Impaired Consumer Finance Receivables - Troubled Debt Restructurings

Consumer finance receivables in the post-acquisition portfolio that become classified as TDRs are separately assessed for impairment. A specific allowance is estimated based on the present value of the expected future cash flows of the receivable discounted at the loan's original effective interest rate. At December 31, 2012, the financial effects of the accounts in the post-acquisition portfolio that became classified as TDRs resulted in an impairment charge recorded as part of the provision for loan losses. Accounts that become classified as TDRs because of a payment deferral still accrue interest at the contractual rate and an additional fee is collected at each time of deferral and recorded as a reduction of accrued interest. No interest or fees are forgiven on a payment deferral to a customer and therefore, there are no additional financial effects of deferred loans becoming classified as TDRs. Accounts in Chapter 13 bankruptcy would have already been placed on non-accrual, therefore there are no additional financial effects of these loans becoming classified as TDRs.

The outstanding recorded investment for consumer finance receivables that are considered to be TDRs and the related allowance as of December 31, 2012 is shown below (in thousands):



	Successor
	December 31, 2012
Outstanding recorded investment	$	228,320
Less: allowance for loan losses	(32,575		)
Outstanding recorded investment, net of allowance	$	195,745
Unpaid principal balance	$	231,844

At December 31, 2011, the amount of consumer finance receivables in the post-acquisition portfolio that would be considered TDRs was insignificant.

Finance charge income from loans classified as TDRs is accounted for in the same manner as other accruing loans. Cash collections on these loans are allocated according to the same payment hierarchy methodology applied to loans that are not classified as TDRs. Additional information about loans classified as TDRs is shown below (in thousands):



	Successor
	Year Ended December 31, 2012
Average recorded investment	$	101,574
Finance charge income recognized	11,081

The following table provides information on loans at the time they became classified as TDRs (dollars in thousands):



	Successor
	Year Ended December 31, 2012
	Number of Accounts	Amount
Recorded investment	12,882	$	242,521

A redefault is when an account meets the requirements for evaluation under our charge-off policy (see Note 1 - "Summary of Significant Accounting Policies" for additional information). The following table presents the unpaid principal balance, net of recoveries, of loans that redefaulted during the reporting period and were within 12 months or less of being modified as a TDR (in thousands):



	Successor
	Year Ended December 31, 2012
Net recorded investment charged-off on TDRs that subsequently defaulted	$	3,742

Commercial Finance Receivables

A summary of our commercial finance receivables is as follows (in thousands):



	Successor
	Year Ended December 31, 2012
Loans funded	$	1,227,287
Principal collections and other	(667,288		)
Balance at end of period	$	559,999

There were no commercial receivables on non-accrual status as of December 31, 2012.

A summary of the allowance for commercial loan losses is as follows (in thousands):



	Successor
	Year Ended December 31, 2012
Provision for loan losses	$	6,103
Balance at end of period	$	6,103

Credit Risk

We extend wholesale credit to dealers primarily in the form of approved lines of credit to purchase new GM vehicles as well as used vehicles. Each commercial lending request is evaluated, taking into consideration the borrower's financial condition and the underlying collateral for the loan.

We use a proprietary model to assign each dealer a risk rating. This model uses historical performance data to identify key factors about a dealer that we consider significant in predicting a dealer's ability to meet its financial obligations. We also consider numerous other financial and qualitative factors including capitalization and leverage, liquidity and cash flow, profitability and credit history.

We regularly review our model to confirm the continued business significance and statistical predictability of the factors and update the model to incorporate new factors or other information that improves its statistical predictability. In addition, we verify the existence of the assets collateralizing the receivables by physical audits of vehicle inventories, which are performed with increased frequency for higher risk (i.e., Group III and Group IV) dealers. We perform a credit review of each dealer at least annually and adjust the dealer's risk rating, if necessary.

Dealers are assigned to five groups according to their risk rating as follows:

•Group I - Dealers with strong to superior financial metrics

•Group II - Dealers with fair to favorable financial metrics

•Group III - Dealers with marginal to weak financial metrics

•Group IV - Dealers with poor financial metrics

•Group V - Dealers with loans classified as uncollectible

For Group V dealers, we suspend their credit lines and no further funding is extended to these dealers.

Performance of our commercial finance receivables is evaluated based on our internal dealer risk rating analysis, as payment for wholesale receivables is generally not required until the dealer has sold the vehicle inventory. Wholesale and dealer loan receivables with the same dealer customer share the same risk rating.

A summary of the credit risk profile by dealer grouping of the commercial finance receivables is as follows (in thousands):



	Successor
	December 31, 2012
Group I	$	98,417
Group II	278,403
Group III	171,008
Group IV	12,171
Group V
	$	559,999

Delinquency

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, 2012, all commercial receivables were current with respect to payment status.

Impaired Commercial Finance Receivables - Troubled Debt Restructurings

Commercial receivables classified as TDRs are assessed for impairment and included in our allowance for credit losses based on the present value of the expected future cash flows of the receivable discounted at the loan's original effective interest rate. For receivables where foreclosure is probable, the fair value of the collateral is used to estimate the specific impairment. At December 31, 2012, there were no outstanding commercial receivables classified as TDRs.