GM Financial Receivables, net

The following table summarizes the components of GM Financial receivables, net (dollars in millions):



	September 30, 2015									December 31, 2014
	Consumer			Commercial			Total			Consumer			Commercial			Total
Finance receivables	$	27,987		$	7,659		$	35,646		$	25,623		$	7,606		$	33,229
Less: allowance for loan losses	(718		)	(40		)	(758		)	(655		)	(40		)	(695		)
GM Financial receivables, net	$	27,269		$	7,619		$	34,888		$	24,968		$	7,566		$	32,534

Fair value of GM Financial receivables, net							$	35,039								$	33,106
Allowance for loan losses classified as current							$	(573	)							$	(529	)

GM Financial estimates the fair value of consumer finance receivables using observable and unobservable inputs within a cash flow model, a Level 3 input. The inputs reflect assumptions regarding expected prepayments, deferrals, delinquencies, recoveries and charge-offs of the loans within the portfolio. The cash flow model produces an estimated amortization schedule of the finance receivables which is the basis for the calculation of the series of cash flows that derive the fair value of the portfolio. The series of cash flows is calculated and discounted using a weighted-average cost of capital or current interest rates. The weighted-average cost of capital uses debt and equity percentages, an unobservable cost of equity and an observable cost of debt based on companies with a similar credit rating and maturity profile as the portfolio. Macroeconomic factors could affect the credit performance of the portfolio and therefore could potentially affect the assumptions used in GM Financial's cash flow model. A substantial majority of GM Financial's commercial finance receivables have variable interest rates and maturities of one year or less. Therefore the carrying amount is considered to be a reasonable estimate of fair value using Level 2 inputs.

The following table summarizes activity for the allowance for loan losses on finance receivables (dollars in millions):



	Three Months Ended						Nine Months Ended
	September 30, 2015			September 30, 2014			September 30, 2015			September 30, 2014
Balance at beginning of period	$	760		$	615		$	695		$	548
Provision for loan losses	144			160			440			408
Charge-offs	(256		)	(230		)	(710		)	(645		)
Recoveries	124			106			357			340
Effect of foreign currency	(14		)	(6		)	(24		)	(6		)
Balance at end of period	$	758		$	645		$	758		$	645

The activity for the allowance for commercial loan losses was insignificant in the three and nine months ended September 30, 2015 and 2014.

Credit Quality

Consumer Finance Receivables

GM Financial uses proprietary scoring systems in its underwriting process that measure the credit quality of the receivables using several factors, such as credit bureau information, consumer credit risk scores (e.g. FICO scores) and contract characteristics. In addition to GM Financial's proprietary scoring systems GM Financial considers other individual consumer factors such as employment history, financial stability and capacity to pay. Subsequent to origination GM Financial reviews the credit quality of retail receivables based on customer payment activity. At the time of loan origination substantially all of GM Financial's international consumers were considered to be prime credit quality. At September 30, 2015 and December 31, 2014, 65% and 83% of the consumer finance receivables in North America were from consumers with sub-prime credit scores, which are defined as FICO scores of less than 620 at the time of loan origination.

An account is considered delinquent if a substantial portion of a scheduled payment has not been received by the date such payment was contractually due. At September 30, 2015 and December 31, 2014 the accrual of finance charge income has been suspended on delinquent consumer finance receivables with contractual amounts due of $726 million and $682 million. The following table summarizes the contractual amount of delinquent contracts, which is not significantly different than the recorded investment of the consumer finance receivables (dollars in millions):



	September 30, 2015				September 30, 2014
	Amount		Percent of Contractual Amount Due		Amount		Percent of Contractual Amount Due
31-to-60 days delinquent	$	1,137	4.0	%	$	979	3.9	%
Greater-than-60 days delinquent	454		1.6	%	425		1.7	%
Total finance receivables more than 30 days delinquent	1,591		5.6	%	1,404		5.6	%
In repossession	53		0.2	%	49		0.2	%
Total finance receivables more than 30 days delinquent or in repossession	$	1,644	5.8	%	$	1,453	5.8	%

Impaired Finance Receivables – Troubled Debt Restructurings

The following table summarizes the outstanding recorded investment for consumer finance receivables that are considered to be troubled debt restructurings and the related allowance (dollars in millions):



	September 30, 2015			December 31, 2014
Outstanding recorded investment	$	1,515		$	1,234
Less: allowance for loan losses	(215		)	(172		)
Outstanding recorded investment, net of allowance	$	1,300		$	1,062

Unpaid principal balance	$	1,543		$	1,255
Outstanding recorded investment percentage of finance receivables	5.4		%	4.8		%

Commercial Finance Receivables

GM Financial's commercial finance receivables consist of dealer financings, primarily for inventory purchases. A proprietary model is used to assign a risk rating to each dealer. A credit review of each dealer is performed at least annually, and if necessary, the dealer's risk rating is adjusted on the basis of the review. The credit lines for Group VI dealers are typically suspended and no further funding is extended to these dealers. At September 30, 2015 and December 31, 2014 the commercial finance receivables on non-accrual status were insignificant. The following table summarizes the credit risk profile by dealer grouping of the commercial finance receivables (dollars in millions):



	September 30, 2015		December 31, 2014
Group I – Dealers with superior financial metrics	$	1,191	$	1,050
Group II – Dealers with strong financial metrics	2,269		2,022
Group III – Dealers with fair financial metrics	2,498		2,599
Group IV – Dealers with weak financial metrics	1,088		1,173
Group V – Dealers warranting special mention due to potential weaknesses	408		524
Group VI – Dealers with loans classified as substandard, doubtful or impaired	205		238
	$	7,659	$	7,606