General Motors 2015 Annual Report Download - page 70

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Table of Contents


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):




Balance at beginning of period $ 695
$ 548
$ 351
Provision for loan losses 624
604
475
Charge-offs (999)
(914)
(643)
Recoveries 487
470
362
Effect of foreign currency (25)
(13)
3
Balance at end of period $ 782
$ 695
$ 548
The activity for the allowance for commercial loan losses was insignificant in the years ended December 31, 2015, 2014 and 2013.


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 are considered to be prime credit quality. At December 31, 2015 and 2014, 60% and 83% of the retail 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.
GM Financial purchases 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 such payment was contractually
due. At December 31, 2015 and 2014 the accrual of finance charge income had been suspended on delinquent retail finance receivables with contractual
amounts due of $778 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 retail finance receivables (dollars in millions):










31-to-60 days delinquent $ 1,237
4.2%
$ 1,083
4.2%
Greater-than-60 days delinquent 481
1.6%
432
1.7%
Total finance receivables more than 30 days delinquent 1,718
5.8%
1,515
5.9%
In repossession 46
0.2%
40
0.2%
Total finance receivables more than 30 days delinquent or in repossession $ 1,764
6.0%
$ 1,555
6.1%

66