,781 98.6 
Total$1,268 $3,421 $9,321 $19,731 $26,213 $23,011 $82,965 100.0 %
Gross charge-offs$44 $67 $120 $167 $123 $17 $538 
Non-Consumer Portfolio. The credit quality of dealer financing receivables is evaluated based on our internal dealer risk rating analysis. We use a proprietary model to assign each dealer a risk rating. This model uses historical dealer performance data to identify key factors about a dealer that we consider most significant in predicting a dealer’s ability to meet its financial obligations. We also consider numerous other financial and qualitative factors of the dealer’s operations, including capitalization and leverage, liquidity and cash flow, profitability, and credit history with ourselves and other creditors.

Dealers are assigned to one of four groups according to risk ratings as follows:

•Group I – strong to superior financial metrics
•Group II – fair to favorable financial metrics
•Group III – marginal to weak financial metrics
•Group IV – poor financial metrics, including dealers classified as uncollectible

We generally suspend credit lines and extend no further funding to dealers classified in Group IV.
NOTE 4. FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES (Continued)

The credit quality analysis of dealer financing receivables at December 31, 2025 and gross charge-offs during the year ended December 31, 2025 were as follows (in millions):
Amortized Cost Basis by Origination Year
Dealer Loans
Prior to 202120212022202320242025TotalWholesale LoansTotalPercent
Group I$269 $68 $31 $149 $78 $268 $863 $27,306 $28,169 85.5 %
Group II25 8 4 33 46 44 160 3,979 4,139 12.6 
Group III1 — — 2 1 11 15 584 599 1.8 
Group IV— — — — — 2 2 24 26 0.1 
Total (a)$295 $76 $35 $184 $125 $325 $1,040 $31,893 $32,933 100.0 %
Gross charge-offs$— $— $— $1 $— $— $1 $10 $11 
__________
(a)Total past due dealer financing receivables at December 31, 2025 were $8 million. 

The credit quality analysis of dealer financing receivables at September 30, 2026 and gross charge-offs during the first nine months of 2026 were as follows (in millions):
Amortized Cost Basis by Origination Year
Dealer Loans
Prior to 202220222023202420252026TotalWholesale LoansTotalPercent
Group I$262 $28 $152 $78 $161 $249 $930 $28,611 $29,541 87.9 %
Group II45 2 12 47 23 27 156 3,215 3,371 10.0 
Group III6 — — — 2 6 14 672 686 2.0 
Group IV— — — 1 1 — 2 21 23 0.1 
Total (a)$313 $30 $164 $126 $187 $282 $1,102 $32,519 $33,621 100.0 %
Gross charge-offs$— $— $— $— $— $— $— $14 $14 
__________
(a)Total past due dealer financing receivables at September 30, 2026 were $7 million.

Non-Accrual of Revenue. The accrual of financing revenue is discontinued at the time a receivable is determined to be uncollectible or when it is 90 days past due. Accounts may be restored to accrual status only when a customer settles all past-due deficiency balances and future payments are reasonably assured. For receivables in non-accrual status, subsequent financing revenue is recognized only to the extent a payment is received. Payments are generally applied first to outstanding interest and then to the unpaid principal balance.

Loan Modifications. Consumer and non-consumer receivables that have a modified interest rate and/or a term extension (including receivables that were modified in reorganization proceedings pursuant to the U.S. Bankruptcy Code) are typically considered to be loan modifications. We do not grant modifications to the principal balance of our receivables. If a receivable is modified in a reorganization proceeding, all payment requirements of the reorganization plan need to be met before remaining balances are forgiven.
NOTE 4. FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES (Continued)

During the collection process, we may offer a term extension to a customer experiencing financial difficulty. During the extension period, finance charges continue to accrue. If the customer's financial difficulty is not temporary, but we believe the customer is willing and able to repay their loan at a lower payment amount, we may offer to modify the interest rate and/or extend the term in order to lower the scheduled monthly payment. In those cases, the outstanding balance generally remains unchanged. The use of interest rate modifications and term extensions helps us mitigate financial loss. Term extensions may assist in cases where we believe the customer will recover from short-term financial difficulty and resume regularly scheduled payments. Before offering an interest rate modification or term extension, we evaluate and take into account the capacity of the customer to meet the revised payment terms. Although the granting of an extension could delay the eventual charge-off of a receivable, we are typically able to repossess and sell the related collateral, thereby mitigating the loss. The effect of most loan modifications made to borrowers experiencing financial difficulty is included in the historical trends used to measure the allowance for credit losses. A loan modification that improves the delinquency status of a borrower reduces the probability of default, which results in a lower allowance for credit losses. At September 30, 2026, an insignificant portion of our total finance receivables portfolio had been granted a loan modification and these modifications are generally treated as a continuation of the existing loan.

Allowance for Credit Losses

The allowance for credit losses represents our estimate of the lifetime expected credit losses inherent in finance receivables as of the balance sheet date. The adequacy of the allowance for credit losses is assessed quarterly.

Adjustments to the allowance for credit losses are made by recording charges to Provision for credit losses on our consolidated income statements. The uncollectible portion of a finance receivable is charged to the allowance for credit losses at the earlier of when an account is deemed to be uncollectible or when an account is 120 days delinquent, taking into consideration the financial condition of the customer or borrower, the value of the collateral, recourse to guarantors, and other factors.

Charge-offs on finance receivables include uncollected amounts related to principal, interest, late fees, and other allowable charges. Recoveries on finance receivables previously charged off as uncollectible are credited to the allowance for credit losses. In the event we repossess the collateral, the receivable is charged off and the collateral is recorded at its estimated fair value less costs to sell and reported in Other assets on our consolidated balance sheets.
NOTE 4. FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES (Continued)

An analysis of the allowance for credit losses related to finance receivables for the periods ended September 30 was as follows (in millions):
Third Quarter 2025Third Quarter 2026
ConsumerNon-ConsumerTotal ConsumerNon-ConsumerTotal
Allowance for credit losses
Beginning balance$885 $5 $890 $953 $15 $968 
Charge-offs (177)1 (176)(180)(9)(189)
Recoveries48 — 48 45 — 45 
Provision for credit losses134 1 135 169 4 173 
Other (a) — — — (13)— (13)
Ending balance$890 $7 $897 $974 $10 $984 
First Nine Months 2025First Nine Months 2026
ConsumerNon-ConsumerTotalConsumerNon-ConsumerTotal
Allowance for credit losses
Beginning balance$860 $4 $864 $902 $9 $911 
Charge-offs(490)(13)(503)(538)(14)(552)
Recoveries133 — 133 139 5 144 
Provision for credit losses374 15 389 485 10 495 
Other (a)13 1 14 (14)— (14)
Ending balance$890 $7 $897 $974 $10 $984 
__________
(a)Includes gains/(losses) on unguaranteed residuals on retail balloon and finance lease receivables as well as amounts related to foreign currency translation adjustments.

During the third quarter and first nine months of 2026, the allowance for credit losses increased by $16 million and $73 million, respectively, primarily due to expected losses in our Europe segment’s consumer product portfolio. The year-to-date increase was offset partially by lower U.S. consumer receivables.