Note 6 – Allowance for Credit Losses

The following table provides information related to our allowance for credit losses on finance receivables and investments in operating leases:

	Years Ended March 31,
	2016			2015			2014
Allowance for credit losses at beginning of period	$	485		$	454		$	527
Provision for credit losses		441			308			170
Transferred to held-for-sale¹		(7	)		-			-
Charge-offs, net of recoveries		(384	)		(277	)		(243	)
Allowance for credit losses at end of period	$	535		$	485		$	454

¹ Amount relates to the commercial finance business which was sold on October 1, 2015.

Charge-offs are shown net of recoveries of $72 million, $86 million and $85 million for fiscal 2016, 2015 and 2014, respectively.

Allowance for Credit Losses and Finance Receivables by Portfolio Segment

The following tables provide information related to our allowance for credit losses and finance receivables by portfolio segment for:

	Year Ended March 31, 2016
	Retail Loan			Commercial			Dealer Products			Total
Beginning balance, April 1, 2015	$	299		$	2		$	108		$	409
Charge-offs		(328	)		(1	)		-			(329	)
Recoveries		49			-			-			49
Provisions		269			1			28			298
Transferred to held-for-sale		-			(2	)		(4	)		(6	)
Ending balance, March 31, 2016	$	289		$	-		$	132		$	421

Ending balance: Individually evaluated for impairment	$	-		$	-		$	54		$	54
Ending balance: Collectively evaluated for impairment	$	289		$	-		$	78		$	367

Finance Receivables:
Ending balance, March 31, 2016	$	50,363		$	-		$	15,899		$	66,262
Ending balance: Individually evaluated for impairment	$	-		$	-		$	540		$	540
Ending balance: Collectively evaluated for impairment	$	50,363		$	-		$	15,359		$	65,722

The ending balance of finance receivables collectively evaluated for impairment in the table above includes approximately $226 million of finance receivables within the retail loan portfolio segment that are specifically identified as impaired. These amounts are aggregated with their respective portfolio segments when determining the allowance for credit losses as of March 31, 2016, as they are deemed to be insignificant for individual evaluation and we have determined that the allowance for credit losses is not significant and would not be materially different if the amounts had been individually evaluated for impairment. The ending balance of finance receivables for the dealer products portfolio segment collectively evaluated for impairment as of March 31, 2016 includes $982 million in finance receivables which are guaranteed by Toyota Motor Sales, U.S.A., Inc. (“TMS”) and $136 million in finance receivables which are guaranteed by third party private Toyota distributors. These finance receivables are related to certain Toyota and Lexus dealers and other third parties to whom we provided financing at the request of TMS or such private distributors.

Note 6 – Allowance for Credit Losses (Continued)

	Year Ended March 31, 2015
	Retail Loan			Commercial			Dealer Products			Total
Beginning balance, April 1, 2014	$	296		$	2		$	88		$	386
Charge-offs		(273	)		(2	)		(1	)		(276	)
Recoveries		61			1			1			63
Provisions		215			1			20			236
Ending balance, March 31, 2015	$	299		$	2		$	108		$	409

Ending balance: Individually evaluated for impairment	$	-		$	-		$	55		$	55
Ending balance: Collectively evaluated for impairment	$	299		$	2		$	53		$	354

Finance Receivables:
Ending balance, March 31, 2015	$	50,302		$	521		$	15,744		$	66,567
Ending balance: Individually evaluated for impairment	$	-		$	-		$	360		$	360
Ending balance: Collectively evaluated for impairment	$	50,302		$	521		$	15,384		$	66,207

The ending balance of finance receivables collectively evaluated for impairment in the table above includes approximately $264 million of finance receivables within the retail loan portfolio segment that are specifically identified as impaired. These amounts are aggregated with their respective portfolio segments when determining the allowance for credit losses as of March 31, 2015, as they are deemed to be insignificant for individual evaluation and we have determined that the allowance for credit losses is not significant and would not be materially different if the amounts had been individually evaluated for impairment. The ending balance of finance receivables for the dealer products portfolio segment collectively evaluated for impairment as of March 31, 2015 includes $917 million in finance receivables which are guaranteed by TMS and $122 million in finance receivables which are guaranteed by third party private Toyota distributors. These finance receivables are related to certain Toyota and Lexus dealers and other third parties to whom we provided financing at the request of TMS or such private distributors.

Note 6 – Allowance for Credit Losses (Continued)

Past Due Finance Receivables and Investments in Operating Leases

The following table shows aggregate balances of finance receivables and investments in operating leases 60 or more days past due:

	March 31,		March 31,
	2016		2015
Aggregate balances 60 or more days past due
Finance receivables	$	189	$	153
Investments in operating leases		80		52
Total	$	269	$	205

Substantially all finance receivables and investments in operating leases do not involve recourse to the dealer in the event of customer default. Finance receivables and investments in operating leases 60 or more days past due include contracts in bankruptcy and contracts greater than 120 days past due, which are recorded at the fair value of collateral less estimated costs to sell. Contracts for which vehicles have been repossessed are excluded.

Past Due Finance Receivables by Class

The following tables summarize the aging of finance receivables by class:

	March 31, 2016
	30 - 59 Days Past Due		60 - 89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Current		Total Finance Receivables		90 Days or Greater Past Due and Accruing
Retail loan	$	584	$	129	$	60	$	773	$	49,590	$	50,363	$	35
Wholesale		-		-		-		-		9,262		9,262		-
Real estate		-		-		-		-		4,704		4,704		-
Working capital		-		-		-		-		1,933		1,933		-
Total	$	584	$	129	$	60	$	773	$	65,489	$	66,262	$	35

	March 31, 2015
	30 - 59 Days Past Due		60 - 89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Current		Total Finance Receivables		90 Days or Greater Past Due and Accruing
Retail loan	$	467	$	100	$	51	$	618	$	49,684	$	50,302	$	32
Commercial		8		2		-		10		511		521		-
Wholesale		-		-		-		-		9,226		9,226		-
Real estate		-		-		-		-		4,665		4,665		-
Working capital		-		-		-		-		1,853		1,853		-
Total	$	475	$	102	$	51	$	628	$	65,939	$	66,567	$	32