GM Financial Receivables



	December 31, 2017									December 31, 2016
	Retail			Commercial			Total			Retail			Commercial			Total
Finance receivables, collectively evaluated for impairment, net of fees	$	30,486		$	9,935		$	40,421		$	24,480		$	7,506		$	31,986
Finance receivables, individually evaluated for impairment, net of fees	2,228			22			2,250			1,920			27			1,947
GM Financial receivables	32,714			9,957			42,671			26,400			7,533			33,933
Less: allowance for loan losses	(889		)	(53		)	(942		)	(765		)	(40		)	(805		)
GM Financial receivables, net	$	31,825		$	9,904		$	41,729		$	25,635		$	7,493		$	33,128

Fair value of GM Financial receivables							$	41,735								$	33,181

We estimate the fair value of retail finance receivables using observable and unobservable Level 3 inputs within a cash flow model. 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. The projected cash flows are then discounted to derive the fair value of the portfolio. Macroeconomic factors could affect the credit performance of the portfolio and therefore could potentially affect the assumptions used in our cash flow model. A substantial majority of our commercial finance receivables have variable interest rates. The carrying amount, a Level 2 input, is considered to be a reasonable estimate of fair value.



	Years Ended December 31,
	2017			2016			2015
Allowance for loan losses at beginning of period	$	805		$	749		$	668
Provision for loan losses	757			644			603
Charge-offs	(1,173		)	(1,137		)	(969		)
Recoveries	552			542			469
Effect of foreign currency	1			7			(22		)
Allowance for loan losses at end of period	$	942		$	805		$	749

The allowance for loan losses on retail and commercial finance receivables included a collective allowance of $611 million, $525 million and $524 million and a specific allowance of $331 million, $280 million and $225 million at December 31, 2017, 2016 and 2015.

Retail Finance Receivables We use proprietary scoring systems in the underwriting process that measure the credit quality of retail finance receivables using several factors, such as credit bureau information, consumer credit risk scores (e.g. FICO scores or their equivalent) and contract characteristics. We also consider other factors such as employment history, financial stability and capacity to pay. Subsequent to origination we review the credit quality of retail finance receivables based on customer payment activity. While we have historically focused on consumers with lower than prime credit scores, we have expanded our prime lending programs. At December 31, 2017 and 2016 33% and 41% of retail finance receivables were from consumers with sub-prime credit scores, which are defined as FICO scores or equivalent scores of less than 620 at the time of loan origination.

We purchase retail finance contracts from automobile dealers without recourse, and accordingly, the dealer has no liability to GM Financial if the consumer defaults on the contract. Finance receivables are collateralized by vehicle titles and GM Financial has the right to repossess the vehicle in the event the consumer defaults on the payment terms of the contract.

An account is considered delinquent if a substantial portion of a scheduled payment has not been received by the date the payment was contractually due. The accrual of finance charge income had been suspended on delinquent retail finance receivables with contractual amounts due of $778 million and $798 million at December 31, 2017 and 2016. The following table summarizes the contractual amount of delinquent retail finance receivables, which is not significantly different than the recorded investment of the retail finance receivables:



	December 31, 2017				December 31, 2016
	Amount		Percent of Contractual Amount Due		Amount		Percent of Contractual Amount Due
31-to-60 days delinquent	$	1,334	4.1	%	$	1,220	4.6	%
Greater-than-60 days delinquent	559		1.7	%	532		2.0	%
Total finance receivables more than 30 days delinquent	1,893		5.8	%	1,752		6.6	%
In repossession	27		—	%	47		0.2	%
Total finance receivables more than 30 days delinquent or in repossession	$	1,920	5.8	%	$	1,799	6.8	%

Retail finance receivables classified as TDRs and individually evaluated for impairment were $2.2 billion and $1.9 billion and the allowance for loan losses included $328 million and $276 million of specific allowances on these receivables at December 31, 2017 and 2016.

Commercial Finance Receivables Our commercial finance receivables consist of dealer financings, primarily for inventory purchases. A proprietary model is used to assign a risk rating to each dealer. We perform periodic credit reviews of each dealership and adjust the dealership's risk rating, if necessary. Dealers in Group VI are subject to additional restrictions on funding, including suspension of lines of credit and liquidation of assets. The commercial finance receivables on non-accrual status were insignificant at December 31, 2017 and 2016. The following table summarizes the credit risk profile by dealer risk rating of the commercial finance receivables:



		December 31, 2017		December 31, 2016
Group I	– Dealers with superior financial metrics	$	1,915	$	1,372
Group II	– Dealers with strong financial metrics	3,465		2,526
Group III	– Dealers with fair financial metrics	3,239		2,598
Group IV	– Dealers with weak financial metrics	997		613
Group V	– Dealers warranting special mention due to elevated risks	260		334
Group VI	– Dealers with loans classified as substandard, doubtful or impaired	81		90
		$	9,957	$	7,533