History and Operations

We were formed on August 1, 1986, and, since September 1992, have been in the business of purchasing and servicing automobile sales finance contracts. From January 2007 through May 2008 and starting again in December 2010, we also originated leases on automobiles. In April 2012, we began providing commercial lending to automobile dealers.

Definitive Agreement to Acquire Certain Ally Financial International Operations

In November 2012, we entered into an agreement with Ally Financial Inc. ("Ally") to acquire 100% of the outstanding equity interests of its automotive finance and financial services operations in Europe and Latin America and a separate agreement to acquire Ally’s non-controlling equity interests in GMAC-SAIC Automotive Finance Company Limited, which conducts automotive finance and other financial services in China. The combined consideration will be approximately $4.2 billion, in cash, subject to certain closing adjustments. The transactions are anticipated to be funded by an estimated $2 billion capital contribution from General Motors Company ("GM"), our excess liquidity and incurrence of additional debt. These transactions will enable us to provide automotive finance and other financial services to customers in European, Latin American and Chinese markets. The transactions contemplated by the agreements are subject to satisfaction of certain closing conditions, including obtaining applicable regulatory approvals and third party consents and other customary closing conditions, and are expected to close in stages throughout 2013.

Merger

On October 1, 2010, pursuant to the terms of the Agreement and Plan of Merger (the "Merger Agreement"), dated as of July 21, 2010, with General Motors Holdings LLC ("GM Holdings"), a Delaware limited liability company and a wholly-owned subsidiary of GM, and Goalie Texas Holdco Inc., a Texas corporation and a direct wholly-owned subsidiary of GM Holdings ("Merger Sub"), GM Holdings completed its $3.5 billion acquisition of AmeriCredit Corp. via the merger of Merger Sub with and into AmeriCredit Corp. (the "Merger" or "acquisition"), with AmeriCredit Corp. continuing as the surviving company in the Merger and becoming a wholly-owned subsidiary of GM Holdings. After the Merger, AmeriCredit Corp. was renamed General Motors Financial Company, Inc. The accompanying consolidated financial statements labeled "Predecessor" and "Successor", relate to the period before the Merger and the period after the Merger, respectively. The consolidated financial statements of the Predecessor have been prepared on the same basis as the audited financial statements included in our Annual Report on Form 10-K for the year ended June 30, 2010. The consolidated financial statements of the Successor reflect a change in basis from the application of purchase accounting.

Change in Fiscal Year

On December 9, 2010, we changed our fiscal year end to December 31 from June 30. We made this change to align our financial reporting period, as well as our annual planning and budgeting process, with the GM business cycle. As a result of this change, the Consolidated Financial Statements include our financial results for the three month transition period of July 1, 2010 through September 30, 2010, labeled "Predecessor" and the three month transition period of October 1, 2010 through December 31, 2010, labeled "Successor". The years ended December 31, 2012 and 2011 and June 30, 2010 reflect the twelve-month results of the respective fiscal year and are referred to herein as fiscal 2012, 2011 and 2010.

Basis of Presentation

The consolidated financial statements include our accounts and the accounts of our wholly-owned subsidiaries, including certain special purpose financing trusts ("Trusts") utilized in securitization transactions and credit facilities which are considered variable interest entities ("VIE's"). All intercompany transactions and accounts have been eliminated in consolidation.

The preparation of financial statements in conformity with GAAP in the United States of America requires management to make estimates and assumptions which affect the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities as of the date of the financial statements and the amount of revenue and costs and expenses during the reporting periods. Actual results could differ from those estimates and those differences may be material. These estimates include, among other things, the determination of the allowance for loan losses on finance receivables, estimated recovery value on leased vehicles, goodwill, income taxes and the expected cash flows on the pre-acquisition consumer finance receivables.

Prior year amounts for deferred income, leased vehicle income and gain on retirement of debt have been reclassified to conform to the current year presentation. Deferred income is now presented on its own line on the consolidated balance sheets where it was previously included in accounts payable and accrued expenses. Leased vehicle income is now presented on its own line on the consolidated statements of income and comprehensive income where it was previously included in other income. Gain on retirement of debt is now included in other income where it was previously presented on its own line on the consolidated statements of income and comprehensive income.

Purchase Accounting

The Merger has been accounted for under the purchase method of accounting, whereby the total purchase price of the transaction was allocated to our identifiable tangible and intangible assets acquired and liabilities assumed based on their fair values, and the excess of the purchase price over the fair value of net assets acquired was recorded as goodwill. The allocation resulted in a significant amount of goodwill, an increase in the carrying value of net finance receivables, medium term note facility payable, Wachovia funding facility payable, securitization notes payable, deferred tax assets and uncertain tax positions as well as new identifiable intangible assets. See Note 2 – "Financial Statement Effects of the Merger" for additional information on the purchase price allocation.

Cash Equivalents

Investments in highly liquid securities with original maturities of 90 days or less are included in cash and cash equivalents.

Consumer Finance Receivables and the Allowance for Loan Losses

Pre-Acquisition Consumer Finance Receivables

Consumer finance receivables originated prior to the acquisition were adjusted to fair value at October 1, 2010. As a result of purchase accounting for the Merger, the allowance for loan losses at October 1, 2010 was eliminated and a net discount was recorded on the receivables. The fair value of the receivables was less than the principal amount of those receivables, thus resulting in a discount to par. This discount was attributable, in part, to estimate future credit losses that did not exist at the origination of the loans.

A non-accretable difference is the excess between contractually required payments (undiscounted amount of all uncollected contractual principal and interest payments, both past due and scheduled for the future) and the amount of cash flows, considering the impact of prepayments, expected to be collected. An accretable yield is the excess of the cash flows, considering the impact of prepayments, expected to be collected over the initial investment in the loans, which at October 1, 2010, was fair value.

As a result of purchase accounting for the Merger, we evaluated the common risk characteristics of the loan portfolio and split it into several pools. Once a pool of loans is assembled, the integrity of the pool is maintained. A loan is removed from a pool only if it is sold or paid in full, or the loan is written off. Our policy is to remove a written off loan individually from a pool based on comparing any amount received with its contractual amount. Any difference between these amounts is absorbed by the non-accretable difference. This removal method assumes that the amount received approximates pool performance expectations. The remaining accretable yield balance is unaffected and any material change in remaining effective yield caused by this removal method is addressed by our quarterly cash flow evaluation process for each pool. For loans that are resolved by payment in full there is no release of the non-accretable difference for the pool because there is no difference between the amount received and the contractual amount of the loan.

Any deterioration in the performance of the pre-acquisition receivables will result in an incremental provision for loan losses being recorded. Improvements in the performance of the pre-acquisition receivables which results in a significant increase in actual or expected cash flows will result first in the reversal of any incremental related allowance for loan losses and then in a transfer of the excess from the non-accretable difference to accretable yield, which will be recorded as finance charge income over the remaining life of the receivables.

Post-Acquisition Consumer Finance Receivables and Allowance for Loan Losses

Consumer finance receivables originated since the acquisition are carried at amortized cost, net of allowance for loan losses. Provisions for loan losses are charged to operations in amounts sufficient to maintain the allowance for loan losses at levels considered adequate to cover probable credit losses inherent in our post-acquisition consumer finance receivables.

The allowance for loan losses is established systematically based on the determination of the amount of probable credit losses inherent in the post-acquisition consumer finance receivables as of the balance sheet date. We review charge-off experience factors, delinquency reports, historical collection rates, estimates of the value of the underlying collateral, economic trends, such as unemployment rates, and other information in order to make the necessary judgments as to the probable credit losses. We also use historical charge-off experience to determine the loss confirmation period, which is defined as the time between when an event, such as delinquency status, giving rise to a probable credit loss occurs with respect to a specific account and when such account is charged-off. This loss confirmation period is applied to the forecasted probable credit losses to determine the amount of losses inherent in finance receivables at the balance sheet date. Assumptions regarding credit losses and loss confirmation periods are reviewed periodically and may be impacted by actual performance of finance receivables and changes in any of the factors discussed above. Should the credit loss assumption or loss confirmation period increase, there would be an increase in the amount of allowance for loan losses required, which would decrease the net carrying value of finance receivables and increase the amount of provision for loan losses recorded on the consolidated statements of income and comprehensive income.

Commercial Finance Receivables and the Allowance for Loan Losses

In April 2012, we launched our commercial lending platform to further support our GM-franchised dealerships and their affiliates. Our commercial lending offerings consist of floorplan financing, which are loans to finance the purchase of vehicle inventory, also known as wholesale or inventory financing, as well as dealer loans, which are loans to finance improvements to dealership facilities, to provide working capital, and to purchase and/or finance dealership real estate.

Commercial finance receivables are carried at amortized cost, net of allowance for loan losses. Provisions for loan losses are charged to operations in amounts sufficient to maintain the allowance for loan losses at levels considered adequate to cover probable credit losses inherent in the commercial finance receivables. We reviewed the loss confirmation period as well as performed an analysis of the experience of comparable commercial lenders in order to estimate probable credit losses inherent in our portfolio. The commercial finance receivables are aggregated into loan-risk pools, which are determined based on our internally-developed risk rating system. Based upon our risk ratings, we also determine if any specific dealer loan is considered impaired. If impaired loans are identified, specific reserves are established, as appropriate, and the loan is segregated for separate monitoring.

Charge-off Policy

Our policy is to charge off a consumer account in the month in which the account becomes 120 days contractually delinquent if we have not repossessed the related vehicle. We charge off accounts in repossession when the automobile is repossessed and legally available for disposition. A charge-off generally represents the difference between the estimated net sales proceeds and the amount of the delinquent contract, including accrued interest. Accounts in repossession that have been charged off and have been removed from finance receivables and the related repossessed automobiles, aggregating $22.5 million and $12.8 million at December 31, 2012 and 2011, respectively, are included in other assets on the consolidated balance sheets pending sale and represent a non-cash investing activity.

Commercial finance receivables are individually evaluated, and where collectability of the recorded balance is in doubt, are written down to the fair value of the collateral less costs to sell. Commercial receivables are charged-off at the earlier of when they are deemed uncollectible or reach 360 days past due.

Troubled Debt Restructurings

For evaluating whether a loan modification constitutes a troubled debt restructuring ("TDR") our policy for consumer loans is that both of the following must exist: (i) the modification constitutes a concession; and (ii) the debtor is experiencing financial difficulties. In accordance with our policies and guidelines, we, at times, offer payment deferrals to consumers. Each deferral allows the consumer to move up to two delinquent monthly payments to the end of the loan generally by paying a fee (approximately the interest portion of the payment deferred, except where state law provides for a lesser amount). A loan that is deferred two or more times would be considered significantly delayed and therefore meet the definition of a concession. A loan currently in payment default as the result of being delinquent would also represent a debtor experiencing financial difficulties. Therefore, considering these two factors, the second deferment granted by us on a consumer loan would be considered a TDR and the loan impaired. Accounts in Chapter 13 bankruptcy which have an interest rate or principal adjustment as part of a confirmed bankruptcy plan would also be considered TDRs. The pre-acquisition portfolio is excluded from the TDR policy since expected future credit losses were recognized in the purchase accounting for that portfolio.

Commercial receivables subject to forbearance, moratoriums, extension agreements, or other actions intended to minimize economic loss and to avoid foreclosure or repossession of collateral are classified as TDRs. We do not grant concessions on the principal balance of dealer loans.

Variable Interest Entities – Securitizations and Credit Facilities

We finance our loan origination volume through the use of our credit facilities and execution of securitization transactions, which both utilize special purpose entities ("SPE's"). In a credit facility, we transfer finance receivables or leasing related assets to special purpose finance subsidiaries. These subsidiaries, in turn, issue notes to the agents, collateralized by such assets and cash. The agents provide funding under the notes to the subsidiaries pursuant to an advance formula, and the subsidiaries forward the funds to us in consideration for the transfer of the assets.

In our securitizations, we, through wholly-owned subsidiaries, transfer finance receivables to newly-formed SPE's structured as securitization Trusts ("Trusts"), which issue one or more classes of asset-backed securities. The asset-backed securities are in turn sold to investors.

Our continuing involvement with the credit facilities and Trusts consist of servicing assets held by the SPE's and holding a residual interest in the SPE. These transactions are structured without recourse. The SPE's are considered VIE's under U.S. Generally Accepted Accounting Principles ("U.S. GAAP") and are consolidated because we have: (i) power over the significant activities of the entity and (ii) an obligation to absorb losses or the right to receive benefits from the VIE which are potentially significant to the VIE.

We have power over the significant activities of those VIE's in which we act as servicer of the financial assets held in the VIE. Our servicing fees are not considered significant variable interests in the VIE's; however, because we also retain a residual interest in the SPE, either in the form of a debt security or equity interest, we have an obligation to absorb losses or the right to receive benefits that are potentially significant to the SPE. Accordingly, we are the primary beneficiary of the VIE's and are required to consolidate them within our consolidated financial statements. Therefore, the finance receivables, leasing related assets, borrowings under our credit facilities and, following a securitization, the related securitization notes payable remain on the consolidated balance sheets. See Note 5 – "Finance Receivables", Note 7 – "Securitizations" and Note 8 – "Credit Facilities" for further information.

We are not required, and do not currently intend, to provide any additional financial support to SPE's. While these subsidiaries are included in our consolidated financial statements, these subsidiaries are separate legal entities and the finance receivables and other assets held by these subsidiaries are legally owned by them and are not available to our creditors or creditors of our other subsidiaries.

Except for purchase accounting adjustments, we recognize finance charge and fee income on the receivables and interest expense on the securities issued in a securitization transaction, and record a provision for loan losses to recognize probable loan losses inherent in the finance receivables. Cash pledged to support the securitization transaction is deposited to a restricted account and recorded on our consolidated balance sheets as restricted cash – securitization notes payable, which is invested in highly liquid securities with original maturities of 90 days or less or in highly rated guaranteed investment contracts.

Property and Equipment

As a result of the Merger, on October 1, 2010, our property and equipment was adjusted to an estimated fair market value. Subsequent to the Merger, property and equipment additions are carried at amortized cost. Depreciation is generally provided on a straight-line basis over the estimated useful lives of the assets, which ranges from three to 25 years. The basis of assets sold or retired and the related accumulated depreciation are removed from the accounts at the time of disposition and any resulting gain or loss is included in operations. Maintenance, repairs and minor replacements are charged to operations as incurred; major replacements and betterments are capitalized.

Leased Vehicles

Leased vehicles consist of automobiles leased to consumers. Leased vehicles acquired since the Merger are carried at amortized cost less manufacturer incentives. Depreciation expense is recorded on a straight-line basis over the term of the lease. Leased vehicles are depreciated to the estimated residual value at the end of the lease term. Under the accounting for impairment or disposal of long-lived assets, residual values of operating leases are evaluated individually for impairment when indicators of impairment exist. When aggregate future cash flows from the operating lease, including the expected realizable fair value of the leased asset at the end of the lease, are less than the book value of the lease, an immediate impairment write-down is recognized if the difference is deemed not recoverable. Otherwise, reductions in the expected residual value result in additional depreciation of the leased asset over the remaining term of the lease. Upon disposition, a gain or loss is recorded for any difference between the net book value of the lease and the proceeds from the disposition of the asset, including any insurance proceeds.

Goodwill

Under the purchase method of accounting, our net assets were recorded at their estimated fair value at the date of the Merger. The excess cost of the acquisition over the fair value was recorded as goodwill. Goodwill is subject to impairment testing using a two-step process after considering a qualitative assessment. The first step of the goodwill impairment test is to identify potential impairment by comparing the fair value of the reporting unit with its carrying amount, including goodwill. We have determined that we have one operating segment, thus one reporting unit. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired and the second step of the impairment test is not required. If the carrying amount of a reporting unit exceeds its fair value, the second step of the goodwill impairment test is performed to measure the amount of the impairment loss, if any. The second step of the goodwill impairment test compares the implied fair value (i.e., the fair value of reporting unit less the fair value of the unit's assets and liabilities, including identifiable intangible assets) of the reporting unit's goodwill with the carrying amount of that goodwill. If the carrying value of goodwill exceeds its implied fair value, the excess is required to be recorded as an impairment charge in earnings. We perform our annual goodwill impairment analysis during the fourth quarter. Goodwill must be tested between annual tests if events or changes in circumstances indicate that the asset might be impaired. We reviewed changes in the business climate, changes in market capitalization, legal factors, operating performance indicators and competition, among other factors and their potential impact on our fair value determination. There have been no significant changes in any of these factors that have adversely affected any of the key assumptions used in our determination of fair value. See Note 4 - "Goodwill" for further information.

Derivative Financial Instruments

We recognize all of our derivative financial instruments as either assets or liabilities on our consolidated balance sheets at fair value. The accounting for changes in the fair value of each derivative financial instrument depends on whether it has been designated and qualifies as an accounting hedge, as well as the type of hedging relationship identified.

Our special purpose finance subsidiaries are contractually required to purchase derivative instruments, which could include interest rate cap agreements and/or interest rate swap agreements which are explained below, as credit enhancement in connection with securitization transactions and credit facilities.

We do not use derivative instruments for trading or speculative purposes.

Interest Rate Swap Agreements

We utilize interest rate swap agreements to convert floating rate exposures on securities issued in securitization transactions to fixed rates, thereby hedging the variability in interest expense paid. Our interest rate swap agreements are designated as cash flow hedges on the floating rate debt of our securitization notes payable and may qualify for hedge accounting treatment, while others do not qualify and are marked to market through interest expense in our consolidated statements of income and comprehensive income. Cash flows from derivatives used to manage interest rate risk are classified as operating activities.

For interest rate swap agreements designated as hedges, we formally document all relationships between the interest rate swap agreement and the underlying asset, liability or cash flows being hedged, as well as our risk management objective and strategy for undertaking the hedge transactions. At hedge inception and at least quarterly, we also formally assess whether the interest rate swap agreements that are used in hedging transactions have been highly effective in offsetting changes in the cash flows or fair value of the hedged items and whether those interest rate swap agreements may be expected to remain highly effective in future periods. In addition, we also assess the continued probability that the hedged cash flows will be realized.

We use regression analysis to assess hedge effectiveness of our cash flow hedges on a prospective and retrospective basis. A derivative financial instrument is deemed to be effective if the X-coefficient from the regression analysis is between a range of 0.80 and 1.25. At December 31, 2012, all of our interest rate swap agreements designated as cash flow hedges fall within this range and are deemed to be effective hedges for accounting purposes. We use the hypothetical derivative method to measure the amount of ineffectiveness and a net earnings impact occurs when the change in the value of a derivative instrument does not offset the change in the value of the underlying hedged item. Ineffectiveness of our hedges is not material.

The effective portion of the changes in the fair value of the interest rate swaps qualifying as cash flow hedges are included as a component of accumulated other comprehensive income (loss) as an unrealized gain or loss on cash flow hedges. These unrealized gains or losses are recognized as adjustments to income over the same period in which cash flows from the related hedged item affect earnings. Additionally, to the extent that any of these contracts are not considered to be perfectly effective in offsetting the change in the value of the cash flows being hedged, any changes in fair value relating to the ineffective portion of these contracts are recognized in interest expense on our consolidated statements of income and comprehensive income. We discontinue hedge accounting prospectively when it is determined that an interest rate swap agreement has ceased to be effective as an accounting hedge or if the underlying hedged cash flow is no longer probable of occurring.

Interest Rate Cap Agreements

Generally, we purchase interest rate cap agreements to limit floating rate exposures on securities issued in our credit facilities. As part of our interest rate risk management strategy and when economically feasible, we may simultaneously sell a corresponding interest rate cap agreement in order to offset the premium paid to purchase the interest rate cap agreement and thus retain the interest rate risk. Because the interest rate cap agreements entered into by us or our special purpose finance subsidiaries do not qualify for hedge accounting, changes in the fair value of interest rate cap agreements purchased by the special purpose finance subsidiaries and interest rate cap agreements sold by us are recorded in interest expense on our consolidated statements of income and comprehensive income.

Interest rate risk management contracts are generally expressed in notional principal or contract amounts that are much larger than the amounts potentially at risk for nonpayment by counterparties. Therefore, in the event of nonperformance by the counterparties, our credit exposure is limited to the uncollected interest and the market value related to the contracts that have become favorable to us. We manage the credit risk of such contracts by using highly rated counterparties, establishing risk limits and monitoring the credit ratings of the counterparties.

We maintain a policy of requiring that all derivative contracts be governed by an International Swaps and Derivatives Association Master Agreement. We enter into arrangements with individual counterparties that we believe are creditworthy and generally settle on a net basis. In addition, we perform a quarterly assessment of our counterparty credit risk, including a review of credit ratings, credit default swap rates and potential nonperformance of the counterparty.

Tax Sharing Arrangement

Under the tax sharing arrangement with GM, we are responsible for our tax liabilities as if separate returns are filed. Payments for the tax years 2010 through 2013 are deferred for three years from their original due date. The total amount of deferral is not to exceed $650 million. As of December 31, 2012 and 2011, we have an accrued liability of $558.6 million and $300.3 million to GM, respectively. As of December 31, 2012, a difference of $0.8 million between the amounts to be paid under our tax sharing arrangement with GM and our separate return basis used for financial reporting purposes was reported in our consolidated financial statements through additional paid-in capital.

Income Taxes

Income taxes are accounted for using an asset and liability method which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis, net operating loss and tax credit carryforwards. A valuation allowance is recognized if it is more likely than not that some portion or the entire deferred tax asset will not be realized.

We account for uncertainty in income taxes in the financial statements. See Note 17 – "Income Taxes" for a discussion of the accounting for uncertain tax positions.

Revenue Recognition

Finance Charge Income

Finance charge income related to consumer finance receivables is recognized using the interest method. Accrual of finance charge income is suspended on accounts that are more than 60 days delinquent, accounts in bankruptcy, and accounts in repossession. Payments received on non-accrual loans are first applied to any fees due, then to any interest due and, finally, any remaining amounts received are recorded to principal. Interest accrual resumes once an account has received payments bringing the delinquency status to less than 60 days past due. Fees and commissions received and direct costs of originating loans are deferred and amortized over the term of the related finance receivables using the interest method and are removed from the consolidated balance sheets when the related finance receivables are sold, charged-off or paid in full.

Finance charge income related to commercial finance receivables is recognized using the accrual method. Accrual of finance charge income is suspended on accounts that are more than 90 days delinquent, upon receipt of a bankruptcy notice from a borrower, or where reasonable doubt about the full collectability of contractually agreed upon principal and interest exist. Payments received on non-accrual loans are first applied to principal. Interest accrual resumes once an account has received payments bringing the delinquency status fully current and collection of contractual principal and interest is reasonably expected (including amounts previously charged-off) or, for TDR's, when repayment is reasonably assured based on the modified terms of the loan.

Leased Vehicle Income

Operating lease rental income for leased assets is recognized on a straight-line basis over the lease term. Net deferred origination fees or costs are amortized on a straight-line basis over the life of the lease.

Parent Company Stock Based Compensation

We measure and record compensation expense for parent company stock based compensation awards based on the award's estimated fair value. We record compensation expense over the applicable vesting period of an award.

Salary stock awards granted are fully vested and nonforfeitable upon grant, therefore, compensation cost is recorded on the date of grant.

For fiscal 2012 and 2011, we recorded total stock based compensation expense of $16.5 million ($10.2 million net of tax) and $17.1 million ($10.6 million net of tax), respectively.

Stock Based Compensation – Predecessor

Share-based payment transactions were measured at fair value and recognized in the financial statements.

For the three months ended September 30, 2010 and fiscal 2010, we recorded total stock based compensation expense of $5.0 million ($2.8 million net of tax) and $15.1 million ($9.4 million net of tax), respectively.

The excess tax benefit of the stock based compensation expense related to the exercise of stock options of $0.4 million, and $1.1 million for the three months ended September 30, 2010 and fiscal 2010, respectively, has been included in other net changes as a cash inflow from financing activities on the consolidated statements of cash flows.

The fair value of each option granted or modified was estimated using an option-pricing model with the following weighted average assumptions:



	Predecessor
	Year Ended June 30, 2010
	Year Ended June 30, 2010
Expected dividends	0
Expected volatility	65.7	%
Risk-free interest rate	1.2	%
Expected life	1.4 years

For the three months ended September 30, 2010, there were no options granted or modified.

We have not paid out dividends historically, thus the dividend yields were estimated at zero percent.

Expected volatility reflects an average of the implied and historical volatility rates. Management believed that a combination of market-based measures was the best available indicator of expected volatility.

The risk-free interest rate was the implied yield available for zero-coupon U.S. government issues with a remaining term equal to the expected life of the options.

The expected lives of options were determined based on our historical option exercise experience and the term of the option.

Assumptions were reviewed each time there was a new grant or modification of a previous grant and would have been impacted by actual fluctuation in our stock price, movements in market interest rates and option terms. The use of different assumptions produces a different fair value for the options granted or modified and impacts the amount of compensation expense recognized on the consolidated statements of income and comprehensive income.

Related Party Transactions

We offer loan and lease finance products through GM-franchised dealers to consumers purchasing new and certain used vehicles manufactured by GM. GM makes cash payments to us for offering incentivized rates and structures on these loan and lease finance products under a subvention program. At December 31, 2012 and 2011, we had related party receivables from GM in the amount of $20.8 million and $37.4 million, respectively, under the subvention program. We also had $45.6 million at December 31, 2012 in outstanding loans to dealers that are majority-owned and consolidated by GM, in connection with our commercial lending program.