10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to _______________

Commission File Number 1-9961

TOYOTA MOTOR CREDIT CORPORATION

(Exact name of registrant as specified in its charter)

California	95-3775816
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
6565 Headquarters Drive Plano, Texas	75024
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code: (469) 486-9300

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Medium-Term Notes, Series B Stated Maturity Date January 11, 2028	TM/28	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.  See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     ☐    

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

As of October 31, 2019, the number of outstanding shares of capital stock, no par value per share, of the registrant was 91,500, all of which shares were held by Toyota Financial Services International Corporation.

Reduced Disclosure Format

The registrant meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this Form with the reduced disclosure format.

TOYOTA MOTOR CREDIT CORPORATION

FORM 10-Q

For the quarter ended September 30, 2019

INDEX
PART I	3
Item 1. Financial Statements	3
Consolidated Statements of Income	3
Consolidated Statements of Comprehensive Income	3
Consolidated Balance Sheets	4
Consolidated Statements of Shareholder’s Equity	5
Consolidated Statements of Cash Flows	6
Notes to Consolidated Financial Statements	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	44
Item 3. Quantitative and Qualitative Disclosures About Market Risk	69
Item 4. Controls and Procedures	69
PART II	70
Item 1. Legal Proceedings	70
Item 1A. Risk Factors	70
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	70
Item 3. Defaults Upon Senior Securities	70
Item 4. Mine Safety Disclosures	70
Item 5. Other Information	70
Item 6. Exhibits	71
Signatures	72

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

TOYOTA MOTOR CREDIT CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in millions)

(Unaudited)

	Three Months Ended				Six Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
Financing revenues:
Operating lease	$	2,197	$	2,167	$	4,381	$	4,293
Retail		638		547		1,227		1,082
Dealer		183		176		373		351
Total financing revenues		3,018		2,890		5,981		5,726
Depreciation on operating leases		1,583		1,662		3,208		3,428
Interest expense		613		702		1,310		1,384
Net financing revenues		822		526		1,463		914
Insurance earned premiums and contract revenues		232		226		461		450
Investment and other income, net		97		56		215		96
Net financing revenues and other revenues		1,151		808		2,139		1,460
Expenses:
Provision for credit losses		61		67		136		156
Operating and administrative		358		348		695		672
Insurance losses and loss adjustment expenses		115		112		228		237
Total expenses		534		527		1,059		1,065
Income before income taxes		617		281		1,080		395
Provision for income taxes		158		87		262		109
Net income	$	459	$	194	$	818	$	286

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in millions)

(Unaudited)

	Three Months Ended					Six Months Ended
	September 30,					September 30,
	2019			2018		2019			2018
Net income	$	459		$	194	$	818		$	286
Other comprehensive income (loss), net of tax:
Net unrealized gains (losses) on available-for-sale   marketable securities [net of tax provision   of ($2), ($1), ($5) and ($1), respectively]		6			1		16			(3	)
Reclassification adjustment for net (gains) losses on   available-for-sale marketable securities included in   investment and other income, net [net of tax provision of $0, $0, $0 and $0, respectively]		(1	)		1		(1	)		1
Other comprehensive income (loss)		5			2		15			(2	)
Comprehensive income	$	464		$	196	$	833		$	284

Refer to the accompanying Notes to Consolidated Financial Statements.

3

TOYOTA MOTOR CREDIT CORPORATION

CONSOLIDATED BALANCE SHEETS

(Dollars in millions except share data)

(Unaudited)

	September 30,		March 31,
	2019		2019
ASSETS
Cash and cash equivalents	$	2,664	$	2,198
Restricted cash and cash equivalents		941		985
Investments in marketable securities		3,452		2,908
Finance receivables, net		72,988		70,517
Investments in operating leases, net		37,687		37,927
Other assets		2,206		1,981
Total assets	$	119,938	$	116,516
LIABILITIES AND SHAREHOLDER’S EQUITY
Debt	$	95,093	$	92,922
Deferred income taxes		5,594		5,452
Other liabilities		4,840		4,564
Total liabilities		105,527		102,938
Commitments and contingencies (Refer to Note 9)
Shareholder’s equity:
Capital stock, no par value (100,000 shares authorized; 91,500 issued    and outstanding) at September 30, 2019 and March 31, 2019		915		915
Additional paid-in capital		2		2
Accumulated other comprehensive income		18		3
Retained earnings		13,476		12,658
Total shareholder's equity		14,411		13,578
Total liabilities and shareholder's equity	$	119,938	$	116,516

The following table presents the assets and liabilities of our consolidated variable interest entities (Refer to Note 8).

	September 30,		March 31,
	2019		2019
ASSETS
Finance receivables, net	$	12,272	$	11,075
Investments in operating leases, net		4,153		5,307
Other assets		117		192
Total assets	$	16,542	$	16,574
LIABILITIES
Debt	$	12,837	$	12,401
Other liabilities		11		12
Total liabilities	$	12,848	$	12,413

Refer to the accompanying Notes to Consolidated Financial Statements.

4

TOYOTA MOTOR CREDIT CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDER’S EQUITY

(Dollars in millions)

(Unaudited)

	Three Months Ended September 30, 2018
					Accumulated
			Additional		other
	Capital		paid-in		comprehensive			Retained
	stock		capital		(loss) income			earnings			Total
Balance at June 30, 2018	$	915	$	2	$	(21	)	$	11,962		$	12,858
Net income		-		-		-			194			194
Other comprehensive income, net of tax		-		-		2			-			2
Balance at September 30, 2018	$	915	$	2	$	(19	)	$	12,156		$	13,054
	Six Months Ended September 30, 2018
					Accumulated
			Additional		other
	Capital		paid-in		comprehensive			Retained
	stock		capital		(loss) income			earnings			Total
Balance at March 31, 2018	$	915	$	2	$	(29	)	$	11,992		$	12,880
Cumulative-effect of change in accounting policy		-		-		12			(122	)		(110	)
Net income		-		-		-			286			286
Other comprehensive loss, net of tax		-		-		(2	)		-			(2	)
Balance at September 30, 2018	$	915	$	2	$	(19	)	$	12,156		$	13,054

	Three Months Ended September 30, 2019
					Accumulated
			Additional		other
	Capital		paid-in		comprehensive		Retained
	stock		capital		income		earnings		Total
Balance at June 30, 2019	$	915	$	2	$	13	$	13,017	$	13,947
Net income		-		-		-		459		459
Other comprehensive income, net of tax		-		-		5		-		5
Balance at September 30, 2019	$	915	$	2	$	18	$	13,476	$	14,411
	Six Months Ended September 30, 2019
					Accumulated
			Additional		other
	Capital		paid-in		comprehensive		Retained
	stock		capital		income		earnings		Total
Balance at March 31, 2019	$	915	$	2	$	3	$	12,658	$	13,578
Net income		-		-		-		818		818
Other comprehensive income, net of tax		-		-		15		-		15
Balance at September 30, 2019	$	915	$	2	$	18	$	13,476	$	14,411

Refer to the accompanying Notes to Consolidated Financial Statements.

5

TOYOTA MOTOR CREDIT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in millions)

(Unaudited)

	Six Months Ended September 30,
	2019			2018
Cash flows from operating activities:
Net income	$	818		$	286
Adjustments to reconcile net income to net cash provided by operating    activities:
Depreciation and amortization		3,264			3,484
Recognition of deferred income		(1,230	)		(1,142	)
Provision for credit losses		136			156
Amortization of deferred costs		352			310
Foreign currency and other adjustments to the carrying value of debt, net		(411	)		(748	)
Net (gains) losses from investments in marketable securities		(90	)		41
Net change in:
Derivative assets		11			12
Other assets and accrued interest		(75	)		76
Deferred income taxes		137			81
Derivative liabilities		12			25
Other liabilities		121			167
Net cash provided by operating activities		3,045			2,748
Cash flows from investing activities:
Purchase of investments in marketable securities		(1,018	)		(798	)
Proceeds from sales of investments in marketable securities		183			71
Proceeds from maturities of investments in marketable securities		403			1,908
Acquisition of finance receivables		(15,483	)		(12,322	)
Collection of finance receivables		12,628			12,035
Net change in wholesale and certain working capital receivables		428			781
Acquisition of investments in operating leases		(8,521	)		(8,680	)
Disposals of investments in operating leases		6,285			5,808
Long term loans to affiliates		(100	)		(200	)
Payments on long term loans from affiliates		13			20
Other, net		(16	)		(19	)
Net cash used in investing activities		(5,198	)		(1,396	)
Cash flows from financing activities:
Proceeds from issuance of debt		11,101			15,032
Payments on debt		(10,269	)		(12,380	)
Net change in commercial paper		1,751			(2,029	)
Net change in financing support provided by affiliates		2			(3	)
Dividend paid		(10	)		-
Net cash provided by financing activities		2,575			620
Net increase in cash and cash equivalents and restricted cash and cash equivalents		422			1,972
Cash and cash equivalents and restricted cash and cash equivalents at the beginning of the period		3,183			4,759
Cash and cash equivalents and restricted cash and cash equivalents at the end of the period	$	3,605		$	6,731
Supplemental disclosures:
Interest paid, net	$	1,315		$	1,048
Income taxes paid, net	$	45		$	15

Refer to the accompanying Notes to Consolidated Financial Statements.

6

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 1 – Interim Financial Data

Basis of Presentation

The information furnished in these unaudited interim consolidated financial statements as of and for the three and six months ended September 30, 2019 and 2018 has been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”).  In the opinion of management, the unaudited consolidated financial information reflects all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the results for the interim periods presented.  The results of operations for the three and six months ended September 30, 2019 do not necessarily indicate the results which may be expected for the full fiscal year ending March 31, 2020 (“fiscal 2020”).

These financial statements should be read in conjunction with the Consolidated Financial Statements and Notes to Consolidated Financial Statements included in Toyota Motor Credit Corporation’s Annual Report on Form 10-K (“Form 10-K”) for the fiscal year ended March 31, 2019 (“fiscal 2019”), which was filed with the Securities and Exchange Commission on June 4, 2019.  References herein to “TMCC” denote Toyota Motor Credit Corporation, and references herein to “we”, “our”, and “us” denote Toyota Motor Credit Corporation and its consolidated subsidiaries.

Certain prior period amounts have been reclassified to conform to current period presentation.  Related party transactions are disclosed in Note 11 – Related Party Transactions.

Other Matters

On April 16, 2019, we announced that we will restructure our field operations over the next two years to better serve our dealer partners by streamlining our field office structure into three regional locations and investing in new technology.  Costs associated with this restructure are not expected to be significant.

TMCC has commenced preparations to launch private label finance services for third-party automotive and mobility companies.  In furtherance of this new business initiative, on August 28, 2019, we entered into an agreement with Mazda Motor of America, Inc. (“Mazda”) pursuant to which we will offer exclusive private label automotive retail, lease, and dealer financing products and services, and vehicle protection products and services, to Mazda customers and dealers in the United States, launching at various times through fiscal year 2021 for an initial term of approximately five years.  We intend to leverage our existing processes and personnel to service the newly originated assets, and we expect to make certain technology investments to support the Mazda program.  TMCC will not acquire any existing Mazda assets or liabilities pursuant to the agreement and we do not expect launch costs to be significant through fiscal year 2021.

7

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 1 – Interim Financial Data (Continued)

Recently Adopted Accounting Guidance

On April 1, 2019, we adopted the following new accounting standards:

Leases

We adopted Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) (“ASU 2016-02”), along with the subsequently issued guidance amending and clarifying various aspects of the new lease guidance, using the modified retrospective method.  In accordance with that method, the comparative period’s information has not been restated and continues to be reported under the lease accounting guidance in effect for that period.  We also elected to apply the package of practical expedients permitted under the transition guidance of the new standard which allowed us to not reassess our historical lease classification, initial direct costs, and whether or not contracts entered into prior to adoption are or contain leases.  As a lessor, the adoption of ASU 2016-02, did not have a significant impact on our financial statements.  As a lessee, the adoption of ASU 2016-02 added right-of-use (“ROU”) assets of $115 million and operating lease liabilities of $122 million, which are included in Other assets, and in Other liabilities, respectively, in our Consolidated Balance Sheet.  The adoption of this new guidance did not impact our Consolidated Statement of Income and did not result in a cumulative-effect adjustment to opening retained earnings.

Refer to Note 4 – Investments in Operating Leases, Net and Note 9 – Commitments and Contingencies for additional information.

Other Recently Adopted Standards

We adopted ASU 2017-08, Receivables – Nonrefundable Fees and Other Costs, which requires certain premiums on callable debt securities to be amortized to the earliest call date.  The adoption of this guidance did not have a material impact on our consolidated financial statements and related disclosures.

We adopted ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.  The adoption of this guidance did not have an impact on our consolidated financial statements and related disclosures as we no longer have hedge accounting derivatives.

In the second quarter of fiscal 2020, we adopted ASU 2019-07, Codification Updates to Securities and Exchange Commission (“SEC”) Sections – Amendments to SEC Paragraphs Pursuant to SEC Final Rule Releases No. 33-10532, “Disclosure Update and Simplification,” and Nos. 33-10231 and 33-10442, “Investment Company Reporting Modernization,” and Miscellaneous Updates.  This guidance was effective upon issuance in July 2019 and aligns the guidance in various SEC sections to the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) with the requirements of certain already effective SEC final rules.  While most of the amendments in this release eliminate outdated or duplicative disclosure requirements, the final rule release amends the interim financial statement requirements to include a reconciliation of changes in shareholder’s equity for each period for which an income statement is required to be filed.  We have disclosed the required information in the Consolidated Statements of Shareholder’s Equity.  The other eliminations or amendments did not have a material impact on our consolidated financial statements and related disclosures.

8

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 1 – Interim Financial Data (Continued)

Accounting Guidance Issued But Not Yet Adopted

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.  This guidance introduces a new impairment model based on expected losses rather than incurred losses for certain types of financial instruments.  It also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination.  The FASB subsequently issued guidance amending and clarifying aspects of the new impairment model.  This ASU is effective for us on April 1, 2020.  We are in the process of developing, refining and testing the models and procedures that will be used to calculate the credit loss reserves in accordance with this new accounting guidance.  We expect this new guidance will result in an increase in our allowance for credit losses with a cumulative-effect adjustment to our opening retained earnings in the period of adoption.  The magnitude of the increase in our allowance for credit losses is under evaluation.  We are currently evaluating the other potential impacts of this guidance on our consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), which modifies disclosure requirements related to fair value measurement.  This ASU is effective for us on April 1, 2020.  The adoption of this guidance will not have a material impact on our consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software, which aligns the accounting for costs incurred to implement a cloud computing arrangement that is a service arrangement with the guidance on capitalizing costs associated with developing or obtaining internal-use software.  This ASU is effective for us on April 1, 2020.  We are currently evaluating the potential impacts of this guidance on our consolidated financial statements and related disclosures.

In October 2018, the FASB issued ASU 2018-17, Consolidation (Topic 810), which requires indirect interests held through related parties in common control arrangements to be considered on a proportional basis for determining whether fees paid to decision makers and service providers are variable interests.  This ASU is effective for us on April 1, 2021.  The adoption of this guidance will not have a material impact on our consolidated financial statements and related disclosures.   

In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. The applicable provisions of this ASU are effective for us on April 1, 2020. We are currently evaluating the potential impacts of this guidance on our consolidated financial statements and related disclosures.

9

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 2 – Investments in Marketable Securities

Investments in marketable securities consist of debt securities and equity investments.  We classify all of our debt securities as available-for-sale.  All equity investments are recorded at fair value with changes in fair value included in Investment and other income, net within our Consolidated Statements of Income.

Investments in marketable securities consisted of the following:

	September 30, 2019
	Amortized		Unrealized		Unrealized		Fair
	cost		gains		losses		value
Available-for-sale debt securities:
U.S. government and agency obligations	$	196	$	8	$	-	$	204
Municipal debt securities		9		2		-		11
Certificates of deposit		150		-		-		150
Commercial paper		350		-		-		350
Corporate debt securities		164		10		-		174
Mortgage-backed securities:
U.S. government agency		32		1		-		33
Non-agency residential		1		-		-		1
Non-agency commercial		44		1		-		45
Asset-backed securities		79		2		-		81
Total available-for-sale debt securities	$	1,025	$	24	$	-	$	1,049
Equity investments							$	2,403
Total investments in marketable securities							$	3,452

	March 31, 2019
	Amortized		Unrealized		Unrealized			Fair
	cost		gains		losses			value
Available-for-sale debt securities:
U.S. government and agency obligations	$	213	$	2	$	(3	)	$	212
Municipal debt securities		9		2		-			11
Certificates of deposit		50		-		-			50
Commercial paper		70		-		-			70
Corporate debt securities		160		3		(1	)		162
Mortgage-backed securities:
U.S. government agency		35		-		-			35
Non-agency residential		1		-		-			1
Non-agency commercial		39		-		-			39
Asset-backed securities		52		1		-			53
Total available-for-sale debt securities	$	629	$	8	$	(4	)	$	633
Equity investments									2,275
Total investments in marketable securities								$	2,908

A portion of our equity investments are investments in funds that are privately placed and managed by an open-end investment management company (the “Trust”).  If we elect to redeem shares, the Trust will normally redeem all shares for cash, but may, in unusual circumstances, redeem amounts exceeding the lesser of $250 thousand or 1 percent of the Trust’s asset value by payment in kind of securities held by the respective fund during any 90-day period.

We also invest in actively traded open-end mutual funds.  Redemptions are subject to normal terms and conditions as described in each fund’s prospectus.

10

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 2 – Investments in Marketable Securities (Continued)

Unrealized Losses on Securities

Available-for-sale debt securities in a continuous loss position for less than twelve months and greater than twelve months were not significant as of September 30, 2019 and March 31, 2019.  

Gains and Losses on Securities

The following table represents gains and losses on our investments in marketable securities presented in our Consolidated Statements of Income:

	Three Months Ended					Six Months Ended
	September 30,					September 30,
	2019		2018			2019		2018
Available-for-sale debt securities:
Realized gains (losses)	$	1	$	(1	)	$	1	$	(1	)
Equity investments:
Unrealized gains (losses) recognized	$	31	$	(15	)	$	86	$	(40	)
Realized gains (losses) on sales	$	1	$	-		$	3	$	-

Contractual Maturities

The amortized cost and fair value, by contractual maturity of available-for-sale debt securities are summarized in the following table.  Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay certain obligations.

	September 30, 2019
	AmortizedCost		Fair Value
Available-for-sale debt securities:
Due within 1 year	$	542	$	542
Due after 1 year through 5 years		128		130
Due after 5 years through 10 years		124		131
Due after 10 years		75		86
Mortgage-backed and asset-backed securities1		156		160
Total	$	1,025	$	1,049

¹ Mortgage-backed and asset-backed securities are shown separately from other maturity groupings as these securities have multiple maturity dates.

11

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 3 – Finance Receivables, Net

Finance receivables, net consist of the retail loan and the dealer products portfolio segments, which includes accrued interest and deferred fees and costs, net of the allowance for credit losses and deferred income.  Finance receivables, net also includes securitized retail receivables, which represent retail receivables that have been sold for legal purposes to securitization trusts but continue to be included in our consolidated financial statements, as discussed further in Note 8 – Variable Interest Entities.  Cash flows from these securitized retail receivables are available only for the repayment of debt issued by these trusts and other obligations arising from the securitization transactions.  They are not available for payment of our other obligations or to satisfy claims of our other creditors.

Finance receivables, net consisted of the following:

	September 30,			March 31,
	2019			2019
Retail receivables	$	44,063		$	42,621
Securitized retail receivables		12,539			11,318
Dealer financing		17,331			17,696
		73,933			71,635
Deferred origination (fees) and costs, net		831			695
Deferred income		(1,271	)		(1,314	)
Allowance for credit losses
Retail and securitized retail receivables		(317	)		(304	)
Dealer financing		(188	)		(195	)
Total allowance for credit losses		(505	)		(499	)
Finance receivables, net	$	72,988		$	70,517

12

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 3 – Finance Receivables, Net (Continued)

Credit Quality Indicators

We are exposed to credit risk on our finance receivables.  Credit risk is the risk of loss arising from the failure of customers or dealers to meet the terms of their contracts with us or otherwise fail to perform as agreed.

Retail Loan Portfolio Segment

The retail loan portfolio segment consists of one class of finance receivables.  While we use various credit quality metrics to develop our allowance for credit losses on the retail loan portfolio segment, we primarily utilize the aging of the individual accounts to monitor the credit quality of these finance receivables.  Based on our experience, the payment status of borrowers is the strongest indicator of the credit quality of the underlying receivables.  Payment status also impacts charge-offs.

Individual borrower accounts within the retail loan portfolio segment are segregated into aging categories based on the number of days past due.  The aging for each class of finance receivables is updated monthly.

Dealer Products Portfolio Segment

For the three classes of finance receivables within the dealer products portfolio segment (wholesale, real estate and working capital), all loans outstanding for an individual dealer or dealer group, which includes affiliated entities, are aggregated and evaluated collectively by dealer or dealer group.  This reflects the interconnected nature of financing provided to our individual dealer and dealer group customers, and their affiliated entities.

When assessing the credit quality of the finance receivables within the dealer products portfolio segment, we segregate the finance receivables account balances into four categories representing distinct credit quality indicators based on internal risk assessments.  The internal risk assessments for all finance receivables within the dealer products portfolio segment are updated on a monthly basis.

The four credit quality indicators are:

• Performing – Account not classified as either Credit Watch, At Risk or Default;

• Credit Watch – Account designated for elevated attention;

• At Risk – Account where there is an increased likelihood that default may exist based on qualitative and quantitative factors; and

• Default – Account is not currently meeting contractual obligations or we have temporarily waived certain contractual requirements

The tables below present each credit quality indicator by class of finance receivables:

	Retail Loan
	September 30,		March 31,
	2019		2019
Aging of finance receivables:
Current	$	55,565	$	53,047
30-59 days past due		754		657
60-89 days past due		194		162
90 days or greater past due		89		73
Total	$	56,602	$	53,939

	Wholesale				Real Estate				Working Capital
	September 30,		March 31,		September 30,		March 31,		September 30,		March 31,
	2019		2019		2019		2019		2019		2019
Credit quality indicators:
Performing	$	8,992	$	9,155	$	4,152	$	4,019	$	2,548	$	2,448
Credit Watch		873		1,127		380		554		69		70
At Risk		126		152		83		84		60		63
Default		20		6		23		14		5		4
Total	$	10,011	$	10,440	$	4,638	$	4,671	$	2,682	$	2,585

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TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 3 – Finance Receivables, Net (Continued)

Past Due Finance Receivables by Class

Substantially all finance receivables do not involve recourse to the dealer in the event of customer default.  Finance receivables 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.

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

	September 30, 2019
	30 - 59 Days Past Due		60 - 89 Days Past Due		90Daysor Greater Past Due		TotalPast Due		Current		TotalFinance Receivables		90 Days or GreaterPast Due and Accruing
Retail loan	$	754	$	194	$	89	$	1,037	$	55,565	$	56,602	$	60
Wholesale		-		-		-		-		10,011		10,011		-
Real estate		-		1		-		1		4,637		4,638		-
Working capital		-		-		4		4		2,678		2,682		-
Total	$	754	$	195	$	93	$	1,042	$	72,891	$	73,933	$	60

	March 31, 2019
	30 - 59 Days Past Due		60 - 89 Days Past Due		90Daysor Greater Past Due		TotalPast Due		Current		TotalFinance Receivables		90Daysor GreaterPast Due and Accruing
Retail loan	$	657	$	162	$	73	$	892	$	53,047	$	53,939	$	47
Wholesale		-		-		1		1		10,439		10,440		-
Real estate		-		-		-		-		4,671		4,671		-
Working capital		-		-		4		4		2,581		2,585		-
Total	$	657	$	162	$	78	$	897	$	70,738	$	71,635	$	47

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TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 3 – Finance Receivables, Net (Continued)

Impaired Finance Receivables

The following table summarizes the information related to our impaired loans by class of finance receivables: 

	Impaired				Individually Evaluated
	Finance Receivables				Allowance
	September 30,		March 31,		September 30,		March 31,
	2019		2019		2019		2019
Impaired account balances individually evaluated for impairment with an allowance:
Wholesale	$	115	$	161	$	22	$	28
Real estate		101		93		10		11
Working capital		64		67		58		60
Total	$	280	$	321	$	90	$	99
Impaired account balances individually evaluated for impairment without an allowance:
Wholesale	$	161	$	130
Real estate		149		152
Working capital		20		20
Total	$	330	$	302
Impaired account balances aggregated and evaluated for impairment:
Retail loan	$	243	$	231
Total impaired account balances:
Retail loan	$	243	$	231
Wholesale		276		291
Real estate		250		245
Working capital		84		87
Total	$	853	$	854

The primary source of interest income recognized on the loans in the table above is from performing troubled debt restructurings within the dealer products portfolio segment.  Interest income on impaired finance receivables and interest income recognized using a cash-basis method of accounting during the three and six months ended September 30, 2019 and 2018 were not significant.  As of September 30, 2019 and March 31, 2019, the impaired finance receivables balance for accounts in the dealer products portfolio segment that were on nonaccrual status was $323 million and $329 million, respectively, and there were no charge-offs against the allowance for credit losses for these finance receivables.  Therefore, the impaired finance receivables balance is equal to the unpaid principal balance.  

As of September 30, 2019 and March 31, 2019, impaired finance receivables in the retail loan portfolio segment recorded at the fair value of the collateral less estimated selling costs were not significant and therefore excluded from the table above.  Refer to Note 5 – Allowance for Credit Losses for details related to the retail loan portfolio segment’s impaired account balances which are aggregated and evaluated for impairment when determining the allowance for credit losses.

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TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 3 – Finance Receivables, Net (Continued)

Troubled Debt Restructuring

For accounts not under bankruptcy protection, the amount of finance receivables modified as a troubled debt restructuring during the three and six months ended September 30, 2019 and 2018 was not significant for each class of finance receivables.  Troubled debt restructurings for accounts not under bankruptcy protection within the retail loan class of finance receivables are comprised exclusively of contract term extensions that reduce the monthly payment due from the customer.  For the three classes of finance receivables within the dealer products portfolio segment, troubled debt restructurings include contract term extensions, interest rate adjustments, waivers of loan covenants, or any combination of the three.  Troubled debt restructurings of accounts not under bankruptcy protection did not include forgiveness of principal or interest rate adjustments during the three and six months ended September 30, 2019 and 2018.

We consider finance receivables under bankruptcy protection within the retail loan class to be troubled debt restructurings as of the date we receive notice of a customer filing for bankruptcy protection, regardless of the ultimate outcome of the bankruptcy proceedings.  The bankruptcy court may impose modifications as part of the proceedings, including interest rate adjustments and forgiveness of principal.  For the three and six months ended September 30, 2019 and 2018, the financial impact of troubled debt restructurings related to finance receivables under bankruptcy protection was not significant to our Consolidated Statements of Income and Consolidated Balance Sheets. 

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TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 4 – Investments in Operating Leases, Net

In conjunction with the April 1, 2019 adoption of ASU 2016-02, Leases, as described in Note 1 – Interim Financial Data, we updated our accounting policies and disclosures below.

Investments in operating leases, net primarily consists of vehicle lease contracts acquired from dealers.  Generally, lessees have the ability to extend their lease term in six month increments up to a total of 12 months from the original lease maturity date.  A lease can be terminated at any time by satisfying the obligations under the lease contract.  Early termination programs may be occasionally offered to eligible lessees.  At the end of the lease, the customer has the option to buy the leased vehicle or return the vehicle to the dealer.  

Securitized investments in operating leases represent beneficial interests in a pool of certain vehicle leases that have been sold for legal purposes to securitization trusts but continue to be included in our consolidated financial statements as discussed further in Note 8 - Variable Interest Entities.  Cash flows from these securitized investments in operating leases are available only for the repayment of debt issued by these trusts and other obligations arising from the securitization transactions.  They are not available for payment of our other obligations or to satisfy claims of our other creditors.

Operating lease revenues are recognized on a straight-line basis over the term of the lease.  We have made an accounting policy election to exclude from the consideration in the contract, and from variable payments not included in the consideration in the contract, sales and other taxes assessed by a governmental authority that are both imposed on and concurrent with a specific lease revenue-producing transaction and collected from customers.  Deferred fees and costs, including incentive payments made to dealers and acquisition fees collected from customers, and payments received on affiliate sponsored subvention and other incentive programs are capitalized or deferred and amortized on a straight-line basis over the contract term.  The accrual of revenue on investments in operating leases is discontinued at the time an account is determined to be uncollectible and subsequent revenue is recognized only to the extent a payment is received.  Operating leases may be restored to accrual status when future payments are reasonably assured.  

Vehicle Lease Residual Values

Contractual residual values of vehicle lease contracts are estimated at lease inception by examining external industry data, the anticipated Toyota and Lexus product pipeline and our own experience.  Factors considered in this evaluation include, but are not limited to, economic forecasts, new vehicle pricing, new vehicle incentive programs, new vehicle sales, competitor actions and behavior, vehicle features and specifications, the mix and level of used vehicle supply, the level of current used vehicle values, buying and leasing behavior trends, and fuel prices.  We are exposed to a risk of loss to the extent the customer returns the vehicle and the value of the vehicle is lower than the residual value estimated at inception of the lease and if the number of returned vehicles is higher than anticipated.

Depreciation on operating leases is recognized using the straight-line method over the lease term.  The depreciable basis is the original acquisition cost of the vehicle less the estimated residual value of the vehicle at the end of the lease term.  On a quarterly basis, we review the estimated end-of-term market values and return rates of leased vehicles to assess the appropriateness of the carrying values at lease-end.  Factors affecting the estimated end-of-term market value are similar to those considered in the evaluation of residual values at lease inception discussed above.  Adjustments to depreciation expense to reflect revised estimates of expected market values at lease termination and revised return rates are recorded prospectively on a straight-line basis over the remaining lease term.

We use various channels to sell vehicles returned at lease-end. Upon disposition, a gain or loss is recorded for any difference between the net book value of the lease and the proceeds received from the disposition of the asset, including any insurance proceeds.

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TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 4 – Investments in Operating Leases, Net (Continued)

Investments in operating leases, net consisted of the following:

	September 30,			March 31,
	2019			2019
Investments in operating leases	$	43,908		$	42,869
Securitized investments in operating leases		5,913			7,532
		49,821			50,401
Deferred origination (fees) and costs, net		(236	)		(225	)
Deferred income		(2,170	)		(2,085	)
Accumulated depreciation		(9,647	)		(10,061	)
Allowance for credit losses		(81	)		(103	)
Investments in operating leases, net	$	37,687		$	37,927

Future minimum rentals on investments in operating leases are as follows:

Years ending March 31,	Future minimum rentals on operating leases
2020	$	3,291
2021		5,078
2022		2,754
2023		581
2024		37
Thereafter		1
Total	$	11,742

A portion of our operating lease contracts has historically terminated prior to maturity.  Future minimum rentals shown above should not be considered indicative of future cash collections.

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TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 5 – Allowance for Credit Losses

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

	Three Months Ended						Six Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Allowance for credit losses at beginning of period	$	605		$	600		$	602		$	597
Charge-offs		(106	)		(105	)		(208	)		(218	)
Recoveries		26			23			56			50
Provision for credit losses		61			67			136			156
Allowance for credit losses at end of period	$	586		$	585		$	586		$	585

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TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 5 – Allowance for Credit Losses (Continued)

Allowance for Credit Losses and Finance Receivables by Portfolio Segment

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

	Three Months Ended September 30, 2019
	Retail Loan			DealerProducts			Total
Allowance for Credit Losses for Finance Receivables:
Beginning balance, July 1, 2019	$	327		$	177		$	504
Charge-offs		(80	)		-			(80	)
Recoveries		13			-			13
Provision for credit losses		57			11			68
Ending balance, September 30, 2019	$	317		$	188		$	505
	Six Months Ended September 30, 2019
Allowance for Credit Losses for Finance Receivables:	Retail Loan			DealerProducts			Total
Beginning balance, April 1, 2019	$	304		$	195		$	499
Charge-offs		(152	)		-			(152	)
Recoveries		27			-			27
Provision for credit losses		138			(7	)		131
Ending balance, September 30, 2019	$	317		$	188		$	505
Ending balance: Individually evaluated for impairment	$	-		$	90		$	90
Ending balance: Collectively evaluated for impairment	$	317		$	98		$	415
Finance Receivables:
Ending balance, September 30, 2019	$	56,602		$	17,331		$	73,933
Ending balance: Individually evaluated for impairment	$	-		$	610		$	610
Ending balance: Collectively evaluated for impairment	$	56,602		$	16,721		$	73,323

The ending balance of finance receivables collectively evaluated for impairment in the above table includes approximately $243 million of finance receivables within the retail loan portfolio segment that are specifically identified as impaired.  These amounts are aggregated within their respective portfolio segment when determining the allowance for credit losses as of September 30, 2019, 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 September 30, 2019 includes $1,052 million in finance receivables that are guaranteed by Toyota Motor North America, Inc. (“TMNA”), and $131 million in finance receivables that 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 TMNA and third party private Toyota distributors.

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TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 5 – Allowance for Credit Losses (Continued)

	Three Months Ended September 30, 2018
	Retail Loan			DealerProducts			Total
Allowance for Credit Losses for Finance Receivables:
Beginning balance, July 1, 2018	$	313		$	150		$	463
Charge-offs		(76	)		-			(76	)
Recoveries		12			-			12
Provision for credit losses		58			(10	)		48
Ending balance, September 30, 2018	$	307		$	140		$	447
	Six Months Ended September 30, 2018
Allowance for Credit Losses for Finance Receivables:	Retail Loan			DealerProducts			Total
Beginning balance, April 1, 2018	$	312		$	151		$	463
Charge-offs		(151	)		-			(151	)
Recoveries		26			-			26
Provision for credit losses		120			(11	)		109
Ending balance, September 30, 2018	$	307		$	140		$	447
Ending balance: Individually evaluated for impairment	$	-		$	57		$	57
Ending balance: Collectively evaluated for impairment	$	307		$	83		$	390
Finance Receivables:
Ending balance, September 30, 2018	$	53,957		$	16,538		$	70,495
Ending balance: Individually evaluated for impairment	$	-		$	446		$	446
Ending balance: Collectively evaluated for impairment	$	53,957		$	16,092		$	70,049

The ending balance of finance receivables collectively evaluated for impairment in the above table includes approximately $216 million of finance receivables within the retail loan portfolio segment that are specifically identified as impaired.  These amounts are aggregated within their respective portfolio segment when determining the allowance for credit losses as of September 30, 2018, 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 September 30, 2018 includes $1,054 million in finance receivables that are guaranteed by TMNA, and $137 million in finance receivables that 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 TMNA and third party private Toyota distributors.

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TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 6 – Derivatives, Hedging Activities and Interest Expense

Derivative Instruments

Our liabilities consist mainly of fixed and variable rate debt, denominated in U.S. dollars and various other currencies, which we issue in the global capital markets, while our assets consist primarily of U.S. dollar denominated, fixed rate receivables.  We enter into interest rate swaps, interest rate floors, and foreign currency swaps to economically hedge the interest rate and foreign currency risks that result from the different characteristics of our assets and liabilities.  Our use of derivative transactions is intended to reduce long-term fluctuations in the fair value of assets and liabilities caused by market movements.  All of our derivative activities are authorized and monitored by our management and our Asset Liability Committee which provides a framework for financial controls and governance to manage market risk.    

Offsetting of Derivatives

The accounting guidance permits the net presentation on our Consolidated Balance Sheets of derivative receivables and derivative payables with the same counterparty and the related cash collateral when a legally enforceable master netting agreement exists.  When we meet this condition, we elect to present such balances on a net basis.  

Our International Swaps and Derivatives Association (“ISDA”) Master Agreements are our master netting agreements which permit multiple transactions to be cancelled and settled with a single net balance paid to either party.  The master netting agreements also contain reciprocal collateral agreements which require the transfer of cash collateral to the party in a net asset position across all transactions.  Our collateral agreements with substantially all our counterparties include a zero threshold, full collateralization arrangement.  Although we have daily valuation and collateral exchange arrangements with all of our counterparties, due to the time required to move collateral, there may be a delay of up to one day between the exchange of collateral and the valuation of our derivatives.  We would not be required to post additional collateral to the counterparties with whom we were in a net liability position at September 30, 2019 if our credit ratings were to decline, since we fully collateralize without regard to credit ratings with these counterparties.  In addition, as our collateral agreements include legal right of offset provisions, collateral amounts are netted against derivative assets or derivative liabilities, the net amount of which is included in Other assets or Other liabilities in our Consolidated Balance Sheets.

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TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 6 – Derivatives, Hedging Activities and Interest Expense (Continued)

Derivative Activity Impact on Financial Statements

The following tables show the financial statement line item and amount of our derivative assets and liabilities that are reported in our Consolidated Balance Sheets:

	September 30, 2019					March 31, 2019
			Fair					Fair
	Notional		value			Notional		value
Other assets:
Interest rate swaps	$	37,394	$	689		$	49,254	$	472
Foreign currency swaps		54		21			2,771		72
Total	$	37,448	$	710		$	52,025	$	544
Counterparty netting				(456	)				(441	)
Collateral held				(204	)				(42	)
Carrying value of derivative contracts – Other assets			$	50				$	61
Other liabilities:
Interest rate swaps	$	63,632	$	928		$	57,593	$	622
Foreign currency swaps		12,696		1,081			9,796		785
Total	$	76,328	$	2,009		$	67,389	$	1,407
Counterparty netting				(456	)				(441	)
Collateral posted				(1,515	)				(940	)
Carrying value of derivative contracts – Other liabilities			$	38				$	26

As of September 30, 2019, we held excess collateral of $1 million, which we did not use to offset derivative assets and was recorded in Other liabilities in our Consolidated Balance Sheets, and we posted excess collateral of $2 million, which we did not use to offset derivative liabilities and was recorded in Other assets in our Consolidated Balance Sheets.  As of March 31, 2019, we held excess collateral of $2 million, which we did not use to offset derivative assets and was recorded in Other liabilities in our Consolidated Balance Sheets and we posted excess collateral of $17 million, which we did not use to offset derivative liabilities and was recorded in Other assets in our Consolidated Balance Sheets.

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TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 6 – Derivatives, Hedging Activities and Interest Expense (Continued)

The following table summarizes the components of interest expense, including the location and amount of gains and losses on derivative instruments and related hedged items, as reported in our Consolidated Statements of Income:

	Three Months Ended						Six Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Interest expense on debt	$	639		$	637		$	1,294		$	1,238
Interest expense (income) on derivatives		37			(22	)		49			(47	)
Interest expense on debt and derivatives		676			615			1,343			1,191
Gains on debt denominated in foreign currencies		(475	)		(161	)		(460	)		(807	)
Losses on foreign currency swaps		474			172			366			855
(Gains) losses on U.S. dollar interest rate swaps		(62	)		76			61			145
Total interest expense	$	613		$	702		$	1,310		$	1,384

Interest expense on debt and derivatives represents net interest settlements and changes in accruals.  Gains and losses on derivatives and debt denominated in foreign currencies exclude net interest settlements and changes in accruals.  Cash flows associated with derivatives are reported in Net cash provided by operating activities in our Consolidated Statements of Cash Flows.

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TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 7 – Debt and Credit Facilities

Debt and the related weighted average contractual interest rates are summarized as follows:

	September 30, 2019							March 31, 2019
	Face Value		Carrying Value		Weighted average contractual interest rates			Face Value		Carrying Value		Weighted average contractual interest rates
Unsecured notes and loans payable	$	82,564	$	82,256		2.43	%	$	80,875	$	80,521		2.60	%
Secured notes and loans payable		12,863		12,837		2.50	%		12,421		12,401		2.62	%
Total debt	$	95,427	$	95,093		2.44	%	$	93,296	$	92,922		2.60	%

The carrying value of our debt includes unamortized premiums, discounts, debt issuance costs and the effects of foreign currency translation adjustments.  

Weighted average contractual interest rates are calculated based on original notional or par value before consideration of premium or discount and approximate the effective interest rates.  Debt is callable at par value.  

Unsecured Notes and Loans Payable

Our unsecured notes and loans payable consist of commercial paper and fixed and variable rate debt.  Short-term funding needs are met through the issuance of commercial paper in the U.S.  Amounts outstanding under our commercial paper programs were $27.0 billion and $25.3 billion as of September 30, 2019 and March 31, 2019, respectively.

Upon issuance of fixed rate debt, we generally elect to enter into pay-float swaps to convert fixed rate payments on debt to floating rate payments.  Certain unsecured notes and loans payable are denominated in various foreign currencies.  The debt is translated into U.S. dollars using the applicable exchange rate at the transaction date and retranslated at each balance sheet date using the exchange rate in effect at that date.  Concurrent with the issuance of these foreign currency unsecured notes and loans payable, we enter into currency swaps in the same notional amount to convert non-U.S. currency payments to U.S. dollar denominated payments.  Gains and losses related to foreign currency transactions are included in Interest expense in our Consolidated Statements of Income.  

Certain of our unsecured notes and loans payable contain covenants and conditions customary in transactions of this nature, including negative pledge provisions, cross-default provisions and limitations on certain consolidations, mergers and sales of assets.  We are currently in compliance with these covenants and conditions.  

Secured Notes and Loans Payable

Our secured notes and loans payable are denominated in U.S. dollars and consist of both fixed and variable rate debt.  Secured notes and loans payable are issued using on-balance sheet securitization trusts, as further discussed in Note 8 – Variable Interest Entities.  These notes are repayable only from collections on the underlying securitized retail finance receivables and the beneficial interests in investments in operating leases and from related credit enhancements.

In June 2019, we completed an offering of secured notes under a new revolving asset-backed securitization program, backed by a revolving pool of finance receivables and cash collateral. Cash flows from these receivables during the revolving period in excess of what is needed to pay certain expenses of the securitization trust and contractual interest payments on the related secured notes may be used to purchase additional receivables, provided that certain conditions are met following the purchase.  The secured notes feature a scheduled five year revolving period, with the ability to repay the secured notes in full, after which an amortization period begins. The revolving period may also end with the amortization period beginning upon the occurrence of certain events that include certain segregated account balances falling below their required levels, credit losses or delinquencies on the pool of assets supporting the notes exceeding specified levels, the adjusted pool balance falling to less than 50% of the initial principal amount of the secured notes, or interest not being paid on the secured notes.

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TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 7 – Debt and Credit Facilities (Continued)

Credit Facilities and Letters of Credit

For additional liquidity purposes, we maintain credit facilities as described below:

364 Day Credit Agreement, Three Year Credit Agreement and Five Year Credit Agreement

In November 2018, TMCC, Toyota Credit de Puerto Rico Corp. (“TCPR”) and other Toyota affiliates entered into a $5.0 billion 364 day syndicated bank credit facility, a $5.0 billion three year syndicated bank credit facility and a $5.0 billion five year syndicated bank credit facility, expiring in fiscal 2020, 2022, and 2024, respectively.

The ability to make draws is subject to covenants and conditions customary in transactions of this nature, including negative pledge provisions, cross-default provisions and limitations on certain consolidations, mergers and sales of assets.  These agreements may be used for general corporate purposes and none were drawn upon as of September 30, 2019 and March 31, 2019.  We are currently in compliance with the covenants and conditions of the credit agreements described above.

Other Unsecured Credit Agreements

TMCC has entered into additional unsecured credit facilities with various banks.  As of September 30, 2019, TMCC had committed bank credit facilities totaling $5.5 billion, of which $2.3 billion, $650 million, $2.1 billion and $475 million mature in fiscal 2020, 2021, 2022, and 2023, respectively.

These credit agreements contain covenants and conditions customary in transactions of this nature, including negative pledge provisions, cross-default provisions and limitations on certain consolidations, mergers and sales of assets.  These credit facilities were not drawn upon as of September 30, 2019 and March 31, 2019. We are currently in compliance with the covenants and conditions of the credit agreements described above.

TMCC is party to a $5.0 billion three year revolving credit facility with Toyota Motor Sales U.S.A., Inc. expiring in fiscal 2022.  This credit facility may be used for general corporate purposes and was not drawn upon as of September 30, 2019.  Any amounts drawn on this credit facility would be recorded in Other liabilities on our Consolidated Balance Sheets.

From time to time, we may borrow from affiliates based upon a number of business factors such as funds availability, cash flow timing, relative cost of funds, and market access capabilities.  Any amounts borrowed from affiliates would be recorded in Other liabilities on our Consolidated Balance Sheets.

26

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 8 – Variable Interest Entities

Consolidated Variable Interest Entities

We use one or more special purpose entities that are considered Variable Interest Entities (“VIEs”) to issue asset-backed securities to third party bank-sponsored asset-backed securitization vehicles and to investors in securitization transactions.  The securities issued by these VIEs are backed by the cash flows related to retail finance receivables and beneficial interests in investments in operating leases (“Securitized Assets”).  We hold variable interests in the VIEs that could potentially be significant to the VIEs.  We determined that we are the primary beneficiary of the securitization trusts because (i) our servicing responsibilities for the Securitized Assets give us the power to direct the activities that most significantly impact the performance of the VIEs, and (ii) our variable interests in the VIEs give us the obligation to absorb losses and the right to receive residual returns that could potentially be significant.

The following tables show the assets and liabilities related to our VIE securitization transactions that were included in our Consolidated Balance Sheets:

	September 30, 2019
			VIE Assets				VIE Liabilities
			Net
	Restricted Cash		Securitized Assets		Other Assets		Debt		Other Liabilities
Retail finance receivables	$	669	$	12,272	$	6	$	10,337	$	9
Investments in operating leases		272		4,153		111		2,500		2
Total	$	941	$	16,425	$	117	$	12,837	$	11

	March 31, 2019
			VIE Assets				VIE Liabilities
			Net
	Restricted Cash		Securitized Assets		Other Assets		Debt		Other Liabilities
Retail finance receivables	$	630	$	11,075	$	6	$	9,202	$	10
Investments in operating leases		355		5,307		186		3,199		2
Total	$	985	$	16,382	$	192	$	12,401	$	12

Restricted Cash, including cash equivalents, shown in the table above represents collections from the underlying Gross Securitized Assets shown in the table above and certain reserve deposits held by TMCC for the VIEs and is included as part of Restricted cash and cash equivalents on our Consolidated Balance Sheets.  Net Securitized Assets shown in the table above are presented net of deferred fees and costs, deferred income, accumulated depreciation and the allowance for credit losses.  Other Assets represent used vehicles held-for-sale that were repossessed by or returned to TMCC for the benefit of the VIEs.  The related debt of these consolidated VIEs is presented net of $1,520 million and $1,486 million of securities retained by TMCC at September 30, 2019 and March 31, 2019, respectively.  Other Liabilities represents accrued interest on the debt of the consolidated VIEs.

The assets of the VIEs and the restricted cash and cash equivalents held by TMCC serve as the sole source of repayment for the asset-backed securities issued by these entities.  Investors in the notes issued by the VIEs do not have recourse to us or our other assets, with the exception of customary representation and warranty repurchase provisions and indemnities.

As the primary beneficiary of these entities, we are exposed to credit, residual value, interest rate, and prepayment risk from the Securitized Assets in the VIEs.  However, our exposure to these risks did not change as a result of the transfer of the assets to the VIEs.  We may also be exposed to interest rate risk arising from the secured notes issued by the VIEs.

In addition, we are party to interest rate swaps with certain special purpose entities that issue variable rate debt.  Under the terms of these swaps, the special purpose entities are obligated to pay TMCC a fixed rate of interest on certain payment dates in exchange for receiving a floating rate of interest on notional amounts equal to the outstanding balance of the secured debt.  This arrangement enables the special purpose entities to mitigate the interest rate risk inherent in issuing variable rate debt that is secured by fixed rate Securitized Assets.

27

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 8 – Variable Interest Entities (Continued)

The transfers of the Securitized Assets to the special purpose entities in our securitizations are considered to be sales for legal purposes.  However, the Securitized Assets and the related debt remain on our Consolidated Balance Sheets.  We recognize financing revenue on the Securitized Assets and interest expense on the secured debt issued by the special purpose entities.  We also maintain an allowance for credit losses on the Securitized Assets to cover estimated probable credit losses using a methodology consistent with that used for our non-securitized asset portfolio.  The interest rate swaps between TMCC and the special purpose entities are considered intercompany transactions and therefore are eliminated in our consolidated financial statements.

Non-consolidated Variable Interest Entities

We provide lending to Toyota and Lexus dealers through the Toyota Dealer Investment Group’s Dealer Capital Program (“TDIG Program”) operated by our affiliate TMNA, which has an equity interest in these dealerships.  Dealers participating in this program have been determined to be VIEs.  We do not consolidate the dealerships in this program as we are not the primary beneficiary and any exposure to loss is limited to the amount of the credit facility.  Amounts due from these dealers under the TDIG Program that are classified as Finance receivables, net in our Consolidated Balance Sheets as of September 30, 2019 and March 31, 2019 and revenues earned from these dealers for the three and six months ended September 30, 2019 and 2018 were not significant. 

We also have other lending relationships, which have been determined to be VIEs, but these relationships are not consolidated as we are not the primary beneficiary.  Amounts due and revenues earned under these relationships as of and for the three and six months ended September 30, 2019 and 2018 were not significant.

28

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 9 – Commitments and Contingencies

Commitments and Guarantees

We have entered into certain commitments and guarantees for which the maximum unfunded amounts are summarized in the table below:

	September 30,		March 31,
	2019		2019
Commitments:
Credit facilities commitments with dealers	$	1,391	$	1,378
Commitments under operating lease agreements		119		144
Total commitments		1,510		1,522
Guarantees of affiliate pollution control and solid waste disposal bonds		100		100
Total commitments and guarantees	$	1,610	$	1,622

Wholesale financing is not considered to be a contractual commitment as the arrangements are not binding arrangements under which TMCC is required to perform.

Lease Commitments

We have a lease agreement through August 2032, with TMNA for our headquarters facility in Plano, Texas.  Total operating lease expense, including payments to affiliates, was $18 million for the six months ended September 30, 2019.  Commitments under operating lease agreements in the table above include $76 million and $97 million for facility leases with affiliates at September 30, 2019 and March 31, 2019, respectively.

Our remaining operating lease portfolio consists primarily of real estate leases. Lease terms may contain renewal and extension options or early termination features. Generally, these options do not impact the lease term because TMCC is not reasonably certain that it will exercise the options. These lease agreements do not impose restrictions on our ability to pay dividends, engage in debt or equity financing transactions or enter into further lease agreements, nor do they have residual value guarantees. We exclude from our Consolidated Balance Sheets leases with a term equal to one year or less and do not separate non-lease components from our real estate leases.

Our commitments under operating lease agreements are summarized below:

Years ending March 31,	Amounts due on operating lease liabilities as of  September 30, 2019			Future minimum lease payments as of  March 31, 2019
2020 1	$	11		$	22
2021		20			19
2022		21			20
2023		13			12
2024		11			10
Thereafter		62			61
Total	$	138		$	144
Present value discount		(19	)
Total operating lease liability	$	119

¹ Amounts due on operating lease liabilities as of September 30, 2019 excludes the amounts incurred for the six months ended September 30, 2019.

Operating lease liabilities and ROU assets are recognized at the lease commencement date based on the present value of the future minimum lease payments over the lease term.As the interest rate implicit in the lease contract is typically not readily determinable, we utilize our incremental borrowing rate.

29

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 9 – Commitments and Contingencies (Continued)

The following table provides additional information related to operating lease agreements for which we are the lessee:

	September 30,
	2019
ROU assets	$	112
Lease liabilities	$	119
Weighted average remaining lease term (in years)	9.53
Weighted average discount rate	3.10%

Commitments

We provide fixed and variable rate working capital loans, revolving lines of credit, and real estate financing to dealers and various multi-franchise organizations referred to as dealer groups for facilities construction and refurbishment, working capital requirements, real estate purchases, business acquisitions and other general business purposes.  These loans are typically secured with liens on real estate, vehicle inventory, and/or other dealership assets, as appropriate, and may be guaranteed by individual or corporate guarantees of affiliated dealers, dealer groups, or dealer principals.  Although the loans are typically collateralized or guaranteed, the value of the underlying collateral or guarantees may not be sufficient to cover our exposure under such agreements.  Our pricing reflects market conditions, the competitive environment, the level of support dealers provide our retail, lease and insurance business and the credit worthiness of each dealer.  Amounts drawn under these facilities are reviewed for collectability on a quarterly basis, in conjunction with our evaluation of the allowance for credit losses.  We have also extended credit facilities to affiliates as described in Note 12 – Related Party Transactions in our fiscal 2019 Form 10-K.

Guarantees and Other Contingencies

TMCC has guaranteed bond obligations totaling $100 million in principal that were issued by Putnam County, West Virginia and Gibson County, Indiana to finance the construction of pollution control facilities at manufacturing plants of certain TMCC affiliates.  The bonds mature in the following fiscal years ending March 31: 2028 - $20 million; 2029 - $50 million; 2030 - $10 million; 2031 - $10 million; and 2032 - $10 million.  TMCC would be required to perform under the guarantees in the event of non-payment on the bonds and other related obligations.  TMCC is entitled to reimbursement by the applicable affiliates for any amounts paid.  TMCC receives a nominal annual fee for guaranteeing such payments.  TMCC has not been required to perform under any of these affiliate bond guarantees as of September 30, 2019 and March 31, 2019.

Indemnification

In the ordinary course of business, we enter into agreements containing indemnification provisions standard in the industry related to several types of transactions, including, but not limited to, debt funding, derivatives, securitization transactions, and our vendor and supplier agreements.  Performance under these indemnities would occur upon a breach of the representations, warranties or covenants made or given, or a third party claim. In addition, we have agreed in certain debt and derivative issuances, and subject to certain exceptions, to gross-up payments due to third parties in the event that withholding tax is imposed on such payments.  In addition, certain of our funding arrangements may require us to pay lenders for increased costs due to certain changes in laws or regulations.  Due to the difficulty in predicting events which could cause a breach of the indemnification provisions or trigger a gross-up or other payment obligation, we are not able to estimate our maximum exposure to future payments that could result from claims made under such provisions.  We have not made any material payments in the past as a result of these provisions, and as of September 30, 2019, we determined that it is not probable that we will be required to make any material payments in the future.  As of September 30, 2019 and March 31, 2019, no amounts have been recorded under these indemnification provisions.

30

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 9 – Commitments and Contingencies (Continued)

Litigation and Governmental Proceedings

Various legal actions, governmental proceedings and other claims are pending or may be instituted or asserted in the future against us with respect to matters arising in the ordinary course of business.  Certain of these actions are or purport to be class action suits, seeking sizeable damages and/or changes in our business operations, policies and practices.  Certain of these actions are similar to suits that have been filed against other financial institutions and captive finance companies.  In addition, we are subject to governmental and regulatory examinations, information-gathering requests, and investigations from time to time at the state and federal levels.  It is inherently difficult to predict the course of such legal actions and governmental inquiries.  

We perform periodic reviews of pending claims and actions to determine the probability of adverse verdicts and resulting amounts of liability.  We establish accruals for legal claims when payments associated with the claims become probable and the costs can be reasonably estimated.  When we are able, we also determine estimates of reasonably possible loss or range of loss, whether in excess of any related accrued liability or where there is no accrued liability.  Given the inherent uncertainty associated with legal matters, the actual costs of resolving legal claims and associated costs of defense may be substantially higher or lower than the amounts for which accruals have been established.  Based on available information and established accruals, we do not believe it is reasonably possible that the results of these proceedings, either individually or in the aggregate, will have a material adverse effect on our consolidated financial condition or results of operations.

31

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 10 – Income Taxes

Our effective tax rate was 26 percent and 24 percent for the three and six months ended September 30, 2019, compared to 31 percent and 28 percent for the same periods in fiscal 2019.  Our provision for income taxes was $158 million and $262 million for the three and six months ended September 30, 2019, compared to $87 million and $109 million for the same periods in fiscal 2019.  The increase in the provision for income taxes for the three and six months ended September 30, 2019 was primarily due to the increase in our income before taxes compared to the same periods in fiscal 2019.  The decrease in the effective tax rate for the three and six months ended September 30, 2019 compared to the same periods in fiscal 2019, was primarily due to state tax law changes taking effect in this fiscal year.

Tax-related Contingencies

As of September 30, 2019, we remain under IRS examination for fiscal 2020, 2019 and 2018.  

We periodically review our uncertain tax positions.  Our assessment is based on many factors including any ongoing IRS audits.  For the three months ended September 30, 2019, our assessment did not result in a material change in unrecognized tax benefits.

Our deferred tax assets were $1.4 billion and $2.9 billion at September 30, 2019 and March 31, 2019, respectively, and were primarily due to the deferred deduction of allowance for credit losses and residual value losses and federal tax loss carryforward which has no expiration.  The total deferred tax liability, net of these deferred tax assets, was $5.6 billion and $5.5 billion at September 30, 2019 and March 31, 2019, respectively.  Realization with respect to the federal tax loss carryforward is dependent on generating sufficient income.  Although realization is not assured, management believes it is more likely than not that the deferred tax assets will be realized.  The amount of the deferred tax assets considered realizable could be reduced if management’s estimates change.

32

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 11 – Related Party Transactions

In conjunction with the April 1, 2019 adoption of ASU 2016-02, Leases, as described in Note 1 – Interim Financial Data, we recorded ROU assets and lease liabilities, which include amounts for facility leases with affiliates.  As of September 30, 2019, the amounts for both affiliate related ROU assets and lease liabilities were $76 million.

Except for the transaction mentioned above, as of September 30, 2019, there were no other material changes to our related party agreements or relationships as described in our fiscal 2019 Form 10-K.  The tables below show the financial statement line items and amounts included in our Consolidated Statements of Income and in our Consolidated Balance Sheets under various related party agreements or relationships:

	Three Months Ended						Six Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Net financing revenues:
Manufacturer's subvention and other revenues	$	508		$	467		$	1,020		$	934
Depreciation on operating leases	$	(13	)	$	(5	)	$	(23	)	$	(10	)
Interest expense:
Credit support fees, interest and other expenses	$	24		$	24		$	48		$	49
Insurance earned premiums and contract revenues:
Insurance premiums and contract revenues	$	45		$	44		$	90		$	89
Investment and other income, net:
Interest and other income	$	6		$	2		$	12		$	4
Expenses:
Operating and administrative expenses	$	21		$	24		$	42		$	47
Insurance losses and loss adjustment expenses1	$	-		$	(1	)	$	-		$	(3	)

¹ Amount includes the transfer of insurance losses and loss adjustment expenses under a reinsurance contract.

33

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 11 – Related Party Transactions (Continued)

	September 30,			March 31,
	2019			2019
Assets:
Investments in marketable securities
Commercial paper	$	350		$	70
Finance receivables, net
Accounts receivable	$	111		$	150
Deferred retail subvention income	$	(1,207	)	$	(1,257	)
Investments in operating leases, net
Investments in operating leases, net	$	(51	)	$	1
Deferred lease subvention income	$	(2,147	)	$	(2,062	)
Other assets
Notes receivable	$	688		$	601
Other receivables, net	$	94		$	11
Liabilities:
Other liabilities
Unearned affiliate insurance premiums and contract revenues	$	339		$	337
Other payables, net	$	226		$	147
Notes payable	$	18		$	16

TMCC receives subvention payments from TMNA which results in a gross monthly subvention receivable.  As of September 30, 2019 and March 31, 2019, the subvention receivable from TMNA was $190 million and $171 million, respectively.  We have a master netting agreement with TMNA which allows us to net settle payments for shared services and subvention transactions.  Under this agreement we had a net amount payable to TMNA, which resulted in the subvention receivable being recorded in Other payables, net in Other liabilities as of September 30, 2019 and March 31, 2019.

34

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 12 – Fair Value Measurements

Recurring Fair Value Measurements

Financial assets and financial liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.  The following tables summarize our financial assets and financial liabilities measured at fair value on a recurring basis by level within the fair value hierarchy except for certain investments that are measured at fair value using the net asset value per share (or its equivalent) as a practical expedient and are excluded from the leveling information provided in the tables below.  Fair value amounts presented below are intended to permit reconciliation of the fair value hierarchy to the amounts presented in our Consolidated Balance Sheets.  

	September 30, 2019
								Counterparty
								netting &			Fair
	Level 1		Level 2			Level 3		collateral			value
Investments in marketable securities:
Available-for-sale debt securities:
U.S. government and agency obligations	$	202	$	2		$	-	$	-		$	204
Municipal debt securities		-		11			-		-			11
Certificates of deposit		-		150			-		-			150
Commercial paper		-		350			-		-			350
Corporate debt securities		-		174			-		-			174
Mortgage-backed securities:
U.S. government agency		-		33			-		-			33
Non-agency residential		-		-			1		-			1
Non-agency commercial		-		-			45		-			45
Asset-backed securities		-		-			81		-			81
Available-for-sale debt securities total		202		720			127		-			1,049
Equity investments:
Fixed income mutual funds:
Fixed income mutual funds measured at    net asset value												725
Total return bond funds		1,678		-			-		-			1,678
Equity investments total		1,678		-			-		-			2,403
Investments in marketable securities total		1,880		720			127		-			3,452
Derivative assets:
Interest rate swaps		-		689			-		-			689
Foreign currency swaps		-		21			-		-			21
Counterparty netting and collateral		-		-			-		(660	)		(660	)
Derivative assets total		-		710			-		(660	)		50
Assets at fair value		1,880		1,430			127		(660	)		3,502
Derivative liabilities:
Interest rate swaps		-		(928	)		-		-			(928	)
Foreign currency swaps		-		(1,081	)		-		-			(1,081	)
Counterparty netting and collateral		-		-			-		1,971			1,971
Liabilities at fair value		-		(2,009	)		-		1,971			(38	)
Net assets at fair value	$	1,880	$	(579	)	$	127	$	1,311		$	3,464

35

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 12 – Fair Value Measurements (Continued)

	March 31, 2019
								Counterparty
								netting &			Fair
	Level 1		Level 2			Level 3		collateral			value
Investments in marketable securities:
Available-for-sale debt securities:
U.S. government and agency obligations	$	194	$	18		$	-	$	-		$	212
Municipal debt securities		-		11			-		-			11
Certificates of deposit		-		50			-		-			50
Commercial paper		-		70			-		-			70
Corporate debt securities		-		162			-		-			162
Mortgage-backed securities:
U.S. government agency		-		35			-		-			35
Non-agency residential		-		-			1		-			1
Non-agency commercial		-		-			39		-			39
Asset-backed securities		-		-			53		-			53
Available-for-sale debt securities total		194		346			93		-			633
Equity investments:
Fixed income mutual funds:
Fixed income mutual funds measured at    net asset value												689
Total return bond funds		1,586		-			-		-			1,586
Equity investments total		1,586		-			-		-			2,275
Investments in marketable securities total		1,780		346			93		-			2,908
Derivative assets:
Interest rate swaps		-		471			1		-			472
Foreign currency swaps		-		72			-		-			72
Counterparty netting and collateral		-		-			-		(483	)		(483	)
Derivative assets total		-		543			1		(483	)		61
Assets at fair value		1,780		889			94		(483	)		2,969
Derivative liabilities:
Interest rate swaps		-		(622	)		-		-			(622	)
Foreign currency swaps		-		(785	)		-		-			(785	)
Counterparty netting and collateral		-		-			-		1,381			1,381
Liabilities at fair value		-		(1,407	)		-		1,381			(26	)
Net assets at fair value	$	1,780	$	(518	)	$	94	$	898		$	2,943

36

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 12 – Fair Value Measurements (Continued)

Transfers between levels of the fair value hierarchy are recognized at the end of their respective reporting periods.  Transfers between levels of the fair value hierarchy during the three and six months ended September 30, 2019 and 2018 resulted from changes in the transparency of inputs and were not significant.

The following tables summarize the rollforward of all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs:

	Three Months Ended September 30, 2019
											Total net
									Derivative		assets
	Available-for-sale debt securities								instruments, net		(liabilities)
						Total
	Mortgage-		Asset-			available-			Interest
	backed		backed			for-sale debt			rate
	securities		securities			securities			swaps
Fair value, July 1, 2019	$	41	$	66		$	107		$	-	$	107
Total gains (losses)
Included in net income		-		-			-			-		-
Included in other comprehensive income		-		-			-			-		-
Purchases, issuances, sales, and settlements
Purchases		5		19			24			-		24
Issuances		-		-			-			-		-
Sales		-		-			-			-		-
Settlements		-		(4	)		(4	)		-		(4	)
Transfers in to Level 3		-		-			-			-		-
Transfers out of Level 3		-		-			-			-		-
Fair value, September 30, 2019	$	46	$	81		$	127		$	-	$	127
The amount of total gains   (losses) included in net income   attributable to assets held   at the reporting date									$	-	$	-

	Three Months Ended September 30, 2018
												Total net
									Derivative			assets
	Available-for-sale debt securities								instruments, net			(liabilities)
						Total
	Mortgage-		Asset-			available-			Interest
	backed		backed			for-sale debt			rate
	securities		securities			securities			swaps
Fair value, July 1, 2018	$	25	$	38		$	63		$	(23	)	$	40
Total gains (losses)
Included in net income		-		-			-			(10	)		(10	)
Included in other comprehensive income		-		-			-			-			-
Purchases, issuances, sales, and settlements
Purchases		5		18			23			-			23
Issuances		-		-			-			-			-
Sales		-		(4	)		(4	)		-			(4	)
Settlements		-		(6	)		(6	)		(26	)		(32	)
Transfers in to Level 3		-		-			-			-			-
Transfers out of Level 3		-		-			-			-			-
Fair value, September 30, 2018	$	30	$	46		$	76		$	(59	)	$	17
The amount of total gains   (losses) included in net income   attributable to assets held   at the reporting date									$	(10	)	$	(10	)

37

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 12 – Fair Value Measurements (Continued)

	Six Months Ended September 30, 2019
												Total net
									Derivative			assets
	Available-for-sale debt securities								instruments, net			(liabilities)
						Total
	Mortgage-		Asset-			available-			Interest
	backed		backed			for-sale debt			rate
	securities		securities			securities			swaps
Fair value, April 1, 2019	$	40	$	53		$	93		$	1		$	94
Total gains (losses)
Included in net income		-		-			-			18			18
Included in other comprehensive income		1		1			2			-			2
Purchases, issuances, sales, and settlements
Purchases		5		34			39			-			39
Issuances		-		-			-			-			-
Sales		-		-			-			-			-
Settlements		-		(7	)		(7	)		6			(1	)
Transfers in to Level 3		-		-			-			-			-
Transfers out of Level 3		-		-			-			(25	)		(25	)
Fair value, September 30, 2019	$	46	$	81		$	127		$	-		$	127
The amount of total gains   (losses) included in net income   attributable to assets held   at the reporting date									$	18		$	18

	Six Months Ended September 30, 2018
													Total net
										Derivative			assets
	Available-for-sale debt securities									instruments, net			(liabilities)
							Total
	Mortgage-			Asset-			available-			Interest
	backed			backed			for-sale debt			rate
	securities			securities			securities			swaps
Fair value, April 1, 2018	$	31		$	39		$	70		$	(21	)	$	49
Total gains (losses)
Included in net income		-			-			-			(18	)		(18	)
Included in other comprehensive income		-			-			-			-			-
Purchases, issuances, sales, and settlements
Purchases		5			20			25			-			25
Issuances		-			-			-			-			-
Sales		-			(4	)		(4	)		-			(4	)
Settlements		(6	)		(9	)		(15	)		(20	)		(35	)
Transfers in to Level 3		-			-			-			-			-
Transfers out of Level 3		-			-			-			-			-
Fair value, September 30, 2018	$	30		$	46		$	76		$	(59	)	$	17
The amount of total gains   (losses) included in net   income attributable to   assets held at the   reporting date										$	(18	)	$	(18	)

38

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 12 – Fair Value Measurements (Continued)

Nonrecurring Fair Value Measurements

Nonrecurring fair value measurements include Level 3 net finance receivables that are not measured at fair value on a recurring basis, but are subject to fair value adjustments utilizing the fair value of the underlying collateral when there is evidence of impairment. We did not have any significant nonrecurring fair value items as of September 30, 2019 and March 31, 2019.

Level 3 Fair Value Measurements

The Level 3 financial assets and liabilities recorded at fair value which are subject to recurring and nonrecurring fair value measurement, and the corresponding change in the fair value measurements of these assets and liabilities, were not significant to our Consolidated Balance Sheets or Consolidated Statements of Income as of and for the three and six months ended September 30, 2019 and as of and for the year ended March 31, 2019.

39

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 12 – Fair Value Measurements (Continued)

Financial Instruments

The following tables provide information about assets and liabilities not carried at fair value on a recurring basis on our Consolidated Balance Sheets:

	September 30, 2019
	Carrying								Total Fair
	value		Level 1		Level 2		Level 3		Value
Financial assets
Finance receivables, net
Retail loan	$	55,842	$	-	$	-	$	56,665	$	56,665
Wholesale		9,892		-		-		9,977		9,977
Real estate		4,575		-		-		4,676		4,676
Working capital		2,567		-		-		2,593		2,593
Financial liabilities
Unsecured notes and loans payable	$	82,256	$	-	$	82,110	$	1,575	$	83,685
Secured notes and loans payable		12,837		-		-		12,954		12,954

	March 31, 2019
	Carrying								Total Fair
	value		Level 1		Level 2		Level 3		Value
Financial assets
Finance receivables, net
Retail loan	$	53,013	$	-	$	-	$	53,247	$	53,247
Wholesale		10,293		-		-		10,369		10,369
Real estate		4,550		-		-		4,534		4,534
Working capital		2,510		-		-		2,554		2,554
Financial liabilities
Unsecured notes and loans payable	$	80,521	$	-	$	79,056	$	2,313	$	81,369
Secured notes and loans payable		12,401		-		-		12,428		12,428

The carrying value of each class of finance receivables includes accrued interest and deferred fees and costs, net of deferred income and the allowance for credit losses.  Finance receivables, net, excludes related party transactions, for which the fair value approximates the carrying value, of $109 million and $148 million at September 30, 2019 and March 31, 2019, respectively.  Fair values of related party finance receivables, net are classified as Level 3 of the fair value hierarchy.

For Cash and cash equivalents and Restricted cash and cash equivalents on our Consolidated Balance Sheets, the fair value approximates the carrying value and these instruments are classified as Level 1 of the fair value hierarchy.  

40

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 13 – Segment Information

Financial information for our reportable operating segments is summarized as follows:

	Three Months Ended September 30, 2019
	Finance		Insurance		Intercompany
	operations		operations		eliminations			Total
Total financing revenues	$	3,018	$	-	$	-		$	3,018
Depreciation on operating leases		1,583		-		-			1,583
Interest expense		619		-		(6	)		613
Net financing revenues		816		-		6			822
Insurance earned premiums and contract revenues		-		232		-			232
Investment and other income, net		38		65		(6	)		97
Net financing and other revenues		854		297		-			1,151
Expenses:
Provision for credit losses		61		-		-			61
Operating and administrative expenses		268		90		-			358
Insurance losses and loss adjustment expenses		-		115		-			115
Total expenses		329		205		-			534
Income before income taxes		525		92		-			617
Provision for income taxes		136		22		-			158
Net income	$	389	$	70	$	-		$	459
	Six Months Ended September 30, 2019
	Finance		Insurance		Intercompany
	operations		operations		eliminations			Total
Total financing revenues	$	5,981	$	-	$	-		$	5,981
Depreciation on operating leases		3,208		-		-			3,208
Interest expense		1,322		-		(12	)		1,310
Net financing revenues		1,451		-		12			1,463
Insurance earned premiums and contract revenues		-		461		-			461
Investment and other income, net		75		152		(12	)		215
Net financing and other revenues		1,526		613		-			2,139
Expenses:
Provision for credit losses		136		-		-			136
Operating and administrative expenses		514		181		-			695
Insurance losses and loss adjustment expenses		-		228		-			228
Total expenses		650		409		-			1,059
Income before income taxes		876		204		-			1,080
Provision for income taxes		212		50		-			262
Net income	$	664	$	154	$	-		$	818
Total assets at September 30, 2019	$	115,714	$	5,414	$	(1,190	)	$	119,938

41

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 13 – Segment Information(Continued)

	Three Months Ended September 30, 2018
	Finance		Insurance		Intercompany
	operations		operations		eliminations			Total
Total financing revenues	$	2,890	$	-	$	-		$	2,890
Depreciation on operating leases		1,662		-		-			1,662
Interest expense		707		-		(5	)		702
Net financing revenues		521		-		5			526
Insurance earned premiums and contract revenues		-		226		-			226
Investment and other income, net		51		10		(5	)		56
Net financing and other revenues		572		236		-			808
Expenses:
Provision for credit losses		67		-		-			67
Operating and administrative expenses		262		86		-			348
Insurance losses and loss adjustment expenses		-		112		-			112
Total expenses		329		198		-			527
Income before income taxes		243		38		-			281
Provision for income taxes		77		10		-			87
Net income	$	166	$	28	$	-		$	194
	Six Months Ended September 30, 2018
	Finance		Insurance		Intercompany
	operations		operations		eliminations			Total
Total financing revenues	$	5,726	$	-	$	-		$	5,726
Depreciation on operating leases		3,428		-		-			3,428
Interest expense		1,394		-		(10	)		1,384
Net financing revenues		904		-		10			914
Insurance earned premiums and contract revenues		-		450		-			450
Investment and other income, net		99		7		(10	)		96
Net financing and other revenues		1,003		457		-			1,460
Expenses:
Provision for credit losses		156		-		-			156
Operating and administrative expenses		503		169		-			672
Insurance losses and loss adjustment expenses		-		237		-			237
Total expenses		659		406		-			1,065
Income before income taxes		344		51		-			395
Provision for income taxes		96		13		-			109
Net income	$	248	$	38	$	-		$	286
Total assets at September 30, 2018	$	117,265	$	4,955	$	(1,160	)	$	121,060

42

TOYOTA MOTOR CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions)

(Unaudited)

Note 13 – Segment Information (Continued)

Insurance operations – Revenue Recognition

For the three and six months ended September 30, 2019 and 2018, approximately 84 percent of Insurance earned premiums and contract revenues in the Insurance operations segment were accounted for under the guidance for revenue from contracts with customers.

The Insurance operations segment defers contractually determined incentives paid to dealers as contract costs for selling vehicle and payment protection products.  These costs are recorded in Other assets on our Consolidated Balance Sheets and are amortized to Operating and administrative expenses on the Consolidated Statements of Income using a methodology consistent with the recognition of revenue.  The amount of capitalized dealer incentives and the related amortization was not significant to our consolidated financial statements as of and for the three and six months ended September 30, 2019 and 2018.

We had $2.2 billion of unearned insurance premiums and contract revenues from contracts with customers included in Other liabilities on our Consolidated Balance Sheets as of April 1, 2019 and April 1, 2018, respectively.  We recognized $121 million and $303 million of these balances in Insurance earned premiums and contract revenues in our Consolidated Statements of Income during the three and six months ended September 30, 2019, compared to $178 million and $345 million recognized during the same periods in fiscal 2019.  At September 30, 2019, we had unearned insurance premiums and contract revenues of $2.3 billion included in Other liabilities on our Consolidated Balance Sheets, and with respect to this balance we expect to recognize revenue of $362 million during fiscal 2020, and $1.9 billion thereafter.  At September 30, 2018 we had unearned insurance premiums and contract revenues of $2.2 billion associated with outstanding contracts.

43

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Statement Regarding Forward-Looking Information

Certain statements contained in this Form 10-Q are “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  These statements are based on current expectations and currently available information.  However, since these statements are based on factors that involve risks and uncertainties, our performance and results may differ materially from those described or implied by such forward-looking statements.  Words such as “believe,” “anticipate,” “expect,” “estimate,” “project,” “should,” “intend,” “will,” “may” or words or phrases of similar meaning are intended to identify forward-looking statements.  We caution that the forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause actual results to differ materially from those in the forward-looking statements, including, without limitation, the risk factors set forth in “Item 1A. Risk Factors” of our Annual Report on Form 10-K (“Form 10-K”) for the fiscal year ended March 31, 2019 (“fiscal 2019”), including the following:

• Changes in general business, economic, and geopolitical conditions, including trade policy, as well as in consumer demand and the competitive environment in the automotive markets in the United States;

• A decline in Toyota Motor North America, Inc. (“TMNA”) sales volume and the level of TMNA sponsored subvention, cash, and contractual residual value support incentive programs;

• Increased competition from other financial institutions seeking to increase their share of financing Toyota and Lexus vehicles;

• Changes in consumer behavior;

• Recalls announced by TMNA and the perceived quality of Toyota and Lexus vehicles;

• Availability and cost of financing;

• Changes in our credit ratings and those of Toyota Motor Corporation (“TMC”);

• Changes in our financial position and liquidity, or changes or disruptions in our funding sources or access to the global capital markets;

• Revisions to the estimates and assumptions for our allowance for credit losses;

• Flaws in the design, implementation and use of quantitative models and revisions to the estimates and assumptions that are used to determine the value of certain assets;

• Fluctuations in the value of our investment securities or market prices;

• Changes to existing, or adoption of new, accounting standards;

• Changes in prices of used vehicles and their effect on residual values of our off-lease vehicles and return rates;

• Failure of our customers or dealers to meet the terms of any contract with us, or otherwise perform as agreed;

• Fluctuations in interest rates and foreign currency exchange rates;

• Failure or interruption in our operations, including our communications and information systems, or as a result of our failure to retain existing or to attract new key personnel;

• A security breach or a cyber-attack;

• Failure to maintain compliant enterprise data practices, including the collection, use, sharing, and security of personally identifiable and financial information of our customers and employees;

• Failure or changes in commercial soundness of our counterparties and other financial institutions;

• Insufficient establishment of reserves, or the failure of a reinsurer to meet its obligations, in our insurance operations;

• Compliance with current laws and regulations or becoming subject to more stringent laws, regulatory requirements and regulatory scrutiny; and

• Natural disasters, changes in fuel prices, manufacturing disruptions and production suspensions of Toyota and Lexus vehicles and related parts supply.

Forward-looking statements speak only as of the date they are made.  We will not update the forward-looking statements to reflect actual results or changes in the factors affecting the forward-looking statements.

44

OVERVIEW

Key Performance Indicators and Factors Affecting Our Business

In our finance operations, we generate revenue, income, and cash flows by providing retail, lease, and dealer financing to dealers and their customers.  We measure the performance of our finance operations using the following metrics: financing volume, market share, financing margins, operating and administrative expense, residual value and credit loss metrics.

In our insurance operations, we generate revenue primarily through marketing, underwriting, and providing claims administration for products that cover certain risks of dealers and their customers.  We measure the performance of our insurance operations using the following metrics: issued agreement volume, average number of agreements in force, loss metrics and investment income.

Our financial results are affected by a variety of economic and industry factors including, but not limited to, new and used vehicle markets, Toyota and Lexus sales volume, new vehicle incentive programs, consumer behavior, employment levels, our ability to respond to changes in interest rates with respect to both contract pricing and funding, the actual or perceived quality, safety or reliability of Toyota and Lexus vehicles, the financial health of the dealers we finance, and competitive pressure.  Our financial results may also be affected by the regulatory environment in which we operate, including as a result of new legislation or changes in regulation and any compliance costs or changes we may be required to make to our business practices.  All of these factors can influence consumer contract and dealer financing volume, the number of consumer contracts and dealers that default and the loss per occurrence, our inability to realize originally estimated contractual residual values on leased vehicles, the volume and performance of our insurance operations, and our gross margins on consumer and dealer financing volume.  Changes in the volume of vehicle sales, sales of our insurance and vehicle and payment protection products, or the level of insurance losses could materially and adversely impact our insurance operations.  Additionally, our funding programs and related costs are influenced by changes in the global capital markets, prevailing interest rates, and our credit ratings and those of our parent companies, which may affect our ability to obtain cost effective funding to support earning asset growth.

45

Fiscal 2020 First Six Months Operating Environment

During the first half of the fiscal year ending March 31, 2020 (“fiscal 2020”), the United States (“U.S.”) economy continued to expand.  The unemployment rate remained at historically low levels and consumer confidence remained at historically high levels, however in recent months wage growth slowed.  Uncertainties surrounding geopolitical events, trade policy, the future path of U.S. monetary policy, and caution by global central banks continue to impact the outlook for future economic growth.  In addition, student and auto related debt balances and delinquencies remained at high levels and represented a larger portion of the consumer debt mix.  Changes in the economy that adversely impact the consumer, such as higher interest rates, elevated debt levels and an increase in unemployment from the current low levels could adversely impact our results of operations in the future.  

Industry-wide vehicle sales and sales incentives in the U.S. were relatively consistent during the first half of fiscal 2020 as compared to the same period in fiscal 2019.  Despite lower levels of subvention, our financing volume increased 11 percent and our market share increased 5 percentage points for the first half of fiscal 2020, compared to the same period in fiscal 2019, as a result of other cash incentive and competitive rate programs.

Used vehicle values for Toyota and Lexus vehicles remained relatively consistent in the first half of fiscal 2020, compared to the same period in fiscal 2019.  Declines in used vehicle values resulting from increases in the supply of used vehicles, increases in new vehicle sales incentives and a larger lease portfolio resulting in higher future maturities could unfavorably impact return rates, residual values, depreciation expense and credit losses in the future.

We continue to maintain broad global access to both domestic and international markets.  Conditions in the global capital markets were generally stable during the first half of fiscal 2020.  However, uncertainty regarding geopolitical events, trade policy, and the future path of U.S. monetary policy led to instances of volatility during the period.  Future changes in interest rates in the U.S. and foreign markets could result in volatility in our interest expense, which could affect our results of operations.

46

RESULTS OF OPERATIONS

The following table summarizes total net income by our reportable operating segments:

	Three Months Ended				Six Months Ended
	September 30,				September 30,
(Dollars in millions)	2019		2018		2019		2018
Net income:
Finance operations1	$	389	$	166	$	664	$	248
Insurance operations1		70		28		154		38
Total net income	$	459	$	194	$	818	$	286

¹ Refer to Note 13 - Segment Information of the Notes to Consolidated Financial Statements for the total asset balances of our finance and insurance operations.

Our consolidated net income was $818 million and $459 million for the first half and second quarter of fiscal 2020 compared to $286 million and $194 million for the same periods in fiscal 2019.  The increase in net income for the first half of fiscal 2020, compared to the same period in fiscal 2019, was primarily due to a $255 million increase in total financing revenues, a $220 million decrease in depreciation on operating leases, a $119 million increase in investment and other income, net, a $74 million decrease in interest expense, partially offset by a $153 million increase in provision for income taxes.  The increase in net income for the second quarter of fiscal 2020, compared to the same period in fiscal 2019, was primarily due to a $128 million increase in total financing revenues, $89 million decrease in interest expense, a $79 million decrease in depreciation on operating leases, a $41 million increase in investment and other income, net, partially offset by a $71 million increase in provision for income taxes.

Our overall capital position increased $0.8 billion, bringing total shareholder’s equity to $14.4 billion at September 30, 2019 as compared to $13.6 billion at March 31, 2019.  Our debt increased to $95.1 billion at September 30, 2019 from $92.9 billion at March 31, 2019.  Our debt-to-equity ratio decreased to 6.6 at September 30, 2019 from 6.8 at March 31, 2019.

47

Finance Operations

The following table summarizes key results of our finance operations:

	Three Months Ended							Six Months Ended
	September 30,				Percentage			September 30,				Percentage
(Dollars in millions)	2019		2018		Change			2019		2018		Change
Financing revenues:
Operating lease	$	2,197	$	2,167		1	%	$	4,381	$	4,293		2	%
Retail		638		547		17	%		1,227		1,082		13	%
Dealer		183		176		4	%		373		351		6	%
Total financing revenues		3,018		2,890		4	%		5,981		5,726		4	%
Depreciation on operating leases		1,583		1,662		(5	)%		3,208		3,428		(6	)%
Interest expense		619		707		(12	)%		1,322		1,394		(5	)%
Net financing revenues		816		521		57	%		1,451		904		61	%
Investment in other income, net		38		51		(25	)%		75		99		(24	)%
Net financing and other revenues		854		572		49	%		1,526		1,003		52	%
Expenses:
Provision for credit losses		61		67		(9	)%		136		156		(13	)%
Operating and administrative expenses		268		262		2	%		514		503		2	%
Total expenses		329		329		-	%		650		659		(1	)%
Income before income taxes		525		243		116	%		876		344		155	%
Provision for income taxes		136		77		77	%		212		96		121	%
Net income from finance operations	$	389	$	166		134	%	$	664	$	248		168	%

Our finance operations reported net income of $664 million and $389 million for the first half and second quarter of fiscal 2020, respectively, compared to $248 million and $166 million for the same periods in fiscal 2019.  The increase in net income from finance operations for the first half of fiscal 2020, compared to the same period in fiscal 2019, was primarily due to a $255 million increase in total financing revenues, a $220 million decrease in depreciation on operating leases, and a $72 million decrease in interest expense, partially offset by a $116 million increase in provision for income taxes.  The increase in net income from finance operations for the second quarter of fiscal 2020, compared to the same period in fiscal 2019 was primarily due to a $128 million increase in total financing revenues, a $88 million decrease in interest expense, and a $79 million decrease in depreciation on operating leases, partially offset by a $59 million increase in provision for income taxes.  

Financing Revenues

Total financing revenues increased 4 percent during both the first half and second quarter of fiscal 2020 as compared to the same periods in fiscal 2019 due to the following:

• Operating lease revenues increased 2 percent and 1 percent in the first half and second quarter of fiscal 2020 as compared to the same periods in fiscal 2019 due to higher portfolio yields.    

• Retail financing revenues increased 13 percent and 17 percent in the first half and second quarter of fiscal 2020 as compared to the same periods in fiscal 2019 due to higher portfolio yields as well as higher average outstanding earning asset balances.

• Dealer financing revenues increased 6 percent and 4 percent in the first half and second quarter of fiscal 2020 as compared to the same periods in fiscal 2019, primarily due to higher portfolio yields.

As a result of the above, our total portfolio yield, which includes operating lease, retail and dealer financing revenues, increased to 4.9 percent and 5.0 percent for the first half and second quarter of fiscal 2020, respectively, compared to 4.2 percent and 4.5 percent for the same periods in fiscal 2019.

48

Depreciation on Operating Leases

We reported depreciation on operating leases of $3,208 million and $1,583 million during the first half and second quarter of fiscal 2020, respectively, compared to $3,428 million and $1,662 million for the same periods in fiscal 2019. The decrease in depreciation expense during the first half and second quarter of fiscal 2020 as compared to the same periods in fiscal 2019 was primarily due to lower expectations of residual value losses on our more recent originations and lower average operating lease units outstanding.

49

Interest Expense

Our liabilities consist mainly of fixed and variable rate debt, denominated in U.S. dollars and various other currencies, which we issue in the global capital markets, while our assets consist primarily of U.S. dollar denominated, fixed rate receivables.  We enter into interest rate swaps, interest rate floors and foreign currency swaps to economically hedge the interest rate and foreign currency risks that result from the different characteristics of our assets and liabilities.  The following table summarizes the components of interest expense:

	Three Months Ended						Six Months Ended
	September 30,						September 30,
(Dollars in millions)	2019			2018			2019			2018
Interest expense on debt	$	639		$	637		$	1,294		$	1,238
Interest expense (income) on derivatives		37			(22	)		49			(47	)
Interest expense on debt and derivatives		676			615			1,343			1,191
Gains on debt denominated in foreign currencies		(475	)		(161	)		(460	)		(807	)
Losses on foreign currency swaps		474			172			366			855
(Gains) losses on U.S. dollar interest rate swaps		(62	)		76			61			145
Total interest expense	$	613		$	702		$	1,310		$	1,384

During the first half and second quarter of fiscal 2020, total interest expense decreased to $1,310 million and $613 million, respectively, from $1,384 million and $702 million, respectively, for the same periods in fiscal 2019. The decrease in total interest expense for the first half of fiscal 2020 compared to the same period in fiscal 2019 is primarily attributable to gains on foreign currency swaps net of debt denominated in foreign currencies and lower losses on U.S. dollar interest rate swaps partially offset by an increase in interest expense on debt and derivatives. The decrease in total interest expense for the second quarter of fiscal 2020 compared to the same period in fiscal 2019 is primarily attributable to gains on U.S. dollar interest rate swaps partially offset by increase in interest expense on debt and derivatives.

Interest expense on debt and derivatives primarily represents contractual net interest settlements and changes in accruals on secured and unsecured notes and loans payable, derivatives, and includes amortization of discounts, premiums, and debt issuance costs.  Interest expense on debt and derivatives in the first half and second quarter of fiscal 2020 increased to $1,343 million and $676 million, respectively, from $1,191 million and $615 million, respectively, in the same periods in fiscal 2019 due to higher weighted average interest rates.

Gains or losses on debt denominated in foreign currencies represent the impact of translation adjustments.  We use foreign currency swaps to economically hedge the debt denominated in foreign currencies. During the first half and second quarter of fiscal 2020, we recorded net gains of $94 million and $1 million, respectively, primarily as a result of decreases in foreign currency swap rates across the various currencies in which our debt is denominated.  During the first half of fiscal 2019, we recorded net losses of $48 million, as losses on our foreign currency swaps were partially offset by gains on our debt denominated in foreign currencies primarily as a result of increases in foreign currency swap rates across the various currencies in which our debt is denominated.  During the second quarter of fiscal 2019, we recorded net losses of $11 million, as losses on our foreign currency swaps were largely offset by gains on our debt denominated in foreign currencies primarily as a result of offsetting foreign currency swap rates across the various currencies in which our debt is denominated.

Gains or losses on U.S. dollar interest rate swaps represent the change in the valuation of interest rate swaps. During the first half of fiscal 2020, we recorded losses of $61 million, as losses on our higher notional, shorter-term pay-fixed swaps exceeded gains on our longer-term pay-float swaps, primarily as a result of decreases in U.S. dollar swap rates.  During the second quarter of fiscal 2020, we recorded gains of $62 million, as gains on our longer-term pay-float swaps exceeded losses on our shorter-term pay fixed swaps, primarily as a result of decreases in U.S. dollar swap rates, particularly on the longer tenors.  During the first half and second quarter of fiscal 2019, we recorded losses of $145 million and $76 million, respectively, with the majority of losses attributable to our pay-float swaps, primarily as a result of increases in U.S. dollar swap rates.

Future changes in interest and foreign currency exchange rates could continue to result in significant volatility in our interest expense, thereby affecting our results of operations.

50

Investment and Other Income, Net

We recorded investment and other income, net of $75 million and $38 million for the first half and second quarter of fiscal 2020, respectively, compared to $99 million and $51 million for the same periods in fiscal 2019.  The decrease in investment and other income, net for the first half and second quarter of fiscal 2020, compared to the same periods in fiscal 2019, was primarily due to a decrease in our marketable securities portfolio for the first half and second quarter of fiscal 2020, compared to the same periods in fiscal 2019.

Provision for Credit Losses

We recorded a provision for credit losses of $136 million and $61 million for the first half and second quarter of fiscal 2020, respectively, compared to $156 million and $67 million for the same periods in fiscal 2019. The decrease in the provision for credit losses for the first half and second quarter of fiscal 2020, compared to the same period in fiscal 2019, was primarily driven by favorable credit loss experience due to a continued focus on late stage collection activities.

Operating and Administrative Expenses

We recorded operating and administrative expenses of $514 million and $268 million for the first half and second quarter of fiscal 2020, respectively, compared to $503 million and $262 million for the same periods in fiscal 2019.

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Insurance Operations

The following table summarizes key results of our insurance operations:

	Three Months Ended							Six Months Ended
	September 30,				Percentage			September 30,				Percentage
	2019		2018		Change			2019		2018		Change
Agreements (units in thousands)
Issued		692		645		7	%		1,348		1,280		5	%
Average in force		9,436		8,918		6	%		9,371		8,828		6	%
(Dollars in millions)
Insurance earned premiums and contract   revenues	$	232	$	226		3	%	$	461	$	450		2	%
Investment and other income, net		65		10		550	%		152		7		2071	%
Revenues from insurance operations		297		236		26	%		613		457		34	%
Expenses:
Insurance losses and loss adjustment   expenses		115		112		3	%		228		237		(4	)%
Operating and administrative expenses		90		86		5	%		181		169		7	%
Total expenses		205		198		4	%		409		406		1	%
Income before income taxes		92		38		142	%		204		51		300	%
Provision for income taxes		22		10		120	%		50		13		285	%
Net income from insurance operations	$	70	$	28		150	%	$	154	$	38		305	%

Our insurance operations reported net income of $154 million and $70 million for the first half and second quarter of fiscal 2020, respectively, compared to $38 million and $28 million for the same periods in fiscal 2019.  The increase in net income from insurance operations for the first half of fiscal 2020, compared to same period in fiscal 2019, was primarily due to $145 million increase in investment and other income, net, partially offset by a $37 million increase in provision for income taxes.The increase in net income from insurance operations for the second quarter of fiscal 2020, compared to the same period in fiscal 2019, was primarily due to a $55 million increase in investment and other income, net,partially offset by a $12 million increase in provision for income taxes.

Agreements issued increased 5 percent and 7 percent for the first half and second quarter of fiscal 2020, compared to the same periods in fiscal 2019, primarily due to increased sales of certified pre-owned warranties, prepaid maintenance agreements, and vehicle services agreements.  The average number of agreements in force increased 6 percent for the first half and second quarter of fiscal 2020, compared to the same periods in fiscal 2019, due to insurance portfolio growth in recent years, most notably in guaranteed auto protection agreements, prepaid maintenance agreements, and tire and wheel protection agreements.  

Revenue from Insurance Operations

Our insurance operations reported insurance earned premiums and contract revenues of $461 million and $232 million for the first half and second quarter of fiscal 2020, compared to $450 million and $226 million for the same periods in fiscal 2019.  Insurance earned premiums and contract revenues represent revenues from in force agreements and are affected by issuances as well as the level, age, and mix of in force agreements.  Insurance earned premiums and contract revenues are recognized over the term of the agreements in relation to the timing and level of anticipated claims.  The increase in insurance earned premiums and contract revenues in the first half and second quarter of fiscal 2020, compared to the same periods in fiscal 2019, was primarily due to insurance portfolio growth in recent years.

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Investment and Other Income, Net

Our insurance operations reported investment and other income, net of $152 million and $65 million for the first half and second quarter of fiscal 2020, respectively, compared to $7 million and $10 million for the same periods in fiscal 2019.  Investment and other income, net, consists primarily of dividend and interest income, realized gains and losses on investments in marketable securities, changes in fair value from equity investments, and other-than-temporary impairment on available-for-sale debt securities, if any.  The increase in investment and other income, net in the first half and second quarter of fiscal 2020, compared to the same periods in fiscal 2019, was primarily due to increased gains from changes in fair value of equity investments.  

Insurance Losses and Loss Adjustment Expenses

Our insurance operations reported insurance losses and loss adjustment expenses of $228 million and $115 million for the first half and second quarter of fiscal 2020, respectively, compared to $237 million and $112 million for the same periods in fiscal 2019.  Insurance losses and loss adjustment expenses incurred are a function of the amount of covered risks, the frequency and severity of claims associated with in force agreements and the level of risk retained by our insurance operations.  Insurance losses and loss adjustment expenses include amounts paid and accrued for reported losses, estimates of losses incurred but not reported, and any related claim adjustment expenses. The decrease in insurance losses and loss adjustment expenses in the first half of fiscal 2020, compared to the same period in fiscal 2019, was primarily due to the previously disclosed termination of the wholesale inventory program in September 2018.  The increase in insurance losses and loss adjustment expenses in the second quarter of fiscal 2020, compared to the same period in fiscal 2019, was primarily due to insurance portfolio growth in recent years.

Operating and Administrative Expenses

Our insurance operations reported operating and administrative expenses of $181 million and $90 million for the first half and second quarter of fiscal 2020, respectively, compared to $169 million and $86 million for the same periods in fiscal 2019.  The increase in operating and administrative expenses in the first half and second quarter of fiscal 2020, compared to the same periods in fiscal 2019, was primarily attributable to higher dealer back-end program expenses as well as higher product expenses driven by the continued growth of our insurance business.  Insurance dealer back-end program expenses are incentives or expense reduction programs we provide to dealers based on certain performance criteria.  

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Provision for Income Taxes

Our overall provision for income taxes was $262 million and $158 million for the first half and second quarter of fiscal 2020, respectively, compared to $109 million and $87 million for the same periods in fiscal 2019.  Our effective tax rate was 24 percent and 26 percent for the first half and second quarter of fiscal 2020, compared to 28 percent and 31 percent for the same periods in fiscal 2019. The increase in the provision for income taxes for the first half and second quarter of fiscal 2020, was primarily due to the increase in our income before tax compared to the same periods in fiscal 2019.  The decrease in the effective tax rate for the first half and second quarter of fiscal 2020, compared to the same periods in fiscal 2019, was primarily due to state tax law changes taking effect in this fiscal year.

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FINANCIAL CONDITION

Vehicle Financing Volume and Net Earning Assets

The composition of our vehicle contract volume and market share is summarized below:

	Three Months Ended									Six Months Ended
	September 30,						Percentage			September 30,						Percentage
(units in thousands):	2019			2018			Change			2019			2018			Change
Vehicle financing volume:1
New retail contracts		186			146			27	%		350			302			16	%
Used retail contracts		86			64			34	%		170			129			32	%
Lease contracts		137			137			-	%		262			273			(4	)%
Total		409			347			18	%		782			704			11	%
TMNA subvened vehicle financing volume (units included in the above table):
New retail contracts		62			80			(23	)%		117			196			(40	)%
Used retail contracts		10			6			67	%		22			19			16	%
Lease contracts		125			131			(5	)%		240			261			(8	)%
Total		197			217			(9	)%		379			476			(20	)%
Market share:2		65.2	%		57.0	%					65.4	%		60.3	%

¹ Total financing volume was comprised of approximately 81 percent Toyota, 16 percent Lexus, and 3 percent non-Toyota/Lexus for the first half of fiscal 2020. Total financing volume was comprised of approximately 82 percent Toyota, 15 percent Lexus, and 3 percent non-Toyota/Lexus for the second quarter of fiscal 2020.  Total financing volume was comprised of approximately 81 percent Toyota, 16 percent Lexus, and 3 percent non-Toyota/Lexus for the first half and second quarter of fiscal 2019.

² Represents the percentage of total domestic TMNA sales of new Toyota and Lexus vehicles financed by us, excluding sales under dealer rental car and commercial fleet programs and sales of a private Toyota distributor.

Vehicle Financing Volume

The volume of our retail and lease contracts, which are acquired primarily from Toyota and Lexus dealers, is substantially dependent upon TMNA new sales volume as well as the level of TMNA sponsored subvention and other incentive programs.  Despite lower levels of subvention, our financing volume increased 11 percent and 18 percent, and our market share increased 5 percentage points and 8 percentage points for the first half and second quarter of fiscal 2020, compared to the same periods in fiscal 2019, as a result of other cash incentive and competitive rate programs.  

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The composition of our net earning assets is summarized below:

	September 30,		March 31,
(Dollars in millions)	2019		2019		Change
Net Earning Assets
Finance receivables, net
Retail finance receivables, net	$	55,845	$	53,016		5	%
Dealer financing, net1		17,143		17,501		(2	)%
Total finance receivables, net		72,988		70,517		4	%
Investments in operating leases, net		37,687		37,927		(1	)%
Net earning assets	$	110,675	$	108,444		2	%
Dealer Financing
(Number of dealers serviced)
Toyota and Lexus dealers1		953		956		-	%
Dealers outside of the Toyota/Lexus dealer network		383		372		3	%
Total number of dealers receiving wholesale financing		1,336		1,328		1	%
Dealer inventory outstanding (units in thousands)		302		309		(2	)%

¹ Includes wholesale and other credit arrangements in which we participate as part of a syndicate of lenders.

Retail Contract Volume and Earning Assets

Despite lower levels of subvention, our new retail contract volume increased 16 percent and 27 percent for the first half and second quarter of fiscal 2020, compared to the same periods in fiscal 2019, as a result of other cash incentive and competitive rate programs.

Our retail finance receivables, net increased 5 percent at September 30, 2019 as compared to March 31, 2019 due to an increase in retail contract volume and in the average amount financed.

Lease Contract Volume and Earning Assets

Our lease contract volume decreased 4 percent for the first half of fiscal 2020, compared to the same period in fiscal 2019, primarily due to lower levels of subvention.  Our investments in operating leases, net, decreased 1 percent at September 30, 2019, as compared to March 31, 2019 due to decreased lease contract volume.

Dealer Financing and Earning Assets

Dealer financing, net at September 30, 2019, decreased 2 percent from March 31, 2019 primarily due to a decrease in dealer inventory outstanding.

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Residual Value Risk

The primary factors affecting our exposure to residual value risk are the levels at which residual values are established at lease inception, current economic conditions and outlook, projected end-of-term market values, and the resulting impact on depreciation expense and lease return rates.  Higher average operating lease units outstanding and the resulting increase in maturities, a higher supply of used vehicles, as well as deterioration in actual and expected used vehicle values for Toyota and Lexus vehicles could unfavorably impact return rates, residual values, and depreciation expense.

On a quarterly basis, we review the estimated end-of-term market values of leased vehicles to assess the appropriateness of our carrying values.  To the extent the estimated end-of-term market value of a leased vehicle is lower than the residual value established at lease inception, the residual value of the leased vehicle is adjusted downward so that the carrying value at lease end will approximate the estimated end-of-term market value.  For investments in operating leases, adjustments are made on a straight-line basis over the remaining terms of the lease contracts and are included in Depreciation on operating leases in our Consolidated Statements of Income as a change in accounting estimate.

Depreciation on Operating Leases

Depreciation on operating leases and average operating lease units outstanding are as follows:

	Three Months Ended							Six Months Ended
	September 30,				Percentage			September 30,				Percentage
	2019		2018		Change			2019		2018		Change
Depreciation on operating leases    (dollars in millions)	$	1,583	$	1,662		(5	)%	$	3,208	$	3,428		(6	)%
Average operating lease units    outstanding    (in thousands)		1,410		1,487		(5	)%		1,418		1,486		(5	)%

Depreciation expense on operating leases decreased 6 percent and 5 percent during the first half and second quarter of fiscal 2020, as compared to the same periods in fiscal 2019, due to lower expectations of residual value losses on our more recent originations and lower average operating lease units outstanding.  

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Credit Risk

Credit Loss Experience

Our credit loss experience may be affected by a number of factors including the economic environment, our purchasing, servicing and collections practices, used vehicle market conditions and subvention.  Changes in the economy that impact the consumer such as increasing interest rates, and a rise in the unemployment rate as well as higher debt balances, coupled with deterioration in actual and expected used vehicle values, could increase our credit losses.  In addition, a decline in the effectiveness of our collection practices could also increase our credit losses.  We continuously evaluate and refine our purchasing practices and collection efforts to minimize risk.  In addition, subvention contributes to our overall portfolio quality, as subvened contracts typically have higher credit quality than non-subvened contracts.

The following table provides information related to our credit loss experience:

	September 30,			March 31,			September 30,
	2019			2019			2018
Net charge-offs as a percentage of average gross    earning assets
Finance receivables		0.34	%		0.39	%		0.35	%
Operating leases		0.14	%		0.23	%		0.22	%
Total		0.27	%		0.34	%		0.31	%
Default frequency as a percentage of outstanding    contracts		1.25	%		1.45	%		1.48	%
Average loss severity per unit1	$	7,772		$	7,281		$	7,223
Aggregate balances for accounts 60 or more days    past due as a percentage of gross earning assets2
Finance receivables3		0.39	%		0.34	%		0.38	%
Operating leases3		0.29	%		0.27	%		0.31	%
Total		0.36	%		0.31	%		0.36	%

¹ Average loss per unit upon disposition of repossessed vehicles or charge-off prior to repossession.

² Substantially all retail and operating lease receivables do not involve recourse to the dealer in the event of customer default.

³ Includes accounts in bankruptcy and excludes accounts for which vehicles have been repossessed.

The level of credit losses primarily reflects two factors: default frequency and loss severity.  Net charge-offs as a percentage of average gross earning assets decreased to 0.27 percent at September 30, 2019 from 0.31 percent at September 30, 2018.  Default frequency as a percentage of outstanding contracts decreased to 1.25 percent for the first half of fiscal 2020, compared to 1.48 percent in the same period in fiscal 2019.  The decrease in both net charge-offs as a percentage of average gross earning assets and default frequency as a percentage of outstanding contracts for the first half of fiscal 2020, compared to the same period in fiscal 2019, is primarily due to a continued focus on late stage collection activities.  Our average loss severity for the first half of fiscal 2020 increased to $7,772 from $7,223 in the first half of fiscal 2019 primarily due to higher average amount financed.  Our aggregate balances for accounts 60 or more days past due were 0.36 percent for both September 30, 2019 and 2018, but have increased from 0.31 percent at March 31, 2019 reflective of our typical seasonal pattern for delinquency.  

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Allowance for Credit Losses

We maintain an allowance for credit losses to cover probable and estimable losses as of the balance sheet date resulting from the non-performance of our customers and dealers under their contractual obligations.  The determination of the allowance for credit losses involves significant assumptions, complex analyses, and management judgment.

The allowance for credit losses for our consumer portfolio is established through a process that estimates probable losses incurred as of the balance sheet date based upon consistently applied statistical analyses of portfolio data.  This process utilizes delinquency migration analysis, in which historical delinquency and credit loss experience is applied to the current aging of the portfolio, and incorporates current and expected trends and other relevant factors, including used vehicle market conditions, economic conditions, unemployment rates, purchase quality mix, and operational factors.  This process, along with management judgment, is used to establish the allowance for credit losses to cover probable and estimable losses incurred as of the balance sheet date.  Movement in any of these factors would cause changes in estimated probable losses.

The allowance for credit losses for our dealer portfolio is established by aggregating dealer financing receivables into loan-risk pools, which are determined based on the risk characteristics of the loan (e.g. secured by vehicles, real estate or dealership assets).  We analyze the loan-risk pools using internally developed risk ratings for each dealer.  In addition, we have established procedures that focus on managing high risk loans in our dealer portfolio.  Our field operations management and special assets group are consulted each quarter to determine if any specific dealer loan is considered impaired.  If impaired loans are identified, specific reserves are established, as appropriate, and the loan is removed from the loan-risk pool for separate monitoring.

The following table provides information related to our allowance for credit losses:

	Three Months Ended						Six Months Ended
	September 30,						September 30,
(Dollars in millions)	2019			2018			2019			2018
Allowance for credit losses at beginning of period	$	605		$	600		$	602		$	597
Charge-offs		(106	)		(105	)		(208	)		(218	)
Recoveries		26			23			56			50
Provision for credit losses		61			67			136			156
Allowance for credit losses at end of period	$	586		$	585		$	586		$	585

Our allowance for credit losses increased slightly to $586 million at September 30, 2019 from $585 million at September 30, 2018.  Changes in the economy that impact the consumer such as increasing interest rates and a rise in the unemployment rate as well as higher debt balances, coupled with deterioration in actual and expected used vehicle values, could result in increases to our allowance for credit losses.  In addition, a decline in the effectiveness of our collection practices could also increase our allowance for credit losses.

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LIQUIDITY AND CAPITAL RESOURCES

Liquidity risk is the risk relating to our ability to meet our financial obligations when they come due.  Our liquidity strategy is to ensure that we maintain the ability to fund assets and repay liabilities in a timely and cost-effective manner, even in adverse market conditions.  Our strategy includes raising funds via the global capital markets and through loans, credit facilities, and other transactions as well as generating liquidity from our earning assets.  This strategy has led us to develop a diversified borrowing base that is distributed across a variety of markets, geographies, investors and financing structures.

Liquidity management involves forecasting and maintaining sufficient capacity to meet our cash needs, including unanticipated events.  To ensure adequate liquidity through a full range of potential operating environments and market conditions, we conduct our liquidity management and business activities in a manner that will preserve and enhance funding stability, flexibility and diversity.  Key components of this operating strategy include a strong focus on developing and maintaining direct relationships with commercial paper investors and wholesale market funding providers, and maintaining the ability to sell certain assets when and if conditions warrant.

We develop and maintain contingency funding plans and regularly evaluate our liquidity position under various operating circumstances, allowing us to assess how we will be able to operate through a period of stress when access to normal sources of capital is constrained.  The plans project funding requirements during a potential period of stress, specify and quantify sources of liquidity, and outline actions and procedures for effectively managing through the problem period. In addition, we monitor the ratings and credit exposure of the lenders that participate in our credit facilities to ascertain any issues that may arise with potential draws on these facilities if that contingency becomes warranted.

We maintain broad access to a variety of domestic and global markets and may choose to realign our funding activities depending upon market conditions, relative costs, and other factors.  We believe that our funding sources, combined with operating and investing activities, provide sufficient liquidity to meet future funding requirements and business growth. For liquidity purposes, we hold cash in excess of our immediate funding needs.  These excess funds are invested in short-term, highly liquid and investment grade money market instruments as well as certain available-for-sale debt securities, which provide liquidity for our short-term funding needs and flexibility in the use of our other funding sources.  We maintained excess funds ranging from $2.9 billion to $6.8 billion with an average balance of $4.4 billion during the quarter ended September 30, 2019.  The amount of excess funds we hold may fluctuate, depending on market conditions and other factors.  We also have access to liquidity under the $5.0 billion credit facility with Toyota Motor Sales U.S.A., Inc. (“TMS”), which is further described in Note 7 – Debt and Credit Facilities of the Notes to the Consolidated Financial Statements.  We believe we have sufficient capacity to meet our short-term funding requirements and manage our liquidity.

Credit support is provided to us by our indirect parent Toyota Financial Services Corporation (“TFSC”), and, in turn to TFSC by TMC.  Taken together, these credit support agreements provide an additional source of liquidity to us, although we do not rely upon such credit support in our liquidity planning and capital and risk management.  The credit support agreements are not a guarantee by TMC or TFSC of any securities or obligations of TFSC or TMCC, respectively.  The fees paid pursuant to these agreements are disclosed in Note 11 – Related Party Transactions of the Notes to Consolidated Financial Statements.

TMC’s obligations under its credit support agreement with TFSC rank pari passu with TMC’s senior unsecured debt obligations.  Refer to Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations “Liquidity and Capital Resources” in our fiscal 2019 Form 10-K for further discussion.

We routinely monitor global financial conditions and our financial exposure to our global counterparties, particularly in those countries experiencing significant economic, fiscal or political strain and the corresponding likelihood of default.  We do not currently have exposure to sovereign counterparties in countries experiencing significant economic, fiscal or political strain or any other sovereign counterparties.  Refer to the “Liquidity and Capital Resources - Credit Facilities and Letters of Credit” section and “Part I, Item 1A. Risk Factors - The failure or commercial soundness of our counterparties and other financial institutions may have an effect on our liquidity, results of operations or financial condition” in our fiscal 2019 Form 10-K for further discussion.

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Funding

The following table summarizes the components of our outstanding debt which includes unamortized premiums, discounts, debt issuance costs and the effects of foreign currency translation adjustments:

	September 30, 2019							March 31, 2019
(Dollars in millions)	Face Value		Carrying Value		Weighted average contractual interest rates			Face Value		Carrying Value		Weighted average contractual interest rates
Unsecured notes and loans payable:
Commercial paper	$	27,060	$	26,981		2.33	%	$	25,374	$	25,273		2.62	%
U.S. medium term note   ("MTN") program		33,627		33,495		2.72	%		33,540		33,397		2.82	%
Euro medium term note   ("EMTN") program		15,970		15,877		1.86	%		15,916		15,810		1.90	%
Other debt		5,907		5,903		2.70	%		6,045		6,041		3.12	%
Total Unsecured notes and loans   payable		82,564		82,256		2.43	%		80,875		80,521		2.60	%
Secured notes and loans payable		12,863		12,837		2.50	%		12,421		12,401		2.62	%
Total debt	$	95,427	$	95,093		2.44	%	$	93,296	$	92,922		2.60	%

Unsecured notes and loans payable

The following table summarizes the significant activities by program of our Unsecured notes and loans payable:

(Dollars in millions)	Commercial paper1		MTNs			EMTNs			Other			Total Unsecured notes and loans payable
Balance at March 31, 2019	$	25,374	$	33,540		$	15,916		$	6,045		$	80,875
Issuances		1,686		4,278			690			1,717			8,371
Maturities and terminations		-		(4,191	)		(210	)		(1,841	)		(6,242	)
Non-cash changes in foreign currency rates		-		-			(426	)		(14	)		(440	)
Balance at September 30, 2019	$	27,060	$	33,627		$	15,970		$	5,907		$	82,564

¹ Changes in Commercial paper are shown net due to its short duration within Issuances.  

Commercial Paper

Short-term funding needs are met through the issuance of commercial paper in the U.S.  Commercial paper outstanding under our commercial paper programs ranged from approximately $25.1 billion to $28.1 billion during the quarter ended September 30, 2019, with an average outstanding balance of $26.8 billion.  Our commercial paper programs are supported by the liquidity facilities discussed under the heading “Liquidity Facilities and Letters of Credit.”  We believe we have sufficient capacity to meet our short-term funding requirements and manage our liquidity.

MTN program

We maintain a shelf registration statement with the Securities and Exchange Commission (“SEC”) to provide for the issuance of debt securities in the U.S. capital markets to retail and institutional investors. We qualify as a well-known seasoned issuer under SEC rules, which allows us to issue under our registration statement an unlimited amount of debt securities during the three year period ending January 2021.  Debt securities issued under the U.S. shelf registration statement are issued pursuant to the terms of an indenture which requires TMCC to comply with certain covenants, including negative pledge and cross-default provisions.  We are currently in compliance with these covenants.

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EMTN program

Our EMTN program, shared with our affiliates Toyota Motor Finance (Netherlands) B.V., Toyota Credit Canada Inc. and Toyota Finance Australia Limited (TMCC and such affiliates, the “EMTN Issuers”), provides for the issuance of debt securities in the international capital markets.  In September 2019, the EMTN Issuers renewed the EMTN program for a one year period.  The maximum aggregate principal amount authorized under the EMTN Program to be outstanding at any time is €50.0 billion or the equivalent in other currencies, of which €18.0 billion was available for issuance at September 30, 2019.  The authorized amount is shared among all EMTN Issuers.  The authorized aggregate principal amount under the EMTN program may be increased from time to time.  Debt securities issued under the EMTN program are issued pursuant to the terms of an agency agreement.  Certain debt securities issued under the EMTN program are subject to negative pledge provisions.  We are currently in compliance with these covenants.

We may issue other debt securities through the global capital markets or enter into other unsecured financing arrangements, including those in which we agree to use the proceeds solely to acquire retail or lease contracts financing new Toyota and Lexus vehicles of specified “green” models.  The terms of these “green” bond transactions are consistent with the terms of other similar transactions except that the proceeds we receive are included in Restricted cash and cash equivalents in our Consolidated Balance Sheets, when applicable.

Other debt

TMCC has entered into term loan agreements with various banks.  These term loan agreements contain covenants and conditions customary in transactions of this nature, including negative pledge provisions, cross-default provisions and limitations on certain consolidations, mergers and sales of assets.  We are currently in compliance with these covenants and conditions.

We may borrow from affiliates on terms based upon a number of business factors such as funds availability, cash flow timing, relative cost of funds, and market access capabilities.

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Secured notes and loans payable

Asset-backed securitization of our earning asset portfolio provides us with an alternative source of funding.  We regularly execute public or private securitization transactions.  

The following table summarizes the significant activities of our Secured notes and loans payable:

(Dollars in millions)	Secured notes and loans payable
Balance at March 31, 2019	$	12,421
Issuances		4,478
Maturities and terminations		(4,036	)
Balance at September 30, 2019	$	12,863

We securitize finance receivables and beneficial interests in investments in operating leases (“Securitized Assets”) using a variety of structures.  Our securitization transactions involve the transfer of Securitized Assets to bankruptcy-remote special purpose entities.  These bankruptcy-remote entities are used to ensure that the Securitized Assets are isolated from the claims of creditors of TMCC and that the cash flows from these assets are available solely for the benefit of the investors in these asset-backed securities.  Investors in asset-backed securities do not have recourse to our other assets, and neither TMCC nor our affiliates guarantee these obligations.  We are not required to repurchase or make reallocation payments with respect to the Securitized Assets that become delinquent or default after securitization.  As seller and servicer of the Securitized Assets, we are required to repurchase or make a reallocation payment with respect to the underlying assets that are subsequently discovered not to have met specified eligibility requirements.  This repurchase obligation is customary in securitization transactions.  With the exception of our new revolving asset-backed securitization program discussed on the next page, funding obtained from our securitization transactions is repaid as the underlying Securitized Assets amortize.

We service the Securitized Assets in accordance with our customary servicing practices and procedures.  Our servicing duties include collecting payments on Securitized Assets and submitting them to a trustee for distribution to security holders and other interest holders.  We prepare monthly servicer certificates on the performance of the Securitized Assets, including collections, investor distributions, delinquencies, and credit losses.  We also perform administrative services for the special purpose entities.

Our use of special purpose entities in securitizations is consistent with conventional practice in the securitization market.  None of our officers, directors, or employees hold any equity interests or receive any direct or indirect compensation from our special purpose entities.  These entities do not own our stock or the stock of any of our affiliates.  Each special purpose entity has a limited purpose and generally is permitted only to purchase assets, issue asset-backed securities, and make payments to the security holders, other interest holders and certain service providers as required under the terms of the transactions.

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Our securitizations are structured to provide credit enhancement to reduce the risk of loss to security holders and other interest holders in the asset-backed securities.  Credit enhancement may include some or all of the following:

• Overcollateralization:  The principal of the Securitized Assets that exceeds the principal amount of the related secured debt.

• Excess spread:  The expected interest collections on the Securitized Assets that exceed the expected fees and expenses of the special purpose entity, including the interest payable on the debt, net of swap settlements, if any.

• Cash reserve funds:  A portion of the proceeds from the issuance of asset-backed securities may be held by the securitization trust in a segregated reserve fund and may be used to pay principal and interest to security holders and other interest holders if collections on the underlying receivables are insufficient.

• Yield supplement arrangements:  Additional overcollateralization may be provided to supplement the future contractual interest payments from securitized receivables with relatively low contractual interest rates.

• Subordinated notes:  The subordination of principal and interest payments on subordinated notes may provide additional credit enhancement to holders of senior notes.

In addition to the credit enhancement described above, we may enter into interest rate swaps with our special purpose entities that issue variable rate debt.  Under the terms of these swaps, the special purpose entities are obligated to pay TMCC a fixed rate of interest on payment dates in exchange for receiving a floating rate of interest on notional amounts equal to the outstanding balance of the secured notes and loans payable.  This arrangement enables the special purpose entities to mitigate the interest rate risk inherent in issuing variable rate debt that is secured by fixed rate Securitized Assets.

Securitized Assets and the related debt remain on our Consolidated Balance Sheets.  We recognize financing revenue on the Securitized Assets.  We also recognize interest expense on the secured notes and loans payable issued by the special purpose entities and maintain an allowance for credit losses on the Securitized Assets to cover estimated probable credit losses using a methodology consistent with that used for our non-securitized asset portfolio.  The interest rate swaps between TMCC and the special purpose entities are considered intercompany transactions and therefore are eliminated in our consolidated financial statements.

We periodically enter into term securitization transactions whereby we agree to use the proceeds solely to acquire retail and lease contracts financing new Toyota and Lexus vehicles of certain specified “green” models.  The terms of these “green” securitization transactions are consistent with the terms of our other similar transactions except that the proceeds we receive are included in Restricted cash and cash equivalents in our Consolidated Balance Sheets, when applicable.

In June 2019, we completed an offering of secured notes under a new revolving asset-backed securitization program, backed by a revolving pool of finance receivables and cash collateral. Cash flows from these receivables during the revolving period in excess of what is needed to pay certain expenses of the securitization trust and contractual interest payments on the related secured notes may be used to purchase additional receivables, provided that certain conditions are met following the purchase.  The secured notes feature a scheduled five year revolving period, with the ability to repay the secured notes in full, after which an amortization period begins. The revolving period may also end with the amortization period beginning upon the occurrence of certain events that include certain segregated account balances falling below their required levels, credit losses or delinquencies on the pool of assets supporting the secured notes exceeding specified levels, the adjusted pool balance falling to less than 50% of the initial principal amount of the secured notes, or interest not being paid on the secured notes.

Public Securitization

We maintain a shelf registration statement with the SEC to provide for the issuance of securities backed by Securitized Assets in the U.S. capital markets during the three year period ending December 2021.  We regularly sponsor public securitization trusts that issue securities backed by retail finance receivables, including registered securities that we retain.  None of these securities have defaulted, experienced any events of default or failed to pay principal in full at maturity.  As of September 30, 2019 and March 31, 2019, we did not have any outstanding lease securitization transactions registered with the SEC.

64

Credit Facilities and Letters of Credit

For additional liquidity purposes, we maintain credit facilities as described below:

364 Day Credit Agreement, Three Year Credit Agreement and Five Year Credit Agreement

In November 2018, TMCC, Toyota Credit de Puerto Rico Corp. (“TCPR”) and other Toyota affiliates entered into a $5.0 billion 364 day syndicated bank credit facility, a $5.0 billion three year syndicated bank credit facility and a $5.0 billion five year syndicated bank credit facility, expiring in fiscal 2020, 2022, and 2024, respectively.

The ability to make draws is subject to covenants and conditions customary in transactions of this nature, including negative pledge provisions, cross-default provisions and limitations on certain consolidations, mergers and sales of assets.  These agreements may be used for general corporate purposes and none were drawn upon as of September 30, 2019 and March 31, 2019.  We are currently in compliance with the covenants and conditions of the credit agreements described above.

Other Unsecured Credit Agreements

TMCC has entered into additional unsecured credit facilities with various banks.  As of September 30, 2019, TMCC had committed bank credit facilities totaling $5.5 billion of which $2.3 billion, $650 million, $2.1 billion, and $475 million mature in fiscal 2020, 2021, 2022, and 2023, respectively.

These credit agreements contain covenants and conditions customary in transactions of this nature, including negative pledge provisions, cross-default provisions and limitations on certain consolidations, mergers and sales of assets.  These credit facilities were not drawn upon as of September 30, 2019 and March 31, 2019. We are currently in compliance with the covenants and conditions of the credit agreements described above.

TMCC is party to a $5.0 billion three year revolving credit facility with TMS, an affiliate, expiring in fiscal 2022. This credit facility may be used for general corporate purposes and was not drawn upon as of September 30, 2019.

From time to time, we may borrow from affiliates based upon a number of business factors such as funds availability, cash flow timing, relative costs of funds, and market access capabilities.

Credit Ratings

The cost and availability of unsecured financing is influenced by credit ratings, which are intended to be an indicator of the creditworthiness of a particular company, security, or obligation.  Lower ratings generally result in higher borrowing costs as well as reduced access to capital markets.  Credit ratings are not recommendations to buy, sell, or hold securities, and are subject to revision or withdrawal at any time by the assigning credit rating organization.  Each credit rating organization may have different criteria for evaluating risk, and therefore ratings should be evaluated independently for each organization.  Our credit ratings depend in part on the existence of the credit support agreements of TFSC and TMC.  Refer to “Part I, Item 1A. Risk Factors - Our borrowing costs and access to the unsecured debt capital markets depend significantly on the credit ratings of TMCC and its parent companies and our credit support arrangements” in our fiscal 2019 Form 10-K.

65

DERIVATIVE INSTRUMENTS

Risk Management Strategy

Our liabilities consist mainly of fixed and variable rate debt, denominated in U.S. dollars and various other currencies, which we issue in the global capital markets, while our assets consist primarily of U.S. dollar denominated, fixed rate receivables.  We enter into interest rate swaps, interest rate floors, and foreign currency swaps to economically hedge the interest rate and foreign currency risks that result from the different characteristics of our assets and liabilities.  Our use of derivative transactions is intended to reduce long-term fluctuations in the fair value of assets and liabilities caused by market movements.  All of our derivative activities are authorized and monitored by our management and our Asset-Liability Committee which provides a framework for financial controls and governance to manage market risk.

Accounting for Derivative Instruments

All derivative instruments are recorded on the balance sheet at fair value, taking into consideration the effects of legally enforceable master netting agreements that allow us to net settle asset and liability positions and offset cash collateral held with the same counterparty on a net basis.  Changes in the fair value of derivatives are recorded in Interest expense in our Consolidated Statements of Income.  The derivative instruments are included as a component of Other assets or Other liabilities in our Consolidated Balance Sheet.

The accounting guidance permits the net presentation on our Consolidated Balance Sheets of derivative receivables and derivative payables with the same counterparty and the related cash collateral when a legally enforceable master netting agreement exists.  When we meet this condition, we elect to present such balances on a net basis.  

Our International Swaps and Derivatives Association (“ISDA”) Master Agreements are our master netting agreements which permit multiple transactions to be cancelled and settled with a single net balance paid to either party.  The master netting agreements also contain reciprocal collateral agreements which require the transfer of cash collateral to the party in a net asset position across all transactions.  Our collateral agreements with substantially all our counterparties include a zero threshold, full collateralization arrangement.  Although we have daily valuation and collateral exchange arrangements with all of our counterparties, due to the time required to move collateral, there may be a delay of up to one day between the exchange of collateral and the valuation of our derivatives.  We would not be required to post additional collateral to the counterparties with whom we were in a net liability position at September 30, 2019, if our credit ratings were to decline, since we fully collateralize without regard to credit ratings with these counterparties.  In addition, as our collateral agreements include legal right of offset provisions, collateral amounts are netted against derivative assets or derivative liabilities.

We categorize derivatives as those designated for hedge accounting (“hedge accounting derivatives”) and those that are not designated for hedge accounting (“non-hedge accounting derivatives”).  At the inception of a derivative contract, we may elect to designate a derivative as a hedge accounting derivative.  As of September 30, 2019, we had no hedge accounting derivatives.

Refer to Note 6 – Derivatives, Hedging Activities and Interest Expense of the Notes to Consolidated Financial Statements.

66

Derivative Assets and Liabilities

The following table summarizes our derivative assets and liabilities, which are included in Other assets and Other liabilities in our Consolidated Balance Sheets:

	September 30,			March 31,
(Dollars in millions)	2019			2019
Gross derivatives assets, net of credit valuation adjustment	$	710		$	544
Less: Counterparty netting		(456	)		(441	)
Less: Collateral held		(204	)		(42	)
Derivative assets, net	$	50		$	61
Gross derivative liabilities, net of credit valuation adjustment	$	2,009		$	1,407
Less: Counterparty netting		(456	)		(441	)
Less: Collateral posted		(1,515	)		(940	)
Derivative liabilities, net	$	38		$	26

Collateral represents cash received or deposited under reciprocal arrangements that we have entered into with our derivative counterparties.  As of September 30, 2019, we held excess collateral of $1 million which we did not use to offset derivative assets, and we posted excess collateral of $2 million which we did not use to offset derivative liabilities.  As of March 31, 2019, we held excess collateral of $2 million, which we did not use to offset derivative assets, and we posted excess collateral of $17 million which we did not use to offset derivative liabilities.  

67

NEW ACCOUNTING STANDARDS

Refer to Note 1 – Interim Financial Data of the Notes to Consolidated Financial Statements.

OFF-BALANCE SHEET ARRANGEMENTS

Guarantees

TMCC has guaranteed the payments of principal and interest with respect to the bond obligations that were issued by Putnam County, West Virginia and Gibson County, Indiana to finance the construction of pollution control facilities at manufacturing plants of certain TMCC affiliates.  Refer to Note 9 - Commitments and Contingencies of the Notes to Consolidated Financial Statements for further discussion.

Commitments

A description of our lending commitments is included under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, Off-Balance Sheet Arrangements” and Note 12 - Related Party Transactions of the Notes to Consolidated Financial Statements in our fiscal 2019 Form 10-K, as well as in Note 9 - Commitments and Contingencies of the Notes to Consolidated Financial Statements.

Indemnification

Refer to Note 9 - Commitments and Contingencies of the Notes to Consolidated Financial Statements for a description of agreements containing indemnification provisions.

68

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We have omitted this section pursuant to General Instruction H(2) of Form 10-Q.

ITEM 4.  CONTROLS AND PROCEDURES

As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer (the principal executive officer) and Chief Financial Officer (the principal financial officer), of the effectiveness of our “disclosure controls and procedures” as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”).  Based on this evaluation, the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) concluded that the disclosure controls and procedures were effective as of September 30, 2019, to ensure that information required to be disclosed in reports filed under the Exchange Act was recorded, processed, summarized and reported within the time periods specified by the SEC’s rules, regulations, and forms and that such information is accumulated and communicated to our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosures.

There have been no changes in our internal control over financial reporting that occurred during the three months ended September 30, 2019, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

69

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Litigation

Various legal actions, governmental proceedings and other claims are pending or may be instituted or asserted in the future against us with respect to matters arising in the ordinary course of business.  Certain of these actions are or purport to be class action suits, seeking sizeable damages and/or changes in our business operations, policies and practices.  In addition, we are subject to governmental and regulatory examinations, information-gathering requests, and investigations from time to time at the state and federal levels.  It is inherently difficult to predict the course of such legal actions and governmental inquiries. Certain of these actions are similar to suits that have been filed against other financial institutions and captive finance companies.  We perform periodic reviews of pending claims and actions to determine the probability of adverse verdicts and resulting amounts of liability.  We establish accruals for legal claims when payments associated with the claims become probable and the costs can be reasonably estimated.  When we are able, we also determine estimates of reasonably possible loss or range of loss, whether in excess of any related accrued liability or where there is no accrued liability.  Refer to Note 9 – Commitments and Contingencies of the Notes to Consolidated Financial Statements.  Given the inherent uncertainty associated with legal matters, the actual costs of resolving legal claims and associated costs of defense may be substantially higher or lower than the amounts for which accruals have been established.  Based on available information and established accruals, we do not believe it is reasonably possible that the results of these proceedings, either individually or in the aggregate, will have a material adverse effect on our financial condition or results of operations.

ITEM 1A. RISK FACTORS

There are no material changes from the risk factors set forth under “Item 1A. Risk Factors” in our fiscal 2019 Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

We have omitted this section pursuant to General Instruction H(2) of Form 10-Q.

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

We have omitted this section pursuant to General Instruction H(2) of Form 10-Q.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

70

ITEM 6.   EXHIBITS

Exhibit Number	Description	Method of Filing
3.1	Restated Articles of Incorporation filed with the California Secretary of State on April 1, 2010	(1)
3.2	Bylaws as amended through December 8, 2000	(2)
4.1	Amended and Restated Agency Agreement, dated September 13, 2019, among Toyota Motor Credit Corporation, Toyota Motor Finance (Netherlands) B.V., Toyota Credit Canada Inc., Toyota Finance Australia Limited and The Bank of New York Mellon, acting through its London branch	(3)
31.1	Certification of Chief Executive Officer	Filed Herewith
31.2	Certification of Chief Financial Officer	Filed Herewith
32.1	Certification pursuant to 18 U.S.C. Section 1350	Furnished Herewith
32.2	Certification pursuant to 18 U.S.C. Section 1350	Furnished Herewith
101.INS	XBRL instance document	Filed Herewith
101.CAL	XBRL taxonomy extension calculation linkbase document	Filed Herewith
101.DEF	XBRL taxonomy extension definition linkbase document	Filed Herewith
101.LAB	XBRL taxonomy extension labels linkbase document	Filed Herewith
101.PRE	XBRL taxonomy extension presentation linkbase document	Filed Herewith
101.SCH	XBRL taxonomy extension schema document	Filed Herewith

(1) Incorporated herein by reference to Exhibit 3.1, filed with our Annual Report on Form 10-K for the fiscal year ended March 31, 2010, Commission File Number 1-9961.

(2) Incorporated herein by reference to Exhibit 3.2 filed with our Quarterly Report on Form 10-Q for the three months ended December 31, 2000, Commission File Number 1-9961.

(3) Incorporated herein by reference to Exhibit 4.1, filed with our Current Report on Form 8-K filed September 17, 2019, Commission File Number 1-9961.

71

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	TOYOTA MOTOR CREDIT CORPORATION
	(Registrant)
Date: November 7, 2019	By	/s/ Mark S. Templin
		Mark S. Templin
		President and Chief Executive Officer
		(Principal Executive Officer)
Date: November 7, 2019	By	/s/ Scott Cooke
		Scott Cooke
		Group Vice President and Chief Financial Officer (Principal Financial Officer)

72

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, Mark S. Templin, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Toyota Motor Credit Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 7, 2019	By	/s/  Mark S. Templin
		Mark S. Templin
		President and
		Chief Executive Officer (Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

I, Scott Cooke, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Toyota Motor Credit Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  November 7, 2019	By	/s/ Scott Cooke
		Scott Cooke
		Group Vice President and
		Chief Financial Officer (Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002*

In connection with the Quarterly Report of Toyota Motor Credit Corporation (the "Company") on Form 10-Q for the period ended September 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Mark S. Templin, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By	/s/ Mark S. Templin
	Mark S. Templin
	President and Chief Executive Officer (Principal Executive Officer)
	November 7, 2019

* A signed original of this written statement required by Section 906 has been provided to Toyota Motor Credit Corporation and will be retained by Toyota Motor Credit Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002*

In connection with the Quarterly Report of Toyota Motor Credit Corporation (the "Company") on Form 10-Q for the period ended September 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Scott Cooke, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By	/s/ Scott Cooke
	Scott Cooke
	Group Vice President and Chief Financial Officer (Principal Financial Officer)
	November 7, 2019

* A signed original of this written statement required by Section 906 has been provided to Toyota Motor Credit Corporation and will be retained by Toyota Motor Credit Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Segment Information - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Apr. 01, 2019	Apr. 01, 2018
Segment Reporting Information [Line Items]
Unearned insurance premiums and contract revenues		$ 2,200		$ 2,200
Insurance earned premiums and contract revenues	$ 121	$ 178	$ 303	$ 345
Other liabilities [Member]
Segment Reporting Information [Line Items]
Unearned insurance premiums and contract revenues	$ 2,300		$ 2,300		$ 2,200	$ 2,200
Accounting Standards Update 2014-09 [Member]
Segment Reporting Information [Line Items]
Percentage of insurance earned premiums and contract revenues accounted under guidance for revenue from contracts with customers	84.00%	84.00%	84.00%	84.00%

XML

Commitments and Contingencies - Commitments and Guarantees (Details) - USD ($) $ in Millions	Sep. 30, 2019	Mar. 31, 2019
Commitments:
Credit facilities commitments with dealers	$ 1,391	$ 1,378
Commitments under operating lease agreements	119
Commitments under operating lease agreements		144
Total commitments	1,510	1,522
Total commitments and guarantees	1,610	1,622
Performance Guarantee [Member] | Putnam and Gibson Counties [Member]
Commitments:
Guarantees of affiliate pollution control and solid waste disposal bonds	$ 100	$ 100

XML

Debt and Credit Facilities - Additional Information (Details 1) - USD ($) $ in Billions	Sep. 30, 2019	Mar. 31, 2019
Debt Disclosure [Abstract]
Commercial paper outstanding	$ 27.0	$ 25.3

XML

Derivatives, Hedging Activities and Interest Expense - Derivative Activity Impact on Consolidated Balance Sheet (Details) - USD ($) $ in Millions	Sep. 30, 2019	Mar. 31, 2019
Other assets [Member]
Derivatives Fair Value [Line Items]
Notional	$ 37,448	$ 52,025
Fair value	710	544
Counterparty netting	(456)	(441)
Collateral held	(204)	(42)
Other assets [Member] | Interest rate swaps [Member]
Derivatives Fair Value [Line Items]
Notional	37,394	49,254
Fair value	689	472
Other assets [Member] | Foreign currency swaps [Member]
Derivatives Fair Value [Line Items]
Notional	54	2,771
Fair value	21	72
Other liabilities [Member]
Derivatives Fair Value [Line Items]
Notional	76,328	67,389
Fair value	2,009	1,407
Counterparty netting	(456)	(441)
Collateral posted	(1,515)	(940)
Other liabilities [Member] | Interest rate swaps [Member]
Derivatives Fair Value [Line Items]
Notional	63,632	57,593
Fair value	928	622
Other liabilities [Member] | Foreign currency swaps [Member]
Derivatives Fair Value [Line Items]
Notional	12,696	9,796
Fair value	1,081	785
Carrying value [Member] | Other assets [Member]
Derivatives Fair Value [Line Items]
Carrying value of derivative contracts – Other assets	50	61
Carrying value [Member] | Other liabilities [Member]
Derivatives Fair Value [Line Items]
Carrying value of derivative contracts – Other liabilities	$ 38	$ 26

XML

Variable Interest Entities (Tables)

6 Months Ended

Sep. 30, 2019

Variable Interest Entity Consolidated Carrying Amount Assets And Liabilities [Abstract]

Schedule of Variable Interest Entities, Securitization Transactions Assets and Liabilities

The following tables show the assets and liabilities related to our VIE securitization transactions that were included in our Consolidated Balance Sheets:

	September 30, 2019
			VIE Assets				VIE Liabilities
			Net
	Restricted Cash		Securitized Assets		Other Assets		Debt		Other Liabilities
Retail finance receivables	$	669	$	12,272	$	6	$	10,337	$	9
Investments in operating leases		272		4,153		111		2,500		2
Total	$	941	$	16,425	$	117	$	12,837	$	11

	March 31, 2019
			VIE Assets				VIE Liabilities
			Net
	Restricted Cash		Securitized Assets		Other Assets		Debt		Other Liabilities
Retail finance receivables	$	630	$	11,075	$	6	$	9,202	$	10
Investments in operating leases		355		5,307		186		3,199		2
Total	$	985	$	16,382	$	192	$	12,401	$	12

XML

Segment Information (Tables)

6 Months Ended

Sep. 30, 2019

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment

Financial information for our reportable operating segments is summarized as follows:

	Three Months Ended September 30, 2019
	Finance		Insurance		Intercompany
	operations		operations		eliminations			Total
Total financing revenues	$	3,018	$	-	$	-		$	3,018
Depreciation on operating leases		1,583		-		-			1,583
Interest expense		619		-		(6	)		613
Net financing revenues		816		-		6			822
Insurance earned premiums and contract revenues		-		232		-			232
Investment and other income, net		38		65		(6	)		97
Net financing and other revenues		854		297		-			1,151
Expenses:
Provision for credit losses		61		-		-			61
Operating and administrative expenses		268		90		-			358
Insurance losses and loss adjustment expenses		-		115		-			115
Total expenses		329		205		-			534
Income before income taxes		525		92		-			617
Provision for income taxes		136		22		-			158
Net income	$	389	$	70	$	-		$	459
	Six Months Ended September 30, 2019
	Finance		Insurance		Intercompany
	operations		operations		eliminations			Total
Total financing revenues	$	5,981	$	-	$	-		$	5,981
Depreciation on operating leases		3,208		-		-			3,208
Interest expense		1,322		-		(12	)		1,310
Net financing revenues		1,451		-		12			1,463
Insurance earned premiums and contract revenues		-		461		-			461
Investment and other income, net		75		152		(12	)		215
Net financing and other revenues		1,526		613		-			2,139
Expenses:
Provision for credit losses		136		-		-			136
Operating and administrative expenses		514		181		-			695
Insurance losses and loss adjustment expenses		-		228		-			228
Total expenses		650		409		-			1,059
Income before income taxes		876		204		-			1,080
Provision for income taxes		212		50		-			262
Net income	$	664	$	154	$	-		$	818
Total assets at September 30, 2019	$	115,714	$	5,414	$	(1,190	)	$	119,938

	Three Months Ended September 30, 2018
	Finance		Insurance		Intercompany
	operations		operations		eliminations			Total
Total financing revenues	$	2,890	$	-	$	-		$	2,890
Depreciation on operating leases		1,662		-		-			1,662
Interest expense		707		-		(5	)		702
Net financing revenues		521		-		5			526
Insurance earned premiums and contract revenues		-		226		-			226
Investment and other income, net		51		10		(5	)		56
Net financing and other revenues		572		236		-			808
Expenses:
Provision for credit losses		67		-		-			67
Operating and administrative expenses		262		86		-			348
Insurance losses and loss adjustment expenses		-		112		-			112
Total expenses		329		198		-			527
Income before income taxes		243		38		-			281
Provision for income taxes		77		10		-			87
Net income	$	166	$	28	$	-		$	194
	Six Months Ended September 30, 2018
	Finance		Insurance		Intercompany
	operations		operations		eliminations			Total
Total financing revenues	$	5,726	$	-	$	-		$	5,726
Depreciation on operating leases		3,428		-		-			3,428
Interest expense		1,394		-		(10	)		1,384
Net financing revenues		904		-		10			914
Insurance earned premiums and contract revenues		-		450		-			450
Investment and other income, net		99		7		(10	)		96
Net financing and other revenues		1,003		457		-			1,460
Expenses:
Provision for credit losses		156		-		-			156
Operating and administrative expenses		503		169		-			672
Insurance losses and loss adjustment expenses		-		237		-			237
Total expenses		659		406		-			1,065
Income before income taxes		344		51		-			395
Provision for income taxes		96		13		-			109
Net income	$	248	$	38	$	-		$	286
Total assets at September 30, 2018	$	117,265	$	4,955	$	(1,160	)	$	121,060

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Investments in Marketable Securities - Schedule of Gains and Losses on Investments in Marketable Securities Presented in Our Consolidated Statement of Income (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Available-for-sale debt securities:
Realized gains (losses)	$ 1	$ (1)	$ 1	$ (1)
Equity investments:
Unrealized gains (losses) recognized	31	(15)	86	(40)
Realized gains (losses) on sales	$ 1	$ 0	$ 3	$ 0

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Variable Interest Entities

6 Months Ended

Sep. 30, 2019

Variable Interest Entity Consolidated Carrying Amount Assets And Liabilities [Abstract]

Variable Interest Entities

Note 8 – Variable Interest Entities

Consolidated Variable Interest Entities

We use one or more special purpose entities that are considered Variable Interest Entities (“VIEs”) to issue asset-backed securities to third party bank-sponsored asset-backed securitization vehicles and to investors in securitization transactions.  The securities issued by these VIEs are backed by the cash flows related to retail finance receivables and beneficial interests in investments in operating leases (“Securitized Assets”).  We hold variable interests in the VIEs that could potentially be significant to the VIEs.  We determined that we are the primary beneficiary of the securitization trusts because (i) our servicing responsibilities for the Securitized Assets give us the power to direct the activities that most significantly impact the performance of the VIEs, and (ii) our variable interests in the VIEs give us the obligation to absorb losses and the right to receive residual returns that could potentially be significant.

The following tables show the assets and liabilities related to our VIE securitization transactions that were included in our Consolidated Balance Sheets:

	September 30, 2019
			VIE Assets				VIE Liabilities
			Net
	Restricted Cash		Securitized Assets		Other Assets		Debt		Other Liabilities
Retail finance receivables	$	669	$	12,272	$	6	$	10,337	$	9
Investments in operating leases		272		4,153		111		2,500		2
Total	$	941	$	16,425	$	117	$	12,837	$	11

	March 31, 2019
			VIE Assets				VIE Liabilities
			Net
	Restricted Cash		Securitized Assets		Other Assets		Debt		Other Liabilities
Retail finance receivables	$	630	$	11,075	$	6	$	9,202	$	10
Investments in operating leases		355		5,307		186		3,199		2
Total	$	985	$	16,382	$	192	$	12,401	$	12

Restricted Cash, including cash equivalents, shown in the table above represents collections from the underlying Gross Securitized Assets shown in the table above and certain reserve deposits held by TMCC for the VIEs and is included as part of Restricted cash and cash equivalents on our Consolidated Balance Sheets.  Net Securitized Assets shown in the table above are presented net of deferred fees and costs, deferred income, accumulated depreciation and the allowance for credit losses.  Other Assets represent used vehicles held-for-sale that were repossessed by or returned to TMCC for the benefit of the VIEs.  The related debt of these consolidated VIEs is presented net of $1,520 million and $1,486 million of securities retained by TMCC at September 30, 2019 and March 31, 2019, respectively.  Other Liabilities represents accrued interest on the debt of the consolidated VIEs.

The assets of the VIEs and the restricted cash and cash equivalents held by TMCC serve as the sole source of repayment for the asset-backed securities issued by these entities.  Investors in the notes issued by the VIEs do not have recourse to us or our other assets, with the exception of customary representation and warranty repurchase provisions and indemnities.

As the primary beneficiary of these entities, we are exposed to credit, residual value, interest rate, and prepayment risk from the Securitized Assets in the VIEs.  However, our exposure to these risks did not change as a result of the transfer of the assets to the VIEs.  We may also be exposed to interest rate risk arising from the secured notes issued by the VIEs.

In addition, we are party to interest rate swaps with certain special purpose entities that issue variable rate debt.  Under the terms of these swaps, the special purpose entities are obligated to pay TMCC a fixed rate of interest on certain payment dates in exchange for receiving a floating rate of interest on notional amounts equal to the outstanding balance of the secured debt.  This arrangement enables the special purpose entities to mitigate the interest rate risk inherent in issuing variable rate debt that is secured by fixed rate Securitized Assets.

Note 8 – Variable Interest Entities (Continued)

The transfers of the Securitized Assets to the special purpose entities in our securitizations are considered to be sales for legal purposes.  However, the Securitized Assets and the related debt remain on our Consolidated Balance Sheets.  We recognize financing revenue on the Securitized Assets and interest expense on the secured debt issued by the special purpose entities.  We also maintain an allowance for credit losses on the Securitized Assets to cover estimated probable credit losses using a methodology consistent with that used for our non-securitized asset portfolio.  The interest rate swaps between TMCC and the special purpose entities are considered intercompany transactions and therefore are eliminated in our consolidated financial statements.

Non-consolidated Variable Interest Entities

We provide lending to Toyota and Lexus dealers through the Toyota Dealer Investment Group’s Dealer Capital Program (“TDIG Program”) operated by our affiliate TMNA, which has an equity interest in these dealerships.  Dealers participating in this program have been determined to be VIEs.  We do not consolidate the dealerships in this program as we are not the primary beneficiary and any exposure to loss is limited to the amount of the credit facility.  Amounts due from these dealers under the TDIG Program that are classified as Finance receivables, net in our Consolidated Balance Sheets as of September 30, 2019 and March 31, 2019 and revenues earned from these dealers for the three and six months ended September 30, 2019 and 2018 were not significant. 

We also have other lending relationships, which have been determined to be VIEs, but these relationships are not consolidated as we are not the primary beneficiary.  Amounts due and revenues earned under these relationships as of and for the three and six months ended September 30, 2019 and 2018 were not significant.

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Investments in Operating Leases, Net

6 Months Ended

Sep. 30, 2019

Leases Operating [Abstract]

Investments in Operating Leases, Net

Note 4 – Investments in Operating Leases, Net

In conjunction with the April 1, 2019 adoption of ASU 2016-02, Leases, as described in Note 1 – Interim Financial Data, we updated our accounting policies and disclosures below.

Investments in operating leases, net primarily consists of vehicle lease contracts acquired from dealers.  Generally, lessees have the ability to extend their lease term in six month increments up to a total of 12 months from the original lease maturity date.  A lease can be terminated at any time by satisfying the obligations under the lease contract.  Early termination programs may be occasionally offered to eligible lessees.  At the end of the lease, the customer has the option to buy the leased vehicle or return the vehicle to the dealer.  

Securitized investments in operating leases represent beneficial interests in a pool of certain vehicle leases that have been sold for legal purposes to securitization trusts but continue to be included in our consolidated financial statements as discussed further in Note 8 - Variable Interest Entities.  Cash flows from these securitized investments in operating leases are available only for the repayment of debt issued by these trusts and other obligations arising from the securitization transactions.  They are not available for payment of our other obligations or to satisfy claims of our other creditors.

Operating lease revenues are recognized on a straight-line basis over the term of the lease.  We have made an accounting policy election to exclude from the consideration in the contract, and from variable payments not included in the consideration in the contract, sales and other taxes assessed by a governmental authority that are both imposed on and concurrent with a specific lease revenue-producing transaction and collected from customers.  Deferred fees and costs, including incentive payments made to dealers and acquisition fees collected from customers, and payments received on affiliate sponsored subvention and other incentive programs are capitalized or deferred and amortized on a straight-line basis over the contract term.  The accrual of revenue on investments in operating leases is discontinued at the time an account is determined to be uncollectible and subsequent revenue is recognized only to the extent a payment is received.  Operating leases may be restored to accrual status when future payments are reasonably assured.  

Vehicle Lease Residual Values

Contractual residual values of vehicle lease contracts are estimated at lease inception by examining external industry data, the anticipated Toyota and Lexus product pipeline and our own experience.  Factors considered in this evaluation include, but are not limited to, economic forecasts, new vehicle pricing, new vehicle incentive programs, new vehicle sales, competitor actions and behavior, vehicle features and specifications, the mix and level of used vehicle supply, the level of current used vehicle values, buying and leasing behavior trends, and fuel prices.  We are exposed to a risk of loss to the extent the customer returns the vehicle and the value of the vehicle is lower than the residual value estimated at inception of the lease and if the number of returned vehicles is higher than anticipated.

Depreciation on operating leases is recognized using the straight-line method over the lease term.  The depreciable basis is the original acquisition cost of the vehicle less the estimated residual value of the vehicle at the end of the lease term.  On a quarterly basis, we review the estimated end-of-term market values and return rates of leased vehicles to assess the appropriateness of the carrying values at lease-end.  Factors affecting the estimated end-of-term market value are similar to those considered in the evaluation of residual values at lease inception discussed above.  Adjustments to depreciation expense to reflect revised estimates of expected market values at lease termination and revised return rates are recorded prospectively on a straight-line basis over the remaining lease term.

We use various channels to sell vehicles returned at lease-end. Upon disposition, a gain or loss is recorded for any difference between the net book value of the lease and the proceeds received from the disposition of the asset, including any insurance proceeds.

Note 4 – Investments in Operating Leases, Net (Continued)

Investments in operating leases, net consisted of the following:

	September 30,			March 31,
	2019			2019
Investments in operating leases	$	43,908		$	42,869
Securitized investments in operating leases		5,913			7,532
		49,821			50,401
Deferred origination (fees) and costs, net		(236	)		(225	)
Deferred income		(2,170	)		(2,085	)
Accumulated depreciation		(9,647	)		(10,061	)
Allowance for credit losses		(81	)		(103	)
Investments in operating leases, net	$	37,687		$	37,927

Future minimum rentals on investments in operating leases are as follows:

Years ending March 31,	Future minimum rentals on operating leases
2020	$	3,291
2021		5,078
2022		2,754
2023		581
2024		37
Thereafter		1
Total	$	11,742

A portion of our operating lease contracts has historically terminated prior to maturity.  Future minimum rentals shown above should not be considered indicative of future cash collections.

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Debt and Credit Facilities (Tables)

6 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

Debt and Related Weighted Average Contractual Interest Rates

Debt and the related weighted average contractual interest rates are summarized as follows:

	September 30, 2019							March 31, 2019
	Face Value		Carrying Value		Weighted average contractual interest rates			Face Value		Carrying Value		Weighted average contractual interest rates
Unsecured notes and loans payable	$	82,564	$	82,256		2.43	%	$	80,875	$	80,521		2.60	%
Secured notes and loans payable		12,863		12,837		2.50	%		12,421		12,401		2.62	%
Total debt	$	95,427	$	95,093		2.44	%	$	93,296	$	92,922		2.60	%

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Finance Receivables, Net (Tables)

6 Months Ended

Sep. 30, 2019

Receivables [Abstract]

Net Financing Receivables

Finance receivables, net consisted of the following:

	September 30,			March 31,
	2019			2019
Retail receivables	$	44,063		$	42,621
Securitized retail receivables		12,539			11,318
Dealer financing		17,331			17,696
		73,933			71,635
Deferred origination (fees) and costs, net		831			695
Deferred income		(1,271	)		(1,314	)
Allowance for credit losses
Retail and securitized retail receivables		(317	)		(304	)
Dealer financing		(188	)		(195	)
Total allowance for credit losses		(505	)		(499	)
Finance receivables, net	$	72,988		$	70,517

Finance Receivable Credit Quality Indicators

The tables below present each credit quality indicator by class of finance receivables:

	Retail Loan
	September 30,		March 31,
	2019		2019
Aging of finance receivables:
Current	$	55,565	$	53,047
30-59 days past due		754		657
60-89 days past due		194		162
90 days or greater past due		89		73
Total	$	56,602	$	53,939

	Wholesale				Real Estate				Working Capital
	September 30,		March 31,		September 30,		March 31,		September 30,		March 31,
	2019		2019		2019		2019		2019		2019
Credit quality indicators:
Performing	$	8,992	$	9,155	$	4,152	$	4,019	$	2,548	$	2,448
Credit Watch		873		1,127		380		554		69		70
At Risk		126		152		83		84		60		63
Default		20		6		23		14		5		4
Total	$	10,011	$	10,440	$	4,638	$	4,671	$	2,682	$	2,585

Past Due Finance Receivables by Class

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

	September 30, 2019
	30 - 59 Days Past Due		60 - 89 Days Past Due		90Daysor Greater Past Due		TotalPast Due		Current		TotalFinance Receivables		90 Days or GreaterPast Due and Accruing
Retail loan	$	754	$	194	$	89	$	1,037	$	55,565	$	56,602	$	60
Wholesale		-		-		-		-		10,011		10,011		-
Real estate		-		1		-		1		4,637		4,638		-
Working capital		-		-		4		4		2,678		2,682		-
Total	$	754	$	195	$	93	$	1,042	$	72,891	$	73,933	$	60

	March 31, 2019
	30 - 59 Days Past Due		60 - 89 Days Past Due		90Daysor Greater Past Due		TotalPast Due		Current		TotalFinance Receivables		90Daysor GreaterPast Due and Accruing
Retail loan	$	657	$	162	$	73	$	892	$	53,047	$	53,939	$	47
Wholesale		-		-		1		1		10,439		10,440		-
Real estate		-		-		-		-		4,671		4,671		-
Working capital		-		-		4		4		2,581		2,585		-
Total	$	657	$	162	$	78	$	897	$	70,738	$	71,635	$	47

Summary of Impaired Loans by Class of Finance Receivable

The following table summarizes the information related to our impaired loans by class of finance receivables: 

	Impaired				Individually Evaluated
	Finance Receivables				Allowance
	September 30,		March 31,		September 30,		March 31,
	2019		2019		2019		2019
Impaired account balances individually evaluated for impairment with an allowance:
Wholesale	$	115	$	161	$	22	$	28
Real estate		101		93		10		11
Working capital		64		67		58		60
Total	$	280	$	321	$	90	$	99
Impaired account balances individually evaluated for impairment without an allowance:
Wholesale	$	161	$	130
Real estate		149		152
Working capital		20		20
Total	$	330	$	302
Impaired account balances aggregated and evaluated for impairment:
Retail loan	$	243	$	231
Total impaired account balances:
Retail loan	$	243	$	231
Wholesale		276		291
Real estate		250		245
Working capital		84		87
Total	$	853	$	854

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Fair Value Measurements

6 Months Ended

Sep. 30, 2019

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 12 – Fair Value Measurements

Recurring Fair Value Measurements

Financial assets and financial liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.  The following tables summarize our financial assets and financial liabilities measured at fair value on a recurring basis by level within the fair value hierarchy except for certain investments that are measured at fair value using the net asset value per share (or its equivalent) as a practical expedient and are excluded from the leveling information provided in the tables below.  Fair value amounts presented below are intended to permit reconciliation of the fair value hierarchy to the amounts presented in our Consolidated Balance Sheets.  

	September 30, 2019
								Counterparty
								netting &			Fair
	Level 1		Level 2			Level 3		collateral			value
Investments in marketable securities:
Available-for-sale debt securities:
U.S. government and agency obligations	$	202	$	2		$	-	$	-		$	204
Municipal debt securities		-		11			-		-			11
Certificates of deposit		-		150			-		-			150
Commercial paper		-		350			-		-			350
Corporate debt securities		-		174			-		-			174
Mortgage-backed securities:
U.S. government agency		-		33			-		-			33
Non-agency residential		-		-			1		-			1
Non-agency commercial		-		-			45		-			45
Asset-backed securities		-		-			81		-			81
Available-for-sale debt securities total		202		720			127		-			1,049
Equity investments:
Fixed income mutual funds:
Fixed income mutual funds measured at    net asset value												725
Total return bond funds		1,678		-			-		-			1,678
Equity investments total		1,678		-			-		-			2,403
Investments in marketable securities total		1,880		720			127		-			3,452
Derivative assets:
Interest rate swaps		-		689			-		-			689
Foreign currency swaps		-		21			-		-			21
Counterparty netting and collateral		-		-			-		(660	)		(660	)
Derivative assets total		-		710			-		(660	)		50
Assets at fair value		1,880		1,430			127		(660	)		3,502
Derivative liabilities:
Interest rate swaps		-		(928	)		-		-			(928	)
Foreign currency swaps		-		(1,081	)		-		-			(1,081	)
Counterparty netting and collateral		-		-			-		1,971			1,971
Liabilities at fair value		-		(2,009	)		-		1,971			(38	)
Net assets at fair value	$	1,880	$	(579	)	$	127	$	1,311		$	3,464

Note 12 – Fair Value Measurements (Continued)

	March 31, 2019
								Counterparty
								netting &			Fair
	Level 1		Level 2			Level 3		collateral			value
Investments in marketable securities:
Available-for-sale debt securities:
U.S. government and agency obligations	$	194	$	18		$	-	$	-		$	212
Municipal debt securities		-		11			-		-			11
Certificates of deposit		-		50			-		-			50
Commercial paper		-		70			-		-			70
Corporate debt securities		-		162			-		-			162
Mortgage-backed securities:
U.S. government agency		-		35			-		-			35
Non-agency residential		-		-			1		-			1
Non-agency commercial		-		-			39		-			39
Asset-backed securities		-		-			53		-			53
Available-for-sale debt securities total		194		346			93		-			633
Equity investments:
Fixed income mutual funds:
Fixed income mutual funds measured at    net asset value												689
Total return bond funds		1,586		-			-		-			1,586
Equity investments total		1,586		-			-		-			2,275
Investments in marketable securities total		1,780		346			93		-			2,908
Derivative assets:
Interest rate swaps		-		471			1		-			472
Foreign currency swaps		-		72			-		-			72
Counterparty netting and collateral		-		-			-		(483	)		(483	)
Derivative assets total		-		543			1		(483	)		61
Assets at fair value		1,780		889			94		(483	)		2,969
Derivative liabilities:
Interest rate swaps		-		(622	)		-		-			(622	)
Foreign currency swaps		-		(785	)		-		-			(785	)
Counterparty netting and collateral		-		-			-		1,381			1,381
Liabilities at fair value		-		(1,407	)		-		1,381			(26	)
Net assets at fair value	$	1,780	$	(518	)	$	94	$	898		$	2,943

Note 12 – Fair Value Measurements (Continued)

Transfers between levels of the fair value hierarchy are recognized at the end of their respective reporting periods.  Transfers between levels of the fair value hierarchy during the three and six months ended September 30, 2019 and 2018 resulted from changes in the transparency of inputs and were not significant.

The following tables summarize the rollforward of all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs:

	Three Months Ended September 30, 2019
											Total net
									Derivative		assets
	Available-for-sale debt securities								instruments, net		(liabilities)
						Total
	Mortgage-		Asset-			available-			Interest
	backed		backed			for-sale debt			rate
	securities		securities			securities			swaps
Fair value, July 1, 2019	$	41	$	66		$	107		$	-	$	107
Total gains (losses)
Included in net income		-		-			-			-		-
Included in other comprehensive income		-		-			-			-		-
Purchases, issuances, sales, and settlements
Purchases		5		19			24			-		24
Issuances		-		-			-			-		-
Sales		-		-			-			-		-
Settlements		-		(4	)		(4	)		-		(4	)
Transfers in to Level 3		-		-			-			-		-
Transfers out of Level 3		-		-			-			-		-
Fair value, September 30, 2019	$	46	$	81		$	127		$	-	$	127
The amount of total gains   (losses) included in net income   attributable to assets held   at the reporting date									$	-	$	-

	Three Months Ended September 30, 2018
												Total net
									Derivative			assets
	Available-for-sale debt securities								instruments, net			(liabilities)
						Total
	Mortgage-		Asset-			available-			Interest
	backed		backed			for-sale debt			rate
	securities		securities			securities			swaps
Fair value, July 1, 2018	$	25	$	38		$	63		$	(23	)	$	40
Total gains (losses)
Included in net income		-		-			-			(10	)		(10	)
Included in other comprehensive income		-		-			-			-			-
Purchases, issuances, sales, and settlements
Purchases		5		18			23			-			23
Issuances		-		-			-			-			-
Sales		-		(4	)		(4	)		-			(4	)
Settlements		-		(6	)		(6	)		(26	)		(32	)
Transfers in to Level 3		-		-			-			-			-
Transfers out of Level 3		-		-			-			-			-
Fair value, September 30, 2018	$	30	$	46		$	76		$	(59	)	$	17
The amount of total gains   (losses) included in net income   attributable to assets held   at the reporting date									$	(10	)	$	(10	)

Note 12 – Fair Value Measurements (Continued)

	Six Months Ended September 30, 2019
												Total net
									Derivative			assets
	Available-for-sale debt securities								instruments, net			(liabilities)
						Total
	Mortgage-		Asset-			available-			Interest
	backed		backed			for-sale debt			rate
	securities		securities			securities			swaps
Fair value, April 1, 2019	$	40	$	53		$	93		$	1		$	94
Total gains (losses)
Included in net income		-		-			-			18			18
Included in other comprehensive income		1		1			2			-			2
Purchases, issuances, sales, and settlements
Purchases		5		34			39			-			39
Issuances		-		-			-			-			-
Sales		-		-			-			-			-
Settlements		-		(7	)		(7	)		6			(1	)
Transfers in to Level 3		-		-			-			-			-
Transfers out of Level 3		-		-			-			(25	)		(25	)
Fair value, September 30, 2019	$	46	$	81		$	127		$	-		$	127
The amount of total gains   (losses) included in net income   attributable to assets held   at the reporting date									$	18		$	18

	Six Months Ended September 30, 2018
													Total net
										Derivative			assets
	Available-for-sale debt securities									instruments, net			(liabilities)
							Total
	Mortgage-			Asset-			available-			Interest
	backed			backed			for-sale debt			rate
	securities			securities			securities			swaps
Fair value, April 1, 2018	$	31		$	39		$	70		$	(21	)	$	49
Total gains (losses)
Included in net income		-			-			-			(18	)		(18	)
Included in other comprehensive income		-			-			-			-			-
Purchases, issuances, sales, and settlements
Purchases		5			20			25			-			25
Issuances		-			-			-			-			-
Sales		-			(4	)		(4	)		-			(4	)
Settlements		(6	)		(9	)		(15	)		(20	)		(35	)
Transfers in to Level 3		-			-			-			-			-
Transfers out of Level 3		-			-			-			-			-
Fair value, September 30, 2018	$	30		$	46		$	76		$	(59	)	$	17
The amount of total gains   (losses) included in net   income attributable to   assets held at the   reporting date										$	(18	)	$	(18	)

Note 12 – Fair Value Measurements (Continued)

Nonrecurring Fair Value Measurements

Nonrecurring fair value measurements include Level 3 net finance receivables that are not measured at fair value on a recurring basis, but are subject to fair value adjustments utilizing the fair value of the underlying collateral when there is evidence of impairment. We did not have any significant nonrecurring fair value items as of September 30, 2019 and March 31, 2019.

Level 3 Fair Value Measurements

The Level 3 financial assets and liabilities recorded at fair value which are subject to recurring and nonrecurring fair value measurement, and the corresponding change in the fair value measurements of these assets and liabilities, were not significant to our Consolidated Balance Sheets or Consolidated Statements of Income as of and for the three and six months ended September 30, 2019 and as of and for the year ended March 31, 2019.

Note 12 – Fair Value Measurements (Continued)

Financial Instruments

The following tables provide information about assets and liabilities not carried at fair value on a recurring basis on our Consolidated Balance Sheets:

	September 30, 2019
	Carrying								Total Fair
	value		Level 1		Level 2		Level 3		Value
Financial assets
Finance receivables, net
Retail loan	$	55,842	$	-	$	-	$	56,665	$	56,665
Wholesale		9,892		-		-		9,977		9,977
Real estate		4,575		-		-		4,676		4,676
Working capital		2,567		-		-		2,593		2,593
Financial liabilities
Unsecured notes and loans payable	$	82,256	$	-	$	82,110	$	1,575	$	83,685
Secured notes and loans payable		12,837		-		-		12,954		12,954

	March 31, 2019
	Carrying								Total Fair
	value		Level 1		Level 2		Level 3		Value
Financial assets
Finance receivables, net
Retail loan	$	53,013	$	-	$	-	$	53,247	$	53,247
Wholesale		10,293		-		-		10,369		10,369
Real estate		4,550		-		-		4,534		4,534
Working capital		2,510		-		-		2,554		2,554
Financial liabilities
Unsecured notes and loans payable	$	80,521	$	-	$	79,056	$	2,313	$	81,369
Secured notes and loans payable		12,401		-		-		12,428		12,428

The carrying value of each class of finance receivables includes accrued interest and deferred fees and costs, net of deferred income and the allowance for credit losses.  Finance receivables, net, excludes related party transactions, for which the fair value approximates the carrying value, of $109 million and $148 million at September 30, 2019 and March 31, 2019, respectively.  Fair values of related party finance receivables, net are classified as Level 3 of the fair value hierarchy.

For Cash and cash equivalents and Restricted cash and cash equivalents on our Consolidated Balance Sheets, the fair value approximates the carrying value and these instruments are classified as Level 1 of the fair value hierarchy.  

XML

Fair Value Measurements - Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Millions	Sep. 30, 2019	Mar. 31, 2019
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	$ 1,049	$ 633
Equity investments	2,403	2,275
Investments in marketable securities total	3,452	2,908
U.S. government and agency obligations [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	204	212
Municipal debt securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	11	11
Corporate debt securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	174	162
U.S. government agency mortgage-backed securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	33	35
Non-agency residential mortgage-backed securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	1	1
Non-agency commercial mortgage-backed securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	45	39
Asset-backed securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	81	53
Recurring [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	1,049	633
Equity investments	2,403	2,275
Investments in marketable securities total	3,452	2,908
Derivative assets	50	61
Counterparty netting and collateral	(660)	(483)
Assets at fair value	3,502	2,969
Counterparty netting and collateral	1,971	1,381
Liabilities at fair value	(38)	(26)
Net assets at fair value	3,464	2,943
Derivative asset liability collateral obligation right to return reclaim cash offset	1,311	898
Recurring [Member] | Certificates of deposit [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	150	50
Recurring [Member] | Commercial paper [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	350	70
Recurring [Member] | U.S. government and agency obligations [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	204	212
Recurring [Member] | Municipal debt securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	11	11
Recurring [Member] | Corporate debt securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	174	162
Recurring [Member] | U.S. government agency mortgage-backed securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	33	35
Recurring [Member] | Non-agency residential mortgage-backed securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	1	1
Recurring [Member] | Non-agency commercial mortgage-backed securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	45	39
Recurring [Member] | Asset-backed securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	81	53
Recurring [Member] | Fixed income total return bond funds [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Equity investments	1,678	1,586
Recurring [Member] | Foreign currency swaps [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Derivative assets	21	72
Derivative liabilities	(1,081)	(785)
Recurring [Member] | Interest rate swaps [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Derivative assets	689	472
Derivative liabilities	(928)	(622)
Recurring [Member] | Level 1 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	202	194
Equity investments	1,678	1,586
Investments in marketable securities total	1,880	1,780
Derivative assets	0	0
Counterparty netting and collateral	0	0
Assets at fair value	1,880	1,780
Counterparty netting and collateral	0	0
Liabilities at fair value	0	0
Net assets at fair value	1,880	1,780
Recurring [Member] | Level 1 [Member] | Certificates of deposit [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	0	0
Recurring [Member] | Level 1 [Member] | Commercial paper [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	0	0
Recurring [Member] | Level 1 [Member] | U.S. government and agency obligations [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	202	194
Recurring [Member] | Level 1 [Member] | Municipal debt securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	0	0
Recurring [Member] | Level 1 [Member] | Corporate debt securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	0	0
Recurring [Member] | Level 1 [Member] | U.S. government agency mortgage-backed securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	0	0
Recurring [Member] | Level 1 [Member] | Non-agency residential mortgage-backed securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	0	0
Recurring [Member] | Level 1 [Member] | Non-agency commercial mortgage-backed securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	0	0
Recurring [Member] | Level 1 [Member] | Asset-backed securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	0	0
Recurring [Member] | Level 1 [Member] | Fixed income total return bond funds [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Equity investments	1,678	1,586
Recurring [Member] | Level 1 [Member] | Foreign currency swaps [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Derivative assets	0	0
Derivative liabilities	0	0
Recurring [Member] | Level 1 [Member] | Interest rate swaps [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Derivative assets	0	0
Derivative liabilities	0	0
Recurring [Member] | Level 2 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	720	346
Equity investments	0	0
Investments in marketable securities total	720	346
Derivative assets	710	543
Counterparty netting and collateral	0	0
Assets at fair value	1,430	889
Counterparty netting and collateral	0	0
Liabilities at fair value	(2,009)	(1,407)
Net assets at fair value	(579)	(518)
Recurring [Member] | Level 2 [Member] | Certificates of deposit [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	150	50
Recurring [Member] | Level 2 [Member] | Commercial paper [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	350	70
Recurring [Member] | Level 2 [Member] | U.S. government and agency obligations [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	2	18
Recurring [Member] | Level 2 [Member] | Municipal debt securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	11	11
Recurring [Member] | Level 2 [Member] | Corporate debt securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	174	162
Recurring [Member] | Level 2 [Member] | U.S. government agency mortgage-backed securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	33	35
Recurring [Member] | Level 2 [Member] | Non-agency residential mortgage-backed securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	0	0
Recurring [Member] | Level 2 [Member] | Non-agency commercial mortgage-backed securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	0	0
Recurring [Member] | Level 2 [Member] | Asset-backed securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	0	0
Recurring [Member] | Level 2 [Member] | Fixed income total return bond funds [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Equity investments	0	0
Recurring [Member] | Level 2 [Member] | Foreign currency swaps [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Derivative assets	21	72
Derivative liabilities	(1,081)	(785)
Recurring [Member] | Level 2 [Member] | Interest rate swaps [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Derivative assets	689	471
Derivative liabilities	(928)	(622)
Recurring [Member] | Level 3 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	127	93
Equity investments	0	0
Investments in marketable securities total	127	93
Derivative assets	0	1
Counterparty netting and collateral	0	0
Assets at fair value	127	94
Counterparty netting and collateral	0	0
Liabilities at fair value	0	0
Net assets at fair value	127	94
Recurring [Member] | Level 3 [Member] | Certificates of deposit [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	0	0
Recurring [Member] | Level 3 [Member] | Commercial paper [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	0	0
Recurring [Member] | Level 3 [Member] | U.S. government and agency obligations [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	0	0
Recurring [Member] | Level 3 [Member] | Municipal debt securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	0	0
Recurring [Member] | Level 3 [Member] | Corporate debt securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	0	0
Recurring [Member] | Level 3 [Member] | U.S. government agency mortgage-backed securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	0	0
Recurring [Member] | Level 3 [Member] | Non-agency residential mortgage-backed securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	1	1
Recurring [Member] | Level 3 [Member] | Non-agency commercial mortgage-backed securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	45	39
Recurring [Member] | Level 3 [Member] | Asset-backed securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities, Debt securities	81	53
Recurring [Member] | Level 3 [Member] | Fixed income total return bond funds [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Equity investments	0	0
Recurring [Member] | Level 3 [Member] | Foreign currency swaps [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Derivative assets	0	0
Derivative liabilities	0	0
Recurring [Member] | Level 3 [Member] | Interest rate swaps [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Derivative assets	0	1
Derivative liabilities	0	0
Recurring [Member] | Fixed income mutual funds measured at net asset value [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Equity investments	$ 725	$ 689

XML

Income Taxes - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Mar. 31, 2019
Income Tax Disclosure [Abstract]
Provision for income taxes	$ 158	$ 87	$ 262	$ 109
Effective tax rate	26.00%	31.00%	24.00%	28.00%
Deferred tax assets	$ 1,400		$ 1,400		$ 2,900
Net deferred income tax liability	$ 5,594		$ 5,594		$ 5,452

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Consolidated Statements of Cash Flows - USD ($) $ in Millions	6 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Cash flows from operating activities:
Net income	$ 818	$ 286
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	3,264	3,484
Recognition of deferred income	(1,230)	(1,142)
Provision for credit losses	136	156
Amortization of deferred costs	352	310
Foreign currency and other adjustments to the carrying value of debt, net	(411)	(748)
Net (gains) losses from investments in marketable securities	(90)	41
Net change in:
Derivative assets	11	12
Other assets and accrued interest	(75)	76
Deferred income taxes	137	81
Derivative liabilities	12	25
Other liabilities	121	167
Net cash provided by operating activities	3,045	2,748
Cash flows from investing activities:
Purchase of investments in marketable securities	(1,018)	(798)
Proceeds from sales of investments in marketable securities	183	71
Proceeds from maturities of investments in marketable securities	403	1,908
Acquisition of finance receivables	(15,483)	(12,322)
Collection of finance receivables	12,628	12,035
Net change in wholesale and certain working capital receivables	428	781
Acquisition of investments in operating leases	(8,521)	(8,680)
Disposals of investments in operating leases	6,285	5,808
Long term loans to affiliates	(100)	(200)
Payments on long term loans from affiliates	13	20
Other, net	(16)	(19)
Net cash used in investing activities	(5,198)	(1,396)
Cash flows from financing activities:
Proceeds from issuance of debt	11,101	15,032
Payments on debt	(10,269)	(12,380)
Net change in commercial paper	1,751	(2,029)
Net change in financing support provided by affiliates	2	(3)
Dividend paid	(10)	0
Net cash provided by financing activities	2,575	620
Net increase in cash and cash equivalents and restricted cash and cash equivalents	422	1,972
Cash and cash equivalents and restricted cash and cash equivalents at the beginning of the period	3,183	4,759
Cash and cash equivalents and restricted cash and cash equivalents at the end of the period	3,605	6,731
Supplemental disclosures:
Interest paid, net	1,315	1,048
Income taxes paid, net	$ 45	$ 15

XML

Finance Receivables, Net - Net Financing Receivables (Details) - USD ($) $ in Millions	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross finance receivables	$ 73,933		$ 71,635
Finance receivables, net	72,988		70,517
Finance Receivables, Net [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross finance receivables	73,933		71,635	$ 70,495
Deferred origination (fees) and costs, net	831		695
Deferred income	(1,271)		(1,314)
Allowance for credit losses	(505)	$ (504)	(499)	$ (447)	$ (463)	$ (463)
Finance receivables, net	72,988		70,517
Finance Receivables, Net [Member] | Retail receivables [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross finance receivables	44,063		42,621
Finance Receivables, Net [Member] | Securitized retail receivables [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross finance receivables	12,539		11,318
Finance Receivables, Net [Member] | Dealer financing [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross finance receivables	17,331		17,696
Allowance for credit losses	(188)		(195)
Finance Receivables, Net [Member] | Retail and securitized retail receivables [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for credit losses	$ (317)		$ (304)

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Finance Receivables, Net - Additional Information (Details) - USD ($) $ in Millions	Sep. 30, 2019	Mar. 31, 2019
Receivables [Abstract]
Dealer products portfolio segment accounts on nonaccrual status	$ 323	$ 329

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Consolidated Balance Sheets - USD ($) $ in Millions	Sep. 30, 2019	Mar. 31, 2019
ASSETS
Cash and cash equivalents	$ 2,664	$ 2,198
Restricted cash and cash equivalents	941	985
Investments in marketable securities	3,452	2,908
Finance receivables, net	72,988	70,517
Investments in operating leases, net	37,687	37,927
Other assets	2,206	1,981
Total assets	119,938	116,516
LIABILITIES AND SHAREHOLDER’S EQUITY
Debt	95,093	92,922
Deferred income taxes	5,594	5,452
Other liabilities	4,840	4,564
Total liabilities	105,527	102,938
Commitments and contingencies (Refer to Note 9)
Shareholder’s equity:
Capital stock, no par value (100,000 shares authorized; 91,500 issued and outstanding) at September 30, 2019 and March 31, 2019	915	915
Additional paid-in capital	2	2
Accumulated other comprehensive income	18	3
Retained earnings	13,476	12,658
Total shareholder's equity	14,411	13,578
Total liabilities and shareholder's equity	$ 119,938	$ 116,516

XML

Document and Entity Information - shares	6 Months Ended
	Sep. 30, 2019	Oct. 31, 2019
Document And Entity Information [Abstract]
Document Type	10-Q
Document Period End Date	Sep. 30, 2019
Amendment Flag	false
Entity Registrant Name	TOYOTA MOTOR CREDIT CORPORATION
Entity Central Index Key	0000834071
Current Fiscal Year End Date	--03-31
Trading Symbol	TM/28
Entity Filer Category	Non-accelerated Filer
Entity Common Stock Shares Outstanding		91,500
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q2
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Current Reporting Status	Yes
Entity Shell Company	false
Entity File Number	1-9961
Entity Tax Identification Number	95-3775816
Entity Address, Address Line One	6565 Headquarters Drive
Entity Address, City or Town	Plano
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	75024
City Area Code	469
Local Phone Number	486-9300
Entity Incorporation, State or Country Code	CA
Document Quarterly Report	true
Document Transition Report	false
Title of 12(b) Security	Medium-Term Notes, Series B Stated Maturity Date January 11, 2028
Security Exchange Name	NYSE
Entity Interactive Data Current	Yes

XML

Allowance for Credit Losses - Allowance for Credit Losses on Finance Receivables and Investments in Operating Leases (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Allowance for Credit Losses on Finance Receivables and Investments in Operating Leases
Allowance for credit losses at beginning of period	$ 605	$ 600	$ 602	$ 597
Charge-offs	(106)	(105)	(208)	(218)
Recoveries	26	23	56	50
Provision for credit losses	61	67	136	156
Allowance for credit losses at end of period	$ 586	$ 585	$ 586	$ 585

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Investments in Marketable Securities (Tables)

6 Months Ended

Sep. 30, 2019

Marketable Securities [Abstract]

Summary of Investments in Marketable Securities

Investments in marketable securities consisted of the following:

	September 30, 2019
	Amortized		Unrealized		Unrealized		Fair
	cost		gains		losses		value
Available-for-sale debt securities:
U.S. government and agency obligations	$	196	$	8	$	-	$	204
Municipal debt securities		9		2		-		11
Certificates of deposit		150		-		-		150
Commercial paper		350		-		-		350
Corporate debt securities		164		10		-		174
Mortgage-backed securities:
U.S. government agency		32		1		-		33
Non-agency residential		1		-		-		1
Non-agency commercial		44		1		-		45
Asset-backed securities		79		2		-		81
Total available-for-sale debt securities	$	1,025	$	24	$	-	$	1,049
Equity investments							$	2,403
Total investments in marketable securities							$	3,452

	March 31, 2019
	Amortized		Unrealized		Unrealized			Fair
	cost		gains		losses			value
Available-for-sale debt securities:
U.S. government and agency obligations	$	213	$	2	$	(3	)	$	212
Municipal debt securities		9		2		-			11
Certificates of deposit		50		-		-			50
Commercial paper		70		-		-			70
Corporate debt securities		160		3		(1	)		162
Mortgage-backed securities:
U.S. government agency		35		-		-			35
Non-agency residential		1		-		-			1
Non-agency commercial		39		-		-			39
Asset-backed securities		52		1		-			53
Total available-for-sale debt securities	$	629	$	8	$	(4	)	$	633
Equity investments									2,275
Total investments in marketable securities								$	2,908

Schedule of Gains and Losses on Investments in Marketable Securities Presented in Our Consolidated Statement of Income

The following table represents gains and losses on our investments in marketable securities presented in our Consolidated Statements of Income:

	Three Months Ended					Six Months Ended
	September 30,					September 30,
	2019		2018			2019		2018
Available-for-sale debt securities:
Realized gains (losses)	$	1	$	(1	)	$	1	$	(1	)
Equity investments:
Unrealized gains (losses) recognized	$	31	$	(15	)	$	86	$	(40	)
Realized gains (losses) on sales	$	1	$	-		$	3	$	-

Summary of Contractual Maturity of Available-For-Sale Debt Securities

The amortized cost and fair value, by contractual maturity of available-for-sale debt securities are summarized in the following table.  Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay certain obligations.

	September 30, 2019
	AmortizedCost		Fair Value
Available-for-sale debt securities:
Due within 1 year	$	542	$	542
Due after 1 year through 5 years		128		130
Due after 5 years through 10 years		124		131
Due after 10 years		75		86
Mortgage-backed and asset-backed securities1		156		160
Total	$	1,025	$	1,049

¹ Mortgage-backed and asset-backed securities are shown separately from other maturity groupings as these securities have multiple maturity dates.

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Related Party Transactions

6 Months Ended

Sep. 30, 2019

Related Party Transactions [Abstract]

Related Party Transactions

Note 11 – Related Party Transactions

In conjunction with the April 1, 2019 adoption of ASU 2016-02, Leases, as described in Note 1 – Interim Financial Data, we recorded ROU assets and lease liabilities, which include amounts for facility leases with affiliates.  As of September 30, 2019, the amounts for both affiliate related ROU assets and lease liabilities were $76 million.

Except for the transaction mentioned above, as of September 30, 2019, there were no other material changes to our related party agreements or relationships as described in our fiscal 2019 Form 10-K.  The tables below show the financial statement line items and amounts included in our Consolidated Statements of Income and in our Consolidated Balance Sheets under various related party agreements or relationships:

	Three Months Ended						Six Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Net financing revenues:
Manufacturer's subvention and other revenues	$	508		$	467		$	1,020		$	934
Depreciation on operating leases	$	(13	)	$	(5	)	$	(23	)	$	(10	)
Interest expense:
Credit support fees, interest and other expenses	$	24		$	24		$	48		$	49
Insurance earned premiums and contract revenues:
Insurance premiums and contract revenues	$	45		$	44		$	90		$	89
Investment and other income, net:
Interest and other income	$	6		$	2		$	12		$	4
Expenses:
Operating and administrative expenses	$	21		$	24		$	42		$	47
Insurance losses and loss adjustment expenses1	$	-		$	(1	)	$	-		$	(3	)

¹ Amount includes the transfer of insurance losses and loss adjustment expenses under a reinsurance contract.

Note 11 – Related Party Transactions (Continued)

	September 30,			March 31,
	2019			2019
Assets:
Investments in marketable securities
Commercial paper	$	350		$	70
Finance receivables, net
Accounts receivable	$	111		$	150
Deferred retail subvention income	$	(1,207	)	$	(1,257	)
Investments in operating leases, net
Investments in operating leases, net	$	(51	)	$	1
Deferred lease subvention income	$	(2,147	)	$	(2,062	)
Other assets
Notes receivable	$	688		$	601
Other receivables, net	$	94		$	11
Liabilities:
Other liabilities
Unearned affiliate insurance premiums and contract revenues	$	339		$	337
Other payables, net	$	226		$	147
Notes payable	$	18		$	16

TMCC receives subvention payments from TMNA which results in a gross monthly subvention receivable.  As of September 30, 2019 and March 31, 2019, the subvention receivable from TMNA was $190 million and $171 million, respectively.  We have a master netting agreement with TMNA which allows us to net settle payments for shared services and subvention transactions.  Under this agreement we had a net amount payable to TMNA, which resulted in the subvention receivable being recorded in Other payables, net in Other liabilities as of September 30, 2019 and March 31, 2019.

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Derivatives, Hedging Activities and Interest Expense (Tables)

6 Months Ended

Sep. 30, 2019

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivative Activity Impact on Consolidated Balance Sheet

The following tables show the financial statement line item and amount of our derivative assets and liabilities that are reported in our Consolidated Balance Sheets:

	September 30, 2019					March 31, 2019
			Fair					Fair
	Notional		value			Notional		value
Other assets:
Interest rate swaps	$	37,394	$	689		$	49,254	$	472
Foreign currency swaps		54		21			2,771		72
Total	$	37,448	$	710		$	52,025	$	544
Counterparty netting				(456	)				(441	)
Collateral held				(204	)				(42	)
Carrying value of derivative contracts – Other assets			$	50				$	61
Other liabilities:
Interest rate swaps	$	63,632	$	928		$	57,593	$	622
Foreign currency swaps		12,696		1,081			9,796		785
Total	$	76,328	$	2,009		$	67,389	$	1,407
Counterparty netting				(456	)				(441	)
Collateral posted				(1,515	)				(940	)
Carrying value of derivative contracts – Other liabilities			$	38				$	26

Components of Interest Expense

The following table summarizes the components of interest expense, including the location and amount of gains and losses on derivative instruments and related hedged items, as reported in our Consolidated Statements of Income:

	Three Months Ended						Six Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Interest expense on debt	$	639		$	637		$	1,294		$	1,238
Interest expense (income) on derivatives		37			(22	)		49			(47	)
Interest expense on debt and derivatives		676			615			1,343			1,191
Gains on debt denominated in foreign currencies		(475	)		(161	)		(460	)		(807	)
Losses on foreign currency swaps		474			172			366			855
(Gains) losses on U.S. dollar interest rate swaps		(62	)		76			61			145
Total interest expense	$	613		$	702		$	1,310		$	1,384

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Related Party Transactions - Related Party Transactions Included in Consolidated Balance Sheets (Details) - TMCC-affiliated companies [Member] - USD ($) $ in Millions	Sep. 30, 2019	Mar. 31, 2019
Investments in marketable securities
Commercial paper	$ 350	$ 70
Finance receivables, net
Accounts receivable	111	150
Deferred retail subvention income	(1,207)	(1,257)
Investments in operating leases, net
Investments in operating leases, net	(51)	1
Deferred lease subvention income	(2,147)	(2,062)
Other assets
Notes receivable	688	601
Other receivables, net	94	11
Other liabilities
Unearned affiliate insurance premiums and contract revenues	339	337
Other payables, net	226	147
Notes payable	$ 18	$ 16

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Commitments and Contingencies - Summary of additional information related to operating lease agreements (Details) $ in Millions	Sep. 30, 2019 USD ($)
Commitments And Contingencies Disclosure [Abstract]
ROU assets	$ 112
Lease liabilities	$ 119
Weighted average remaining lease term (in years)	9 years 6 months 10 days
Weighted average discount rate	3.10%

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Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Statement Of Income And Comprehensive Income [Abstract]
Net unrealized gains (losses) on available-for-sale marketable securities, tax provision	$ (2)	$ (1)	$ (5)	$ (1)
Reclassification adjustment for net losses (gains) on available-for-sale marketable securities included in investment and other income, tax provision	$ 0	$ 0	$ 0	$ 0

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Allowance for Credit Losses - Allowance for Credit Losses and Finance Receivables by Portfolio Segment (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Mar. 31, 2019
Allowance for Credit Losses for Finance Receivables:
Provision for credit losses	$ 61	$ 67	$ 136	$ 156
Finance Receivables:
Total Finance Receivables	73,933		73,933		$ 71,635
Retail Loan [Member]
Finance Receivables:
Total Finance Receivables	56,602		56,602		53,939
Finance Receivables, Net [Member]
Allowance for Credit Losses for Finance Receivables:
Allowance for credit losses at beginning of period	504	463	499	463
Charge-offs	(80)	(76)	(152)	(151)
Recoveries	13	12	27	26
Provision for credit losses	68	48	131	109
Allowance for credit losses at end of period	505	447	505	447
Ending balance: Individually evaluated for impairment	90	57	90	57
Ending balance: Collectively evaluated for impairment	415	390	415	390
Finance Receivables:
Total Finance Receivables	73,933	70,495	73,933	70,495	$ 71,635
Ending balance: Individually evaluated for impairment	610	446	610	446
Ending balance: Collectively evaluated for impairment	73,323	70,049	73,323	70,049
Finance Receivables, Net [Member] | Retail Loan [Member]
Allowance for Credit Losses for Finance Receivables:
Allowance for credit losses at beginning of period	327	313	304	312
Charge-offs	(80)	(76)	(152)	(151)
Recoveries	13	12	27	26
Provision for credit losses	57	58	138	120
Allowance for credit losses at end of period	317	307	317	307
Ending balance: Individually evaluated for impairment	0	0	0	0
Ending balance: Collectively evaluated for impairment	317	307	317	307
Finance Receivables:
Total Finance Receivables	56,602	53,957	56,602	53,957
Ending balance: Individually evaluated for impairment	0	0	0	0
Ending balance: Collectively evaluated for impairment	56,602	53,957	56,602	53,957
Finance Receivables, Net [Member] | Dealer Products [Member]
Allowance for Credit Losses for Finance Receivables:
Allowance for credit losses at beginning of period	177	150	195	151
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provision for credit losses	11	(10)	(7)	(11)
Allowance for credit losses at end of period	188	140	188	140
Ending balance: Individually evaluated for impairment	90	57	90	57
Ending balance: Collectively evaluated for impairment	98	83	98	83
Finance Receivables:
Total Finance Receivables	17,331	16,538	17,331	16,538
Ending balance: Individually evaluated for impairment	610	446	610	446
Ending balance: Collectively evaluated for impairment	$ 16,721	$ 16,092	$ 16,721	$ 16,092

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Consolidated Statements of Shareholder's Equity - USD ($) $ in Millions	Total	Capital stock	Additional paid-in capital	Accumulated other comprehensive (loss) income	Retained earnings
Balance at Mar. 31, 2018	$ 12,880	$ 915	$ 2	$ (29)	$ 11,992
Cumulative-effect of change in accounting policy	(110)	0	0	12	(122)
Net income	286	0	0	0	286
Other comprehensive income (loss), net of tax	(2)	0	0	(2)	0
Balance at Sep. 30, 2018	13,054	915	2	(19)	12,156
Balance at Jun. 30, 2018	12,858	915	2	(21)	11,962
Net income	194	0	0	0	194
Other comprehensive income (loss), net of tax	2	0	0	2	0
Balance at Sep. 30, 2018	13,054	915	2	(19)	12,156
Balance at Mar. 31, 2019	13,578	915	2	3	12,658
Net income	818	0	0	0	818
Other comprehensive income (loss), net of tax	15	0	0	15	0
Balance at Sep. 30, 2019	14,411	915	2	18	13,476
Balance at Jun. 30, 2019	13,947	915	2	13	13,017
Net income	459	0	0	0	459
Other comprehensive income (loss), net of tax	5	0	0	5	0
Balance at Sep. 30, 2019	$ 14,411	$ 915	$ 2	$ 18	$ 13,476

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Finance Receivables, Net - Finance Receivable Credit Quality Indicators (Details) - USD ($) $ in Millions	Sep. 30, 2019	Mar. 31, 2019
Financing Receivable, Recorded Investment [Line Items]
Current	$ 72,891	$ 70,738
Financing receivables, past due	1,042	897
Total Finance Receivables	73,933	71,635
Retail Loan [Member]
Financing Receivable, Recorded Investment [Line Items]
Current	55,565	53,047
Financing receivables, past due	1,037	892
Total Finance Receivables	56,602	53,939
Wholesale [Member]
Financing Receivable, Recorded Investment [Line Items]
Current	10,011	10,439
Financing receivables, past due	0	1
Total Finance Receivables	10,011	10,440
Wholesale [Member] | Performing [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Finance Receivables	8,992	9,155
Wholesale [Member] | Credit Watch [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Finance Receivables	873	1,127
Wholesale [Member] | At Risk [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Finance Receivables	126	152
Wholesale [Member] | Default [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Finance Receivables	20	6
Real estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Current	4,637	4,671
Financing receivables, past due	1	0
Total Finance Receivables	4,638	4,671
Real estate [Member] | Performing [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Finance Receivables	4,152	4,019
Real estate [Member] | Credit Watch [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Finance Receivables	380	554
Real estate [Member] | At Risk [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Finance Receivables	83	84
Real estate [Member] | Default [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Finance Receivables	23	14
Working capital [Member]
Financing Receivable, Recorded Investment [Line Items]
Current	2,678	2,581
Financing receivables, past due	4	4
Total Finance Receivables	2,682	2,585
Working capital [Member] | Performing [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Finance Receivables	2,548	2,448
Working capital [Member] | Credit Watch [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Finance Receivables	69	70
Working capital [Member] | At Risk [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Finance Receivables	60	63
Working capital [Member] | Default [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Finance Receivables	5	4
30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables, past due	754	657
30-59 Days Past Due [Member] | Retail Loan [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables, past due	754	657
30-59 Days Past Due [Member] | Wholesale [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables, past due	0	0
30-59 Days Past Due [Member] | Real estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables, past due	0	0
30-59 Days Past Due [Member] | Working capital [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables, past due	0	0
60-89 Days Past Due [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables, past due	195	162
60-89 Days Past Due [Member] | Retail Loan [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables, past due	194	162
60-89 Days Past Due [Member] | Wholesale [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables, past due	0	0
60-89 Days Past Due [Member] | Real estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables, past due	1	0
60-89 Days Past Due [Member] | Working capital [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables, past due	0	0
90 Days or Greater Past Due [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables, past due	93	78
90 Days or Greater Past Due [Member] | Retail Loan [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables, past due	89	73
90 Days or Greater Past Due [Member] | Wholesale [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables, past due	0	1
90 Days or Greater Past Due [Member] | Real estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables, past due	0	0
90 Days or Greater Past Due [Member] | Working capital [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables, past due	$ 4	$ 4

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Investments in Operating Leases, Net - Additional Information (Details)	6 Months Ended
	Sep. 30, 2019
Leases Operating [Abstract]
Operating lease, existence of option to extend	true
Operating lease, option to extend	Generally, lessees have the ability to extend their lease term in six month increments up to a total of 12 months from the original lease maturity date.

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Segment Information - Additional Information (Details1) $ in Millions	Sep. 30, 2019 USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2019-10-01
Segment Reporting Information [Line Items]
Revenue, remaining performance obligation, amount	$ 362
Revenue, remaining performance obligation, expected timing of satisfaction, period	6 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2020-04-01
Segment Reporting Information [Line Items]
Revenue, remaining performance obligation, amount	$ 1,900
Revenue, remaining performance obligation, expected timing of satisfaction, period

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Debt and Credit Facilities - Debt and Related Weighted Average Contractual Interest Rates (Details) - USD ($) $ in Millions	Sep. 30, 2019	Mar. 31, 2019
Debt Instrument [Line Items]
Debt, Face Value	$ 95,427	$ 93,296
Debt, Carrying Value	$ 95,093	$ 92,922
Weighted average contractual interest rates	2.44%	2.60%
Unsecured notes and loans payable [Member]
Debt Instrument [Line Items]
Debt, Face Value	$ 82,564	$ 80,875
Debt, Carrying Value	$ 82,256	$ 80,521
Weighted average contractual interest rates	2.43%	2.60%
Secured notes and loans payable [Member]
Debt Instrument [Line Items]
Debt, Face Value	$ 12,863	$ 12,421
Debt, Carrying Value	$ 12,837	$ 12,401
Weighted average contractual interest rates	2.50%	2.62%

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Allowance for Credit Losses - Additional Information (Details) - Finance Receivables, Net [Member] - USD ($) $ in Millions	Sep. 30, 2019	Sep. 30, 2018
Financing Receivable Allowance For Credit Losses [Line Items]
Ending balance: Collectively evaluated for impairment	$ 73,323	$ 70,049
Retail and Commercial Loan [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Impaired finance receivables aggregated and collectively evaluated for impairment	243	216
Dealer Products [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Ending balance: Collectively evaluated for impairment	16,721	16,092
TMNA [Member] | Financial Guarantee [Member] | Dealer Products [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Ending balance: Collectively evaluated for impairment	1,052	1,054
Private Toyota Distributors [Member] | Financial Guarantee [Member] | Dealer Products [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Ending balance: Collectively evaluated for impairment	$ 131	$ 137

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Variable Interest Entities - Additional Information (Details) - USD ($) $ in Millions	Sep. 30, 2019	Mar. 31, 2019
Variable Interest Entity Consolidated Carrying Amount Assets And Liabilities [Abstract]
Securities retained by TMCC	$ 1,520	$ 1,486

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Investments in Marketable Securities - Summary of Contractual Maturity of Available-for-Sale Debt Securities (Details) - USD ($) $ in Millions		Sep. 30, 2019	Mar. 31, 2019
Available-for-sale debt securities, Amortized Cost
Due within 1 Year, Amortized Cost		$ 542
Due after 1 Year through 5 Years, Amortized Cost		128
Due after 5 Years through 10 Years, Amortized Cost		124
Due after 10 Years, Amortized Cost		75
Mortgage-backed and asset-backed securities, Amortized Cost	[1]	156
Available-for-sale debt securities, Amortized cost		1,025	$ 629
Available-for-sale debt securities, Fair Value
Due within 1 Year, Fair Value		542
Due after 1 Year through 5 Years, Fair Value		130
Due after 5 Years through 10 Years, Fair Value		131
Due after 10 Years, Fair Value		86
Mortgage-backed and asset-backed securities, Fair Value	[1]	160
Total, Fair Value		$ 1,049	$ 633

[1] Mortgage-backed and asset-backed securities are shown separately from other maturity groupings as these securities have multiple maturity dates.

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Commitments and Contingencies (Tables)

6 Months Ended

Sep. 30, 2019

Commitments And Contingencies Disclosure [Abstract]

Commitments and Guarantees

We have entered into certain commitments and guarantees for which the maximum unfunded amounts are summarized in the table below:

	September 30,		March 31,
	2019		2019
Commitments:
Credit facilities commitments with dealers	$	1,391	$	1,378
Commitments under operating lease agreements		119		144
Total commitments		1,510		1,522
Guarantees of affiliate pollution control and solid waste disposal bonds		100		100
Total commitments and guarantees	$	1,610	$	1,622

Future Minimum Lease Payments under Non-cancelable Operating Lease

Our commitments under operating lease agreements are summarized below:

Years ending March 31,	Amounts due on operating lease liabilities as of  September 30, 2019			Future minimum lease payments as of  March 31, 2019
2020 1	$	11		$	22
2021		20			19
2022		21			20
2023		13			12
2024		11			10
Thereafter		62			61
Total	$	138		$	144
Present value discount		(19	)
Total operating lease liability	$	119

¹ Amounts due on operating lease liabilities as of September 30, 2019 excludes the amounts incurred for the six months ended September 30, 2019.

Summary of Additional Information Related to Operating Lease Agreements

The following table provides additional information related to operating lease agreements for which we are the lessee:

	September 30,
	2019
ROU assets	$	112
Lease liabilities	$	119
Weighted average remaining lease term (in years)	9.53
Weighted average discount rate	3.10%

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Interim Financial Data - Additional Information (Details) - USD ($) $ in Millions	6 Months Ended
	Sep. 30, 2019	Apr. 01, 2019
Summary Of Significant Accounting Policies [Line Items]
Restructuring and related activities, description	On April 16, 2019, we announced that we will restructure our field operations over the next two years to better serve our dealer partners by streamlining our field office structure into three regional locations and investing in new technology. Costs associated with this restructure are not expected to be significant.
Operating lease right-of-use assets	$ 112
Operating lease liabilities	119
Accounting Standards Update 2016-02 [Member]
Summary Of Significant Accounting Policies [Line Items]
Operating lease right-of-use assets	76	$ 115
Operating lease liabilities	$ 76	$ 122

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Debt and Credit Facilities

6 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

Debt and Credit Facilities

Note 7 – Debt and Credit Facilities

Debt and the related weighted average contractual interest rates are summarized as follows:

	September 30, 2019							March 31, 2019
	Face Value		Carrying Value		Weighted average contractual interest rates			Face Value		Carrying Value		Weighted average contractual interest rates
Unsecured notes and loans payable	$	82,564	$	82,256		2.43	%	$	80,875	$	80,521		2.60	%
Secured notes and loans payable		12,863		12,837		2.50	%		12,421		12,401		2.62	%
Total debt	$	95,427	$	95,093		2.44	%	$	93,296	$	92,922		2.60	%

The carrying value of our debt includes unamortized premiums, discounts, debt issuance costs and the effects of foreign currency translation adjustments.  

Weighted average contractual interest rates are calculated based on original notional or par value before consideration of premium or discount and approximate the effective interest rates.  Debt is callable at par value.  

Unsecured Notes and Loans Payable

Our unsecured notes and loans payable consist of commercial paper and fixed and variable rate debt.  Short-term funding needs are met through the issuance of commercial paper in the U.S.  Amounts outstanding under our commercial paper programs were $27.0 billion and $25.3 billion as of September 30, 2019 and March 31, 2019, respectively.

Upon issuance of fixed rate debt, we generally elect to enter into pay-float swaps to convert fixed rate payments on debt to floating rate payments.  Certain unsecured notes and loans payable are denominated in various foreign currencies.  The debt is translated into U.S. dollars using the applicable exchange rate at the transaction date and retranslated at each balance sheet date using the exchange rate in effect at that date.  Concurrent with the issuance of these foreign currency unsecured notes and loans payable, we enter into currency swaps in the same notional amount to convert non-U.S. currency payments to U.S. dollar denominated payments.  Gains and losses related to foreign currency transactions are included in Interest expense in our Consolidated Statements of Income.  

Certain of our unsecured notes and loans payable contain covenants and conditions customary in transactions of this nature, including negative pledge provisions, cross-default provisions and limitations on certain consolidations, mergers and sales of assets.  We are currently in compliance with these covenants and conditions.  

Secured Notes and Loans Payable

Our secured notes and loans payable are denominated in U.S. dollars and consist of both fixed and variable rate debt.  Secured notes and loans payable are issued using on-balance sheet securitization trusts, as further discussed in Note 8 – Variable Interest Entities.  These notes are repayable only from collections on the underlying securitized retail finance receivables and the beneficial interests in investments in operating leases and from related credit enhancements.

In June 2019, we completed an offering of secured notes under a new revolving asset-backed securitization program, backed by a revolving pool of finance receivables and cash collateral. Cash flows from these receivables during the revolving period in excess of what is needed to pay certain expenses of the securitization trust and contractual interest payments on the related secured notes may be used to purchase additional receivables, provided that certain conditions are met following the purchase.  The secured notes feature a scheduled five year revolving period, with the ability to repay the secured notes in full, after which an amortization period begins. The revolving period may also end with the amortization period beginning upon the occurrence of certain events that include certain segregated account balances falling below their required levels, credit losses or delinquencies on the pool of assets supporting the notes exceeding specified levels, the adjusted pool balance falling to less than 50% of the initial principal amount of the secured notes, or interest not being paid on the secured notes.

Note 7 – Debt and Credit Facilities (Continued)

Credit Facilities and Letters of Credit

For additional liquidity purposes, we maintain credit facilities as described below:

364 Day Credit Agreement, Three Year Credit Agreement and Five Year Credit Agreement

In November 2018, TMCC, Toyota Credit de Puerto Rico Corp. (“TCPR”) and other Toyota affiliates entered into a $5.0 billion 364 day syndicated bank credit facility, a $5.0 billion three year syndicated bank credit facility and a $5.0 billion five year syndicated bank credit facility, expiring in fiscal 2020, 2022, and 2024, respectively.

The ability to make draws is subject to covenants and conditions customary in transactions of this nature, including negative pledge provisions, cross-default provisions and limitations on certain consolidations, mergers and sales of assets.  These agreements may be used for general corporate purposes and none were drawn upon as of September 30, 2019 and March 31, 2019.  We are currently in compliance with the covenants and conditions of the credit agreements described above.

Other Unsecured Credit Agreements

TMCC has entered into additional unsecured credit facilities with various banks.  As of September 30, 2019, TMCC had committed bank credit facilities totaling $5.5 billion, of which $2.3 billion, $650 million, $2.1 billion and $475 million mature in fiscal 2020, 2021, 2022, and 2023, respectively.

These credit agreements contain covenants and conditions customary in transactions of this nature, including negative pledge provisions, cross-default provisions and limitations on certain consolidations, mergers and sales of assets.  These credit facilities were not drawn upon as of September 30, 2019 and March 31, 2019. We are currently in compliance with the covenants and conditions of the credit agreements described above.

TMCC is party to a $5.0 billion three year revolving credit facility with Toyota Motor Sales U.S.A., Inc. expiring in fiscal 2022.  This credit facility may be used for general corporate purposes and was not drawn upon as of September 30, 2019.  Any amounts drawn on this credit facility would be recorded in Other liabilities on our Consolidated Balance Sheets.

From time to time, we may borrow from affiliates based upon a number of business factors such as funds availability, cash flow timing, relative cost of funds, and market access capabilities.  Any amounts borrowed from affiliates would be recorded in Other liabilities on our Consolidated Balance Sheets.

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Finance Receivables, Net

6 Months Ended

Sep. 30, 2019

Receivables [Abstract]

Finance Receivables, Net

Note 3 – Finance Receivables, Net

Finance receivables, net consist of the retail loan and the dealer products portfolio segments, which includes accrued interest and deferred fees and costs, net of the allowance for credit losses and deferred income.  Finance receivables, net also includes securitized retail receivables, which represent retail receivables that have been sold for legal purposes to securitization trusts but continue to be included in our consolidated financial statements, as discussed further in Note 8 – Variable Interest Entities.  Cash flows from these securitized retail receivables are available only for the repayment of debt issued by these trusts and other obligations arising from the securitization transactions.  They are not available for payment of our other obligations or to satisfy claims of our other creditors.

Finance receivables, net consisted of the following:

	September 30,			March 31,
	2019			2019
Retail receivables	$	44,063		$	42,621
Securitized retail receivables		12,539			11,318
Dealer financing		17,331			17,696
		73,933			71,635
Deferred origination (fees) and costs, net		831			695
Deferred income		(1,271	)		(1,314	)
Allowance for credit losses
Retail and securitized retail receivables		(317	)		(304	)
Dealer financing		(188	)		(195	)
Total allowance for credit losses		(505	)		(499	)
Finance receivables, net	$	72,988		$	70,517

Note 3 – Finance Receivables, Net (Continued)

Credit Quality Indicators

We are exposed to credit risk on our finance receivables.  Credit risk is the risk of loss arising from the failure of customers or dealers to meet the terms of their contracts with us or otherwise fail to perform as agreed.

Retail Loan Portfolio Segment

The retail loan portfolio segment consists of one class of finance receivables.  While we use various credit quality metrics to develop our allowance for credit losses on the retail loan portfolio segment, we primarily utilize the aging of the individual accounts to monitor the credit quality of these finance receivables.  Based on our experience, the payment status of borrowers is the strongest indicator of the credit quality of the underlying receivables.  Payment status also impacts charge-offs.

Individual borrower accounts within the retail loan portfolio segment are segregated into aging categories based on the number of days past due.  The aging for each class of finance receivables is updated monthly.

Dealer Products Portfolio Segment

For the three classes of finance receivables within the dealer products portfolio segment (wholesale, real estate and working capital), all loans outstanding for an individual dealer or dealer group, which includes affiliated entities, are aggregated and evaluated collectively by dealer or dealer group.  This reflects the interconnected nature of financing provided to our individual dealer and dealer group customers, and their affiliated entities.

When assessing the credit quality of the finance receivables within the dealer products portfolio segment, we segregate the finance receivables account balances into four categories representing distinct credit quality indicators based on internal risk assessments.  The internal risk assessments for all finance receivables within the dealer products portfolio segment are updated on a monthly basis.

The four credit quality indicators are:

• Performing – Account not classified as either Credit Watch, At Risk or Default;

• Credit Watch – Account designated for elevated attention;

• At Risk – Account where there is an increased likelihood that default may exist based on qualitative and quantitative factors; and

• Default – Account is not currently meeting contractual obligations or we have temporarily waived certain contractual requirements

The tables below present each credit quality indicator by class of finance receivables:

	Retail Loan
	September 30,		March 31,
	2019		2019
Aging of finance receivables:
Current	$	55,565	$	53,047
30-59 days past due		754		657
60-89 days past due		194		162
90 days or greater past due		89		73
Total	$	56,602	$	53,939

	Wholesale				Real Estate				Working Capital
	September 30,		March 31,		September 30,		March 31,		September 30,		March 31,
	2019		2019		2019		2019		2019		2019
Credit quality indicators:
Performing	$	8,992	$	9,155	$	4,152	$	4,019	$	2,548	$	2,448
Credit Watch		873		1,127		380		554		69		70
At Risk		126		152		83		84		60		63
Default		20		6		23		14		5		4
Total	$	10,011	$	10,440	$	4,638	$	4,671	$	2,682	$	2,585

Note 3 – Finance Receivables, Net (Continued)

Past Due Finance Receivables by Class

Substantially all finance receivables do not involve recourse to the dealer in the event of customer default.  Finance receivables 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.

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

	September 30, 2019
	30 - 59 Days Past Due		60 - 89 Days Past Due		90Daysor Greater Past Due		TotalPast Due		Current		TotalFinance Receivables		90 Days or GreaterPast Due and Accruing
Retail loan	$	754	$	194	$	89	$	1,037	$	55,565	$	56,602	$	60
Wholesale		-		-		-		-		10,011		10,011		-
Real estate		-		1		-		1		4,637		4,638		-
Working capital		-		-		4		4		2,678		2,682		-
Total	$	754	$	195	$	93	$	1,042	$	72,891	$	73,933	$	60

	March 31, 2019
	30 - 59 Days Past Due		60 - 89 Days Past Due		90Daysor Greater Past Due		TotalPast Due		Current		TotalFinance Receivables		90Daysor GreaterPast Due and Accruing
Retail loan	$	657	$	162	$	73	$	892	$	53,047	$	53,939	$	47
Wholesale		-		-		1		1		10,439		10,440		-
Real estate		-		-		-		-		4,671		4,671		-
Working capital		-		-		4		4		2,581		2,585		-
Total	$	657	$	162	$	78	$	897	$	70,738	$	71,635	$	47

Note 3 – Finance Receivables, Net (Continued)

Impaired Finance Receivables

The following table summarizes the information related to our impaired loans by class of finance receivables: 

	Impaired				Individually Evaluated
	Finance Receivables				Allowance
	September 30,		March 31,		September 30,		March 31,
	2019		2019		2019		2019
Impaired account balances individually evaluated for impairment with an allowance:
Wholesale	$	115	$	161	$	22	$	28
Real estate		101		93		10		11
Working capital		64		67		58		60
Total	$	280	$	321	$	90	$	99
Impaired account balances individually evaluated for impairment without an allowance:
Wholesale	$	161	$	130
Real estate		149		152
Working capital		20		20
Total	$	330	$	302
Impaired account balances aggregated and evaluated for impairment:
Retail loan	$	243	$	231
Total impaired account balances:
Retail loan	$	243	$	231
Wholesale		276		291
Real estate		250		245
Working capital		84		87
Total	$	853	$	854

The primary source of interest income recognized on the loans in the table above is from performing troubled debt restructurings within the dealer products portfolio segment.  Interest income on impaired finance receivables and interest income recognized using a cash-basis method of accounting during the three and six months ended September 30, 2019 and 2018 were not significant.  As of September 30, 2019 and March 31, 2019, the impaired finance receivables balance for accounts in the dealer products portfolio segment that were on nonaccrual status was $323 million and $329 million, respectively, and there were no charge-offs against the allowance for credit losses for these finance receivables.  Therefore, the impaired finance receivables balance is equal to the unpaid principal balance.  

As of September 30, 2019 and March 31, 2019, impaired finance receivables in the retail loan portfolio segment recorded at the fair value of the collateral less estimated selling costs were not significant and therefore excluded from the table above.  Refer to Note 5 – Allowance for Credit Losses for details related to the retail loan portfolio segment’s impaired account balances which are aggregated and evaluated for impairment when determining the allowance for credit losses.

Note 3 – Finance Receivables, Net (Continued)

Troubled Debt Restructuring

For accounts not under bankruptcy protection, the amount of finance receivables modified as a troubled debt restructuring during the three and six months ended September 30, 2019 and 2018 was not significant for each class of finance receivables.  Troubled debt restructurings for accounts not under bankruptcy protection within the retail loan class of finance receivables are comprised exclusively of contract term extensions that reduce the monthly payment due from the customer.  For the three classes of finance receivables within the dealer products portfolio segment, troubled debt restructurings include contract term extensions, interest rate adjustments, waivers of loan covenants, or any combination of the three.  Troubled debt restructurings of accounts not under bankruptcy protection did not include forgiveness of principal or interest rate adjustments during the three and six months ended September 30, 2019 and 2018.

We consider finance receivables under bankruptcy protection within the retail loan class to be troubled debt restructurings as of the date we receive notice of a customer filing for bankruptcy protection, regardless of the ultimate outcome of the bankruptcy proceedings.  The bankruptcy court may impose modifications as part of the proceedings, including interest rate adjustments and forgiveness of principal.  For the three and six months ended September 30, 2019 and 2018, the financial impact of troubled debt restructurings related to finance receivables under bankruptcy protection was not significant to our Consolidated Statements of Income and Consolidated Balance Sheets. 

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Investments in Operating Leases, Net (Tables)

6 Months Ended

Sep. 30, 2019

Leases Operating [Abstract]

Investments in Operating Leases, Net

Investments in operating leases, net consisted of the following:

Future Minimum Rentals on Investments in Operating Leases

Future minimum rentals on investments in operating leases are as follows:

Years ending March 31,	Future minimum rentals on operating leases
2020	$	3,291
2021		5,078
2022		2,754
2023		581
2024		37
Thereafter		1
Total	$	11,742

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Segment Information

6 Months Ended

Sep. 30, 2019

Segment Reporting [Abstract]

Segment Information

Note 13 – Segment Information

Financial information for our reportable operating segments is summarized as follows:

	Three Months Ended September 30, 2019
	Finance		Insurance		Intercompany
	operations		operations		eliminations			Total
Total financing revenues	$	3,018	$	-	$	-		$	3,018
Depreciation on operating leases		1,583		-		-			1,583
Interest expense		619		-		(6	)		613
Net financing revenues		816		-		6			822
Insurance earned premiums and contract revenues		-		232		-			232
Investment and other income, net		38		65		(6	)		97
Net financing and other revenues		854		297		-			1,151
Expenses:
Provision for credit losses		61		-		-			61
Operating and administrative expenses		268		90		-			358
Insurance losses and loss adjustment expenses		-		115		-			115
Total expenses		329		205		-			534
Income before income taxes		525		92		-			617
Provision for income taxes		136		22		-			158
Net income	$	389	$	70	$	-		$	459
	Six Months Ended September 30, 2019
	Finance		Insurance		Intercompany
	operations		operations		eliminations			Total
Total financing revenues	$	5,981	$	-	$	-		$	5,981
Depreciation on operating leases		3,208		-		-			3,208
Interest expense		1,322		-		(12	)		1,310
Net financing revenues		1,451		-		12			1,463
Insurance earned premiums and contract revenues		-		461		-			461
Investment and other income, net		75		152		(12	)		215
Net financing and other revenues		1,526		613		-			2,139
Expenses:
Provision for credit losses		136		-		-			136
Operating and administrative expenses		514		181		-			695
Insurance losses and loss adjustment expenses		-		228		-			228
Total expenses		650		409		-			1,059
Income before income taxes		876		204		-			1,080
Provision for income taxes		212		50		-			262
Net income	$	664	$	154	$	-		$	818
Total assets at September 30, 2019	$	115,714	$	5,414	$	(1,190	)	$	119,938

Note 13 – Segment Information (Continued)

	Three Months Ended September 30, 2018
	Finance		Insurance		Intercompany
	operations		operations		eliminations			Total
Total financing revenues	$	2,890	$	-	$	-		$	2,890
Depreciation on operating leases		1,662		-		-			1,662
Interest expense		707		-		(5	)		702
Net financing revenues		521		-		5			526
Insurance earned premiums and contract revenues		-		226		-			226
Investment and other income, net		51		10		(5	)		56
Net financing and other revenues		572		236		-			808
Expenses:
Provision for credit losses		67		-		-			67
Operating and administrative expenses		262		86		-			348
Insurance losses and loss adjustment expenses		-		112		-			112
Total expenses		329		198		-			527
Income before income taxes		243		38		-			281
Provision for income taxes		77		10		-			87
Net income	$	166	$	28	$	-		$	194
	Six Months Ended September 30, 2018
	Finance		Insurance		Intercompany
	operations		operations		eliminations			Total
Total financing revenues	$	5,726	$	-	$	-		$	5,726
Depreciation on operating leases		3,428		-		-			3,428
Interest expense		1,394		-		(10	)		1,384
Net financing revenues		904		-		10			914
Insurance earned premiums and contract revenues		-		450		-			450
Investment and other income, net		99		7		(10	)		96
Net financing and other revenues		1,003		457		-			1,460
Expenses:
Provision for credit losses		156		-		-			156
Operating and administrative expenses		503		169		-			672
Insurance losses and loss adjustment expenses		-		237		-			237
Total expenses		659		406		-			1,065
Income before income taxes		344		51		-			395
Provision for income taxes		96		13		-			109
Net income	$	248	$	38	$	-		$	286
Total assets at September 30, 2018	$	117,265	$	4,955	$	(1,160	)	$	121,060

Note 13 – Segment Information (Continued)

Insurance operations – Revenue Recognition

For the three and six months ended September 30, 2019 and 2018, approximately 84 percent of Insurance earned premiums and contract revenues in the Insurance operations segment were accounted for under the guidance for revenue from contracts with customers.

The Insurance operations segment defers contractually determined incentives paid to dealers as contract costs for selling vehicle and payment protection products.  These costs are recorded in Other assets on our Consolidated Balance Sheets and are amortized to Operating and administrative expenses on the Consolidated Statements of Income using a methodology consistent with the recognition of revenue.  The amount of capitalized dealer incentives and the related amortization was not significant to our consolidated financial statements as of and for the three and six months ended September 30, 2019 and 2018.

We had $2.2 billion of unearned insurance premiums and contract revenues from contracts with customers included in Other liabilities on our Consolidated Balance Sheets as of April 1, 2019 and April 1, 2018, respectively.  We recognized $121 million and $303 million of these balances in Insurance earned premiums and contract revenues in our Consolidated Statements of Income during the three and six months ended September 30, 2019, compared to $178 million and $345 million recognized during the same periods in fiscal 2019.  At September 30, 2019, we had unearned insurance premiums and contract revenues of $2.3 billion included in Other liabilities on our Consolidated Balance Sheets, and with respect to this balance we expect to recognize revenue of $362 million during fiscal 2020, and $1.9 billion thereafter.  At September 30, 2018 we had unearned insurance premiums and contract revenues of $2.2 billion associated with outstanding contracts.

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Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2019	Mar. 31, 2019
Statement Of Financial Position [Abstract]
Common Stock, Par or Stated Value Per Share
Common Stock, Shares Authorized	100,000	100,000
Common Stock, Shares, Issued	91,500	91,500
Common Stock, Shares, Outstanding	91,500	91,500

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Consolidated Statements of Income - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Financing revenues:
Operating lease	$ 2,197	$ 2,167	$ 4,381	$ 4,293
Retail	638	547	1,227	1,082
Dealer	183	176	373	351
Total financing revenues	3,018	2,890	5,981	5,726
Depreciation on operating leases	1,583	1,662	3,208	3,428
Interest expense	613	702	1,310	1,384
Net financing revenues	822	526	1,463	914
Insurance earned premiums and contract revenues	232	226	461	450
Investment and other income, net	97	56	215	96
Net financing revenues and other revenues	1,151	808	2,139	1,460
Expenses:
Provision for credit losses	61	67	136	156
Operating and administrative	358	348	695	672
Insurance losses and loss adjustment expenses	115	112	228	237
Total expenses	534	527	1,059	1,065
Income before income taxes	617	281	1,080	395
Provision for income taxes	158	87	262	109
Net income	$ 459	$ 194	$ 818	$ 286

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Finance Receivables, Net - Summary of Impaired Loans by Class of Finance Receivable (Details) - USD ($) $ in Millions	Sep. 30, 2019	Mar. 31, 2019
Impaired Finance Receivables
Impaired Finance Receivables Individually Evaluated with Related Allowance	$ 280	$ 321
Impaired Finance Receivables Individually Evaluated with No Related Allowance	330	302
Impaired Finance Receivables	853	854
Individually Evaluated Allowance	90	99
Wholesale [Member]
Impaired Finance Receivables
Impaired Finance Receivables Individually Evaluated with Related Allowance	115	161
Impaired Finance Receivables Individually Evaluated with No Related Allowance	161	130
Impaired Finance Receivables	276	291
Individually Evaluated Allowance	22	28
Real estate [Member]
Impaired Finance Receivables
Impaired Finance Receivables Individually Evaluated with Related Allowance	101	93
Impaired Finance Receivables Individually Evaluated with No Related Allowance	149	152
Impaired Finance Receivables	250	245
Individually Evaluated Allowance	10	11
Working capital [Member]
Impaired Finance Receivables
Impaired Finance Receivables Individually Evaluated with Related Allowance	64	67
Impaired Finance Receivables Individually Evaluated with No Related Allowance	20	20
Impaired Finance Receivables	84	87
Individually Evaluated Allowance	58	60
Retail Loan [Member]
Impaired Finance Receivables
Impaired Finance Receivables Aggregated And Evaluated For Impairment	243	231
Impaired Finance Receivables	$ 243	$ 231

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Investments in Operating Leases, Net - Future Minimum Rentals on Investments in Operating Leases (Details) $ in Millions	Mar. 31, 2019 USD ($)
Future minimum rentals on operating leases
2020	$ 3,291
2021	5,078
2022	2,754
2023	581
2024	37
Thereafter	1
Total	$ 11,742

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Fair Value Measurements - Assets and Liabilities Measured on Recurring Basis Using Significant Unobservable Inputs (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Fair Value Assets And Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Fair value	$ 107	$ 40	$ 94	$ 49
Total gains (losses) included in net income	0	(10)	18	(18)
Total gains (losses) included in other comprehensive income	0	0	2	0
Purchases	24	23	39	25
Issuances	0	0	0	0
Sales	0	(4)	0	(4)
Settlements	(4)	(32)	(1)	(35)
Transfers in to Level 3	0	0	0	0
Transfers out of Level 3	0	0	(25)	0
Fair value	127	17	127	17
The amount of total gains (losses) included in net income attributable to assets held at the reporting date	0	(10)	18	(18)
Available-for-sale debt securities [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Fair value	107	63	93	70
Total gains (losses) included in net income	0	0	0	0
Total gains (losses) included in other comprehensive income	0	0	2	0
Purchases	24	23	39	25
Issuances	0	0	0	0
Sales	0	(4)	0	(4)
Settlements	(4)	(6)	(7)	(15)
Transfers in to Level 3	0	0	0	0
Transfers out of Level 3	0	0	0	0
Fair value	127	76	127	76
The amount of total gains (losses) included in net income attributable to assets held at the reporting date	0	0	0	0
Available-for-sale debt securities [Member] | Mortgage-backed securities [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Fair value	41	25	40	31
Total gains (losses) included in net income	0	0	0	0
Total gains (losses) included in other comprehensive income	0	0	1	0
Purchases	5	5	5	5
Issuances	0	0	0	0
Sales	0	0	0	0
Settlements	0	0	0	(6)
Transfers in to Level 3	0	0	0	0
Transfers out of Level 3	0	0	0	0
Fair value	46	30	46	30
The amount of total gains (losses) included in net income attributable to assets held at the reporting date	0	0	0	0
Available-for-sale debt securities [Member] | Asset-backed securities [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Fair value	66	38	53	39
Total gains (losses) included in net income	0	0	0	0
Total gains (losses) included in other comprehensive income	0	0	1	0
Purchases	19	18	34	20
Issuances	0	0	0	0
Sales	0	(4)	0	(4)
Settlements	(4)	(6)	(7)	(9)
Transfers in to Level 3	0	0	0	0
Transfers out of Level 3	0	0	0	0
Fair value	81	46	81	46
The amount of total gains (losses) included in net income attributable to assets held at the reporting date	0	0	0	0
Interest rate swaps [Member] | Derivative [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
The amount of total gains (losses) included in net income attributable to assets held at the reporting date	0	(10)	18	(18)
Fair value	0	(23)	1	(21)
Total gains (losses) included in net income	0	(10)	18	(18)
Total gains (losses) included in other comprehensive income	0	0	0	0
Purchases	0	0	0	0
Issuances	0	0	0	0
Sales	0	0	0	0
Settlements	0	(26)	6	(20)
Transfers in to Level 3	0	0	0	0
Transfers out of Level 3	0	0	(25)	0
Fair value	$ 0	$ (59)	$ 0	$ (59)

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Related Party Transactions - Additional Information (Details) - USD ($) $ in Millions	Sep. 30, 2019	Apr. 01, 2019	Mar. 31, 2019
Related Party Transaction [Line Items]
Operating lease right-of-use assets	$ 112
Operating lease liabilities	119
Subvention support receivable	190		$ 171
Accounting Standards Update 2016-02 [Member]
Related Party Transaction [Line Items]
Operating lease right-of-use assets	76	$ 115
Operating lease liabilities	$ 76	$ 122

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Commitments and Contingencies - Additional Information (Details) - USD ($)	6 Months Ended
	Sep. 30, 2019	Mar. 31, 2019
Commitments And Contingencies [Line Items]
Commitments under operating lease agreements	$ 119,000,000
Lease description	We exclude from our Consolidated Balance Sheets leases with a term equal to one year or less and do not separate non-lease components from our real estate leases.
Indemnification provisions	$ 0	$ 0
Putnam and Gibson Counties [Member] | Performance Guarantee [Member]
Commitments And Contingencies [Line Items]
Guarantees of affiliate pollution control and solid waste disposal bonds	$ 100,000,000	100,000,000
TMNA [Member]
Commitments And Contingencies [Line Items]
Lease agreement expiration date	Aug. 31, 2032
Total lease expense, including payments to affiliates	$ 18,000,000
TMCC-affiliated companies [Member]
Commitments And Contingencies [Line Items]
Commitments under operating lease agreements	76,000,000	$ 97,000,000
TMCC-affiliated companies [Member] | Putnam and Gibson Counties [Member] | Performance Guarantee [Member]
Commitments And Contingencies [Line Items]
Guarantees of affiliate pollution control and solid waste disposal bonds	100,000,000
TMCC-affiliated companies [Member] | Putnam and Gibson Counties [Member] | Performance Guarantee [Member] | 2028 [Member]
Commitments And Contingencies [Line Items]
Guarantees of affiliate pollution control and solid waste disposal bonds	20,000,000
TMCC-affiliated companies [Member] | Putnam and Gibson Counties [Member] | Performance Guarantee [Member] | 2029 [Member]
Commitments And Contingencies [Line Items]
Guarantees of affiliate pollution control and solid waste disposal bonds	50,000,000
TMCC-affiliated companies [Member] | Putnam and Gibson Counties [Member] | Performance Guarantee [Member] | 2030 [Member]
Commitments And Contingencies [Line Items]
Guarantees of affiliate pollution control and solid waste disposal bonds	10,000,000
TMCC-affiliated companies [Member] | Putnam and Gibson Counties [Member] | Performance Guarantee [Member] | 2031 [Member]
Commitments And Contingencies [Line Items]
Guarantees of affiliate pollution control and solid waste disposal bonds	10,000,000
TMCC-affiliated companies [Member] | Putnam and Gibson Counties [Member] | Performance Guarantee [Member] | 2032 [Member]
Commitments And Contingencies [Line Items]
Guarantees of affiliate pollution control and solid waste disposal bonds	$ 10,000,000

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Debt and Credit Facilities - Additional Information (Details) - USD ($)	1 Months Ended
	Jun. 30, 2019	Nov. 30, 2018	Sep. 30, 2019
364 Day Credit Agreement Expiring 2020 [Member]
Line Of Credit Facility [Line Items]
Initiation date		Nov. 30, 2018
Maximum borrowing capacity		$ 5,000,000,000
Three Year Agreement Expiring 2022 [Member]
Line Of Credit Facility [Line Items]
Initiation date		Nov. 30, 2018
Maximum borrowing capacity		$ 5,000,000,000
Five Year Agreement Expiring 2024 [Member]
Line Of Credit Facility [Line Items]
Initiation date		Nov. 30, 2018
Maximum borrowing capacity		$ 5,000,000,000
Total Committed Bank Credit Facilities [Member]
Line Of Credit Facility [Line Items]
Maximum borrowing capacity			$ 5,500,000,000
Committed Bank Credit Facility Expiring 2020 [Member]
Line Of Credit Facility [Line Items]
Maximum borrowing capacity			2,300,000,000
Committed Bank Credit Facility Expiring 2021 [Member]
Line Of Credit Facility [Line Items]
Maximum borrowing capacity			650,000,000
Committed Bank Credit Facility Expiring 2022 [Member]
Line Of Credit Facility [Line Items]
Maximum borrowing capacity			2,100,000,000
Committed Bank Credit Facility Expiring 2023 [Member]
Line Of Credit Facility [Line Items]
Maximum borrowing capacity			475,000,000
Three Year Revolving Credit Facility Expiring 2022 [Member]
Line Of Credit Facility [Line Items]
Maximum borrowing capacity			5,000,000,000
Credit facilities amount outstanding			$ 0
Secured notes and loans payable [Member]
Line Of Credit Facility [Line Items]
New revolving asset backed securities period	5 years
Secured notes and loans payable [Member] | Maximum [Member]
Line Of Credit Facility [Line Items]
Percentage of initial principal amount	50.00%

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Derivatives, Hedging Activities and Interest Expense - Additional Information (Details) - USD ($) $ in Millions	Sep. 30, 2019	Mar. 31, 2019
Derivative Instruments And Hedging Activities Disclosure [Abstract]
Collateral held in excess of the fair value of derivative assets	$ 1	$ 2
Collateral posted in excess of the fair value of derivative liabilities	$ 2	$ 17

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Segment Information - Schedule of Segment Reporting Information by Segment (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Mar. 31, 2019
Segment Reporting Information [Line Items]
Total financing revenues	$ 3,018	$ 2,890	$ 5,981	$ 5,726
Depreciation on operating leases	1,583	1,662	3,208	3,428
Interest expense	613	702	1,310	1,384
Net financing revenues	822	526	1,463	914
Insurance earned premiums and contract revenues	232	226	461	450
Investment and other income, net	97	56	215	96
Net financing revenues and other revenues	1,151	808	2,139	1,460
Expenses:
Provision for credit losses	61	67	136	156
Operating and administrative expenses	358	348	695	672
Insurance losses and loss adjustment expenses	115	112	228	237
Total expenses	534	527	1,059	1,065
Income before income taxes	617	281	1,080	395
Provision for income taxes	158	87	262	109
Net income	459	194	818	286
Total assets	119,938	121,060	119,938	121,060	$ 116,516
Intercompany Eliminations [Member]
Segment Reporting Information [Line Items]
Total financing revenues	0	0	0	0
Depreciation on operating leases	0	0	0	0
Interest expense	(6)	(5)	(12)	(10)
Net financing revenues	6	5	12	10
Insurance earned premiums and contract revenues	0	0	0	0
Investment and other income, net	(6)	(5)	(12)	(10)
Net financing revenues and other revenues	0	0	0	0
Expenses:
Provision for credit losses	0	0	0	0
Operating and administrative expenses	0	0	0	0
Insurance losses and loss adjustment expenses	0	0	0	0
Total expenses	0	0	0	0
Income before income taxes	0	0	0	0
Provision for income taxes	0	0	0	0
Net income	0	0	0	0
Total assets	(1,190)	(1,160)	(1,190)	(1,160)
Finance Operations [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Total financing revenues	3,018	2,890	5,981	5,726
Depreciation on operating leases	1,583	1,662	3,208	3,428
Interest expense	619	707	1,322	1,394
Net financing revenues	816	521	1,451	904
Insurance earned premiums and contract revenues	0	0	0	0
Investment and other income, net	38	51	75	99
Net financing revenues and other revenues	854	572	1,526	1,003
Expenses:
Provision for credit losses	61	67	136	156
Operating and administrative expenses	268	262	514	503
Insurance losses and loss adjustment expenses	0	0	0	0
Total expenses	329	329	650	659
Income before income taxes	525	243	876	344
Provision for income taxes	136	77	212	96
Net income	389	166	664	248
Total assets	115,714	117,265	115,714	117,265
Insurance Operations [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Total financing revenues	0	0	0	0
Depreciation on operating leases	0	0	0	0
Interest expense	0	0	0	0
Net financing revenues	0	0	0	0
Insurance earned premiums and contract revenues	232	226	461	450
Investment and other income, net	65	10	152	7
Net financing revenues and other revenues	297	236	613	457
Expenses:
Provision for credit losses	0	0	0	0
Operating and administrative expenses	90	86	181	169
Insurance losses and loss adjustment expenses	115	112	228	237
Total expenses	205	198	409	406
Income before income taxes	92	38	204	51
Provision for income taxes	22	10	50	13
Net income	70	28	154	38
Total assets	$ 5,414	$ 4,955	$ 5,414	$ 4,955

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Commitments and Contingencies

6 Months Ended

Sep. 30, 2019

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 9 – Commitments and Contingencies

Commitments and Guarantees

We have entered into certain commitments and guarantees for which the maximum unfunded amounts are summarized in the table below:

	September 30,		March 31,
	2019		2019
Commitments:
Credit facilities commitments with dealers	$	1,391	$	1,378
Commitments under operating lease agreements		119		144
Total commitments		1,510		1,522
Guarantees of affiliate pollution control and solid waste disposal bonds		100		100
Total commitments and guarantees	$	1,610	$	1,622

Wholesale financing is not considered to be a contractual commitment as the arrangements are not binding arrangements under which TMCC is required to perform.

Lease Commitments

We have a lease agreement through August 2032, with TMNA for our headquarters facility in Plano, Texas.  Total operating lease expense, including payments to affiliates, was $18 million for the six months ended September 30, 2019.  Commitments under operating lease agreements in the table above include $76 million and $97 million for facility leases with affiliates at September 30, 2019 and March 31, 2019, respectively.

Our remaining operating lease portfolio consists primarily of real estate leases. Lease terms may contain renewal and extension options or early termination features. Generally, these options do not impact the lease term because TMCC is not reasonably certain that it will exercise the options. These lease agreements do not impose restrictions on our ability to pay dividends, engage in debt or equity financing transactions or enter into further lease agreements, nor do they have residual value guarantees. We exclude from our Consolidated Balance Sheets leases with a term equal to one year or less and do not separate non-lease components from our real estate leases.

Our commitments under operating lease agreements are summarized below:

Years ending March 31,	Amounts due on operating lease liabilities as of  September 30, 2019			Future minimum lease payments as of  March 31, 2019
2020 1	$	11		$	22
2021		20			19
2022		21			20
2023		13			12
2024		11			10
Thereafter		62			61
Total	$	138		$	144
Present value discount		(19	)
Total operating lease liability	$	119

¹ Amounts due on operating lease liabilities as of September 30, 2019 excludes the amounts incurred for the six months ended September 30, 2019.

Operating lease liabilities and ROU assets are recognized at the lease commencement date based on the present value of the future minimum lease payments over the lease term.As the interest rate implicit in the lease contract is typically not readily determinable, we utilize our incremental borrowing rate.

Note 9 – Commitments and Contingencies (Continued)

The following table provides additional information related to operating lease agreements for which we are the lessee:

	September 30,
	2019
ROU assets	$	112
Lease liabilities	$	119
Weighted average remaining lease term (in years)	9.53
Weighted average discount rate	3.10%

Commitments

We provide fixed and variable rate working capital loans, revolving lines of credit, and real estate financing to dealers and various multi-franchise organizations referred to as dealer groups for facilities construction and refurbishment, working capital requirements, real estate purchases, business acquisitions and other general business purposes.  These loans are typically secured with liens on real estate, vehicle inventory, and/or other dealership assets, as appropriate, and may be guaranteed by individual or corporate guarantees of affiliated dealers, dealer groups, or dealer principals.  Although the loans are typically collateralized or guaranteed, the value of the underlying collateral or guarantees may not be sufficient to cover our exposure under such agreements.  Our pricing reflects market conditions, the competitive environment, the level of support dealers provide our retail, lease and insurance business and the credit worthiness of each dealer.  Amounts drawn under these facilities are reviewed for collectability on a quarterly basis, in conjunction with our evaluation of the allowance for credit losses.  We have also extended credit facilities to affiliates as described in Note 12 – Related Party Transactions in our fiscal 2019 Form 10-K.

Guarantees and Other Contingencies

TMCC has guaranteed bond obligations totaling $100 million in principal that were issued by Putnam County, West Virginia and Gibson County, Indiana to finance the construction of pollution control facilities at manufacturing plants of certain TMCC affiliates.  The bonds mature in the following fiscal years ending March 31: 2028 - $20 million; 2029 - $50 million; 2030 - $10 million; 2031 - $10 million; and 2032 - $10 million.  TMCC would be required to perform under the guarantees in the event of non-payment on the bonds and other related obligations.  TMCC is entitled to reimbursement by the applicable affiliates for any amounts paid.  TMCC receives a nominal annual fee for guaranteeing such payments.  TMCC has not been required to perform under any of these affiliate bond guarantees as of September 30, 2019 and March 31, 2019.

Indemnification

In the ordinary course of business, we enter into agreements containing indemnification provisions standard in the industry related to several types of transactions, including, but not limited to, debt funding, derivatives, securitization transactions, and our vendor and supplier agreements.  Performance under these indemnities would occur upon a breach of the representations, warranties or covenants made or given, or a third party claim. In addition, we have agreed in certain debt and derivative issuances, and subject to certain exceptions, to gross-up payments due to third parties in the event that withholding tax is imposed on such payments.  In addition, certain of our funding arrangements may require us to pay lenders for increased costs due to certain changes in laws or regulations.  Due to the difficulty in predicting events which could cause a breach of the indemnification provisions or trigger a gross-up or other payment obligation, we are not able to estimate our maximum exposure to future payments that could result from claims made under such provisions.  We have not made any material payments in the past as a result of these provisions, and as of September 30, 2019, we determined that it is not probable that we will be required to make any material payments in the future.  As of September 30, 2019 and March 31, 2019, no amounts have been recorded under these indemnification provisions.

Note 9 – Commitments and Contingencies (Continued)

Litigation and Governmental Proceedings

Various legal actions, governmental proceedings and other claims are pending or may be instituted or asserted in the future against us with respect to matters arising in the ordinary course of business.  Certain of these actions are or purport to be class action suits, seeking sizeable damages and/or changes in our business operations, policies and practices.  Certain of these actions are similar to suits that have been filed against other financial institutions and captive finance companies.  In addition, we are subject to governmental and regulatory examinations, information-gathering requests, and investigations from time to time at the state and federal levels.  It is inherently difficult to predict the course of such legal actions and governmental inquiries.  

We perform periodic reviews of pending claims and actions to determine the probability of adverse verdicts and resulting amounts of liability.  We establish accruals for legal claims when payments associated with the claims become probable and the costs can be reasonably estimated.  When we are able, we also determine estimates of reasonably possible loss or range of loss, whether in excess of any related accrued liability or where there is no accrued liability.  Given the inherent uncertainty associated with legal matters, the actual costs of resolving legal claims and associated costs of defense may be substantially higher or lower than the amounts for which accruals have been established.  Based on available information and established accruals, we do not believe it is reasonably possible that the results of these proceedings, either individually or in the aggregate, will have a material adverse effect on our consolidated financial condition or results of operations.

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Allowance for Credit Losses

6 Months Ended

Sep. 30, 2019

Loans And Leases Receivable Disclosure [Abstract]

Allowance for Credit Losses

Note 5 – Allowance for Credit Losses

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

	Three Months Ended						Six Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Allowance for credit losses at beginning of period	$	605		$	600		$	602		$	597
Charge-offs		(106	)		(105	)		(208	)		(218	)
Recoveries		26			23			56			50
Provision for credit losses		61			67			136			156
Allowance for credit losses at end of period	$	586		$	585		$	586		$	585

Note 5 – Allowance for Credit Losses (Continued)

Allowance for Credit Losses and Finance Receivables by Portfolio Segment

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

	Three Months Ended September 30, 2019
	Retail Loan			DealerProducts			Total
Allowance for Credit Losses for Finance Receivables:
Beginning balance, July 1, 2019	$	327		$	177		$	504
Charge-offs		(80	)		-			(80	)
Recoveries		13			-			13
Provision for credit losses		57			11			68
Ending balance, September 30, 2019	$	317		$	188		$	505
	Six Months Ended September 30, 2019
Allowance for Credit Losses for Finance Receivables:	Retail Loan			DealerProducts			Total
Beginning balance, April 1, 2019	$	304		$	195		$	499
Charge-offs		(152	)		-			(152	)
Recoveries		27			-			27
Provision for credit losses		138			(7	)		131
Ending balance, September 30, 2019	$	317		$	188		$	505
Ending balance: Individually evaluated for impairment	$	-		$	90		$	90
Ending balance: Collectively evaluated for impairment	$	317		$	98		$	415
Finance Receivables:
Ending balance, September 30, 2019	$	56,602		$	17,331		$	73,933
Ending balance: Individually evaluated for impairment	$	-		$	610		$	610
Ending balance: Collectively evaluated for impairment	$	56,602		$	16,721		$	73,323

The ending balance of finance receivables collectively evaluated for impairment in the above table includes approximately $243 million of finance receivables within the retail loan portfolio segment that are specifically identified as impaired.  These amounts are aggregated within their respective portfolio segment when determining the allowance for credit losses as of September 30, 2019, 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 September 30, 2019 includes $1,052 million in finance receivables that are guaranteed by Toyota Motor North America, Inc. (“TMNA”), and $131 million in finance receivables that 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 TMNA and third party private Toyota distributors.

Note 5 – Allowance for Credit Losses (Continued)

	Three Months Ended September 30, 2018
	Retail Loan			DealerProducts			Total
Allowance for Credit Losses for Finance Receivables:
Beginning balance, July 1, 2018	$	313		$	150		$	463
Charge-offs		(76	)		-			(76	)
Recoveries		12			-			12
Provision for credit losses		58			(10	)		48
Ending balance, September 30, 2018	$	307		$	140		$	447
	Six Months Ended September 30, 2018
Allowance for Credit Losses for Finance Receivables:	Retail Loan			DealerProducts			Total
Beginning balance, April 1, 2018	$	312		$	151		$	463
Charge-offs		(151	)		-			(151	)
Recoveries		26			-			26
Provision for credit losses		120			(11	)		109
Ending balance, September 30, 2018	$	307		$	140		$	447
Ending balance: Individually evaluated for impairment	$	-		$	57		$	57
Ending balance: Collectively evaluated for impairment	$	307		$	83		$	390
Finance Receivables:
Ending balance, September 30, 2018	$	53,957		$	16,538		$	70,495
Ending balance: Individually evaluated for impairment	$	-		$	446		$	446
Ending balance: Collectively evaluated for impairment	$	53,957		$	16,092		$	70,049

The ending balance of finance receivables collectively evaluated for impairment in the above table includes approximately $216 million of finance receivables within the retail loan portfolio segment that are specifically identified as impaired.  These amounts are aggregated within their respective portfolio segment when determining the allowance for credit losses as of September 30, 2018, 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 September 30, 2018 includes $1,054 million in finance receivables that are guaranteed by TMNA, and $137 million in finance receivables that 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 TMNA and third party private Toyota distributors.

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Interim Financial Data

6 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Interim Financial Data

Note 1 – Interim Financial Data

Basis of Presentation

The information furnished in these unaudited interim consolidated financial statements as of and for the three and six months ended September 30, 2019 and 2018 has been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”).  In the opinion of management, the unaudited consolidated financial information reflects all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the results for the interim periods presented.  The results of operations for the three and six months ended September 30, 2019 do not necessarily indicate the results which may be expected for the full fiscal year ending March 31, 2020 (“fiscal 2020”).

These financial statements should be read in conjunction with the Consolidated Financial Statements and Notes to Consolidated Financial Statements included in Toyota Motor Credit Corporation’s Annual Report on Form 10-K (“Form 10-K”) for the fiscal year ended March 31, 2019 (“fiscal 2019”), which was filed with the Securities and Exchange Commission on June 4, 2019.  References herein to “TMCC” denote Toyota Motor Credit Corporation, and references herein to “we”, “our”, and “us” denote Toyota Motor Credit Corporation and its consolidated subsidiaries.

Certain prior period amounts have been reclassified to conform to current period presentation.  Related party transactions are disclosed in Note 11 – Related Party Transactions.

Other Matters

On April 16, 2019, we announced that we will restructure our field operations over the next two years to better serve our dealer partners by streamlining our field office structure into three regional locations and investing in new technology.  Costs associated with this restructure are not expected to be significant.

TMCC has commenced preparations to launch private label finance services for third-party automotive and mobility companies.  In furtherance of this new business initiative, on August 28, 2019, we entered into an agreement with Mazda Motor of America, Inc. (“Mazda”) pursuant to which we will offer exclusive private label automotive retail, lease, and dealer financing products and services, and vehicle protection products and services, to Mazda customers and dealers in the United States, launching at various times through fiscal year 2021 for an initial term of approximately five years.  We intend to leverage our existing processes and personnel to service the newly originated assets, and we expect to make certain technology investments to support the Mazda program.  TMCC will not acquire any existing Mazda assets or liabilities pursuant to the agreement and we do not expect launch costs to be significant through fiscal year 2021.

Note 1 – Interim Financial Data (Continued)

Recently Adopted Accounting Guidance

On April 1, 2019, we adopted the following new accounting standards:

Leases

We adopted Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) (“ASU 2016-02”), along with the subsequently issued guidance amending and clarifying various aspects of the new lease guidance, using the modified retrospective method.  In accordance with that method, the comparative period’s information has not been restated and continues to be reported under the lease accounting guidance in effect for that period.  We also elected to apply the package of practical expedients permitted under the transition guidance of the new standard which allowed us to not reassess our historical lease classification, initial direct costs, and whether or not contracts entered into prior to adoption are or contain leases.  As a lessor, the adoption of ASU 2016-02, did not have a significant impact on our financial statements.  As a lessee, the adoption of ASU 2016-02 added right-of-use (“ROU”) assets of $115 million and operating lease liabilities of $122 million, which are included in Other assets, and in Other liabilities, respectively, in our Consolidated Balance Sheet.  The adoption of this new guidance did not impact our Consolidated Statement of Income and did not result in a cumulative-effect adjustment to opening retained earnings.

Refer to Note 4 – Investments in Operating Leases, Net and Note 9 – Commitments and Contingencies for additional information.

Other Recently Adopted Standards

We adopted ASU 2017-08, Receivables – Nonrefundable Fees and Other Costs, which requires certain premiums on callable debt securities to be amortized to the earliest call date.  The adoption of this guidance did not have a material impact on our consolidated financial statements and related disclosures.

We adopted ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.  The adoption of this guidance did not have an impact on our consolidated financial statements and related disclosures as we no longer have hedge accounting derivatives.

In the second quarter of fiscal 2020, we adopted ASU 2019-07, Codification Updates to Securities and Exchange Commission (“SEC”) Sections – Amendments to SEC Paragraphs Pursuant to SEC Final Rule Releases No. 33-10532, “Disclosure Update and Simplification,” and Nos. 33-10231 and 33-10442, “Investment Company Reporting Modernization,” and Miscellaneous Updates.  This guidance was effective upon issuance in July 2019 and aligns the guidance in various SEC sections to the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) with the requirements of certain already effective SEC final rules.  While most of the amendments in this release eliminate outdated or duplicative disclosure requirements, the final rule release amends the interim financial statement requirements to include a reconciliation of changes in shareholder’s equity for each period for which an income statement is required to be filed.  We have disclosed the required information in the Consolidated Statements of Shareholder’s Equity.  The other eliminations or amendments did not have a material impact on our consolidated financial statements and related disclosures.

Note 1 – Interim Financial Data (Continued)

Accounting Guidance Issued But Not Yet Adopted

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.  This guidance introduces a new impairment model based on expected losses rather than incurred losses for certain types of financial instruments.  It also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination.  The FASB subsequently issued guidance amending and clarifying aspects of the new impairment model.  This ASU is effective for us on April 1, 2020.  We are in the process of developing, refining and testing the models and procedures that will be used to calculate the credit loss reserves in accordance with this new accounting guidance.  We expect this new guidance will result in an increase in our allowance for credit losses with a cumulative-effect adjustment to our opening retained earnings in the period of adoption.  The magnitude of the increase in our allowance for credit losses is under evaluation.  We are currently evaluating the other potential impacts of this guidance on our consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), which modifies disclosure requirements related to fair value measurement.  This ASU is effective for us on April 1, 2020.  The adoption of this guidance will not have a material impact on our consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software, which aligns the accounting for costs incurred to implement a cloud computing arrangement that is a service arrangement with the guidance on capitalizing costs associated with developing or obtaining internal-use software.  This ASU is effective for us on April 1, 2020.  We are currently evaluating the potential impacts of this guidance on our consolidated financial statements and related disclosures.

In October 2018, the FASB issued ASU 2018-17, Consolidation (Topic 810), which requires indirect interests held through related parties in common control arrangements to be considered on a proportional basis for determining whether fees paid to decision makers and service providers are variable interests.  This ASU is effective for us on April 1, 2021.  The adoption of this guidance will not have a material impact on our consolidated financial statements and related disclosures.   

In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. The applicable provisions of this ASU are effective for us on April 1, 2020. We are currently evaluating the potential impacts of this guidance on our consolidated financial statements and related disclosures.

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Fair Value Measurements (Tables)

6 Months Ended

Sep. 30, 2019

Fair Value Disclosures [Abstract]

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables summarize our financial assets and financial liabilities measured at fair value on a recurring basis by level within the fair value hierarchy except for certain investments that are measured at fair value using the net asset value per share (or its equivalent) as a practical expedient and are excluded from the leveling information provided in the tables below.  Fair value amounts presented below are intended to permit reconciliation of the fair value hierarchy to the amounts presented in our Consolidated Balance Sheets.  

	September 30, 2019
								Counterparty
								netting &			Fair
	Level 1		Level 2			Level 3		collateral			value
Investments in marketable securities:
Available-for-sale debt securities:
U.S. government and agency obligations	$	202	$	2		$	-	$	-		$	204
Municipal debt securities		-		11			-		-			11
Certificates of deposit		-		150			-		-			150
Commercial paper		-		350			-		-			350
Corporate debt securities		-		174			-		-			174
Mortgage-backed securities:
U.S. government agency		-		33			-		-			33
Non-agency residential		-		-			1		-			1
Non-agency commercial		-		-			45		-			45
Asset-backed securities		-		-			81		-			81
Available-for-sale debt securities total		202		720			127		-			1,049
Equity investments:
Fixed income mutual funds:
Fixed income mutual funds measured at    net asset value												725
Total return bond funds		1,678		-			-		-			1,678
Equity investments total		1,678		-			-		-			2,403
Investments in marketable securities total		1,880		720			127		-			3,452
Derivative assets:
Interest rate swaps		-		689			-		-			689
Foreign currency swaps		-		21			-		-			21
Counterparty netting and collateral		-		-			-		(660	)		(660	)
Derivative assets total		-		710			-		(660	)		50
Assets at fair value		1,880		1,430			127		(660	)		3,502
Derivative liabilities:
Interest rate swaps		-		(928	)		-		-			(928	)
Foreign currency swaps		-		(1,081	)		-		-			(1,081	)
Counterparty netting and collateral		-		-			-		1,971			1,971
Liabilities at fair value		-		(2,009	)		-		1,971			(38	)
Net assets at fair value	$	1,880	$	(579	)	$	127	$	1,311		$	3,464

	March 31, 2019
								Counterparty
								netting &			Fair
	Level 1		Level 2			Level 3		collateral			value
Investments in marketable securities:
Available-for-sale debt securities:
U.S. government and agency obligations	$	194	$	18		$	-	$	-		$	212
Municipal debt securities		-		11			-		-			11
Certificates of deposit		-		50			-		-			50
Commercial paper		-		70			-		-			70
Corporate debt securities		-		162			-		-			162
Mortgage-backed securities:
U.S. government agency		-		35			-		-			35
Non-agency residential		-		-			1		-			1
Non-agency commercial		-		-			39		-			39
Asset-backed securities		-		-			53		-			53
Available-for-sale debt securities total		194		346			93		-			633
Equity investments:
Fixed income mutual funds:
Fixed income mutual funds measured at    net asset value												689
Total return bond funds		1,586		-			-		-			1,586
Equity investments total		1,586		-			-		-			2,275
Investments in marketable securities total		1,780		346			93		-			2,908
Derivative assets:
Interest rate swaps		-		471			1		-			472
Foreign currency swaps		-		72			-		-			72
Counterparty netting and collateral		-		-			-		(483	)		(483	)
Derivative assets total		-		543			1		(483	)		61
Assets at fair value		1,780		889			94		(483	)		2,969
Derivative liabilities:
Interest rate swaps		-		(622	)		-		-			(622	)
Foreign currency swaps		-		(785	)		-		-			(785	)
Counterparty netting and collateral		-		-			-		1,381			1,381
Liabilities at fair value		-		(1,407	)		-		1,381			(26	)
Net assets at fair value	$	1,780	$	(518	)	$	94	$	898		$	2,943

Assets and Liabilities Measured on Recurring Basis Using Significant Unobservable Inputs

The following tables summarize the rollforward of all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs:

	Three Months Ended September 30, 2019
											Total net
									Derivative		assets
	Available-for-sale debt securities								instruments, net		(liabilities)
						Total
	Mortgage-		Asset-			available-			Interest
	backed		backed			for-sale debt			rate
	securities		securities			securities			swaps
Fair value, July 1, 2019	$	41	$	66		$	107		$	-	$	107
Total gains (losses)
Included in net income		-		-			-			-		-
Included in other comprehensive income		-		-			-			-		-
Purchases, issuances, sales, and settlements
Purchases		5		19			24			-		24
Issuances		-		-			-			-		-
Sales		-		-			-			-		-
Settlements		-		(4	)		(4	)		-		(4	)
Transfers in to Level 3		-		-			-			-		-
Transfers out of Level 3		-		-			-			-		-
Fair value, September 30, 2019	$	46	$	81		$	127		$	-	$	127
The amount of total gains   (losses) included in net income   attributable to assets held   at the reporting date									$	-	$	-

	Three Months Ended September 30, 2018
												Total net
									Derivative			assets
	Available-for-sale debt securities								instruments, net			(liabilities)
						Total
	Mortgage-		Asset-			available-			Interest
	backed		backed			for-sale debt			rate
	securities		securities			securities			swaps
Fair value, July 1, 2018	$	25	$	38		$	63		$	(23	)	$	40
Total gains (losses)
Included in net income		-		-			-			(10	)		(10	)
Included in other comprehensive income		-		-			-			-			-
Purchases, issuances, sales, and settlements
Purchases		5		18			23			-			23
Issuances		-		-			-			-			-
Sales		-		(4	)		(4	)		-			(4	)
Settlements		-		(6	)		(6	)		(26	)		(32	)
Transfers in to Level 3		-		-			-			-			-
Transfers out of Level 3		-		-			-			-			-
Fair value, September 30, 2018	$	30	$	46		$	76		$	(59	)	$	17
The amount of total gains   (losses) included in net income   attributable to assets held   at the reporting date									$	(10	)	$	(10	)

Note 12 – Fair Value Measurements (Continued)

	Six Months Ended September 30, 2019
												Total net
									Derivative			assets
	Available-for-sale debt securities								instruments, net			(liabilities)
						Total
	Mortgage-		Asset-			available-			Interest
	backed		backed			for-sale debt			rate
	securities		securities			securities			swaps
Fair value, April 1, 2019	$	40	$	53		$	93		$	1		$	94
Total gains (losses)
Included in net income		-		-			-			18			18
Included in other comprehensive income		1		1			2			-			2
Purchases, issuances, sales, and settlements
Purchases		5		34			39			-			39
Issuances		-		-			-			-			-
Sales		-		-			-			-			-
Settlements		-		(7	)		(7	)		6			(1	)
Transfers in to Level 3		-		-			-			-			-
Transfers out of Level 3		-		-			-			(25	)		(25	)
Fair value, September 30, 2019	$	46	$	81		$	127		$	-		$	127
The amount of total gains   (losses) included in net income   attributable to assets held   at the reporting date									$	18		$	18

	Six Months Ended September 30, 2018
													Total net
										Derivative			assets
	Available-for-sale debt securities									instruments, net			(liabilities)
							Total
	Mortgage-			Asset-			available-			Interest
	backed			backed			for-sale debt			rate
	securities			securities			securities			swaps
Fair value, April 1, 2018	$	31		$	39		$	70		$	(21	)	$	49
Total gains (losses)
Included in net income		-			-			-			(18	)		(18	)
Included in other comprehensive income		-			-			-			-			-
Purchases, issuances, sales, and settlements
Purchases		5			20			25			-			25
Issuances		-			-			-			-			-
Sales		-			(4	)		(4	)		-			(4	)
Settlements		(6	)		(9	)		(15	)		(20	)		(35	)
Transfers in to Level 3		-			-			-			-			-
Transfers out of Level 3		-			-			-			-			-
Fair value, September 30, 2018	$	30		$	46		$	76		$	(59	)	$	17
The amount of total gains   (losses) included in net   income attributable to   assets held at the   reporting date										$	(18	)	$	(18	)

Financial Assets and Liabilities Not Carried at Fair Value on Recurring Basis on Consolidated Balance Sheets

The following tables provide information about assets and liabilities not carried at fair value on a recurring basis on our Consolidated Balance Sheets:

	September 30, 2019
	Carrying								Total Fair
	value		Level 1		Level 2		Level 3		Value
Financial assets
Finance receivables, net
Retail loan	$	55,842	$	-	$	-	$	56,665	$	56,665
Wholesale		9,892		-		-		9,977		9,977
Real estate		4,575		-		-		4,676		4,676
Working capital		2,567		-		-		2,593		2,593
Financial liabilities
Unsecured notes and loans payable	$	82,256	$	-	$	82,110	$	1,575	$	83,685
Secured notes and loans payable		12,837		-		-		12,954		12,954

	March 31, 2019
	Carrying								Total Fair
	value		Level 1		Level 2		Level 3		Value
Financial assets
Finance receivables, net
Retail loan	$	53,013	$	-	$	-	$	53,247	$	53,247
Wholesale		10,293		-		-		10,369		10,369
Real estate		4,550		-		-		4,534		4,534
Working capital		2,510		-		-		2,554		2,554
Financial liabilities
Unsecured notes and loans payable	$	80,521	$	-	$	79,056	$	2,313	$	81,369
Secured notes and loans payable		12,401		-		-		12,428		12,428

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Investments in Marketable Securities - Additional Information (Details)	6 Months Ended
	Sep. 30, 2019 USD ($)
Marketable Securities [Abstract]
Private placement share redemption percentage	1.00%
Private placement share redemption amount	$ 250,000
Share redemption period	90 days

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Variable Interest Entities - Schedule of Assets and Liabilities related to Variable Interest Entities Securitization Transactions (Details) - USD ($) $ in Millions	Sep. 30, 2019	Mar. 31, 2019
Variable Interest Entity [Line Items]
Restricted Cash	$ 941	$ 985
Net Securitized Assets	72,988	70,517
Other Assets	2,206	1,981
Debt	95,093	92,922
Other liabilities	4,840	4,564
Other assets [Member]
Variable Interest Entity [Line Items]
Restricted Cash	941	985
Net Securitized Assets	16,425	16,382
Other Assets	117	192
Other liabilities [Member]
Variable Interest Entity [Line Items]
Debt	12,837	12,401
Other liabilities	11	12
Retail Finance Receivables [Member] | Other assets [Member]
Variable Interest Entity [Line Items]
Restricted Cash	669	630
Net Securitized Assets	12,272	11,075
Other Assets	6	6
Retail Finance Receivables [Member] | Other liabilities [Member]
Variable Interest Entity [Line Items]
Debt	10,337	9,202
Other liabilities	9	10
Investments In Operating Leases, Net [Member] | Other assets [Member]
Variable Interest Entity [Line Items]
Restricted Cash	272	355
Net Securitized Assets	4,153	5,307
Other Assets	111	186
Investments In Operating Leases, Net [Member] | Other liabilities [Member]
Variable Interest Entity [Line Items]
Debt	2,500	3,199
Other liabilities	$ 2	$ 2

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Derivatives, Hedging Activities and Interest Expense - Components of Interest Expense (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Derivative Instruments Gain Loss [Line Items]
Interest expense on debt	$ 639	$ 637	$ 1,294	$ 1,238
Interest expense (income) on derivatives	37	(22)	49	(47)
Interest expense on debt and derivatives	676	615	1,343	1,191
Total interest expense	613	702	1,310	1,384
Interest expense [Member]
Derivative Instruments Gain Loss [Line Items]
Gains on debt denominated in foreign currencies	(475)	(161)	(460)	(807)
Losses on foreign currency swaps	474	172	366	855
(Gains) losses on U.S. dollar interest rate swaps	$ (62)	$ 76	$ 61	$ 145

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Fair Value Measurements - Additional Information (Details) - USD ($) $ in Millions	Sep. 30, 2019	Mar. 31, 2019
Fair Value Disclosures [Abstract]
Finance receivables from related party	$ 109	$ 148

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Derivatives, Hedging Activities and Interest Expense

6 Months Ended

Sep. 30, 2019

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivatives, Hedging Activities and Interest Expense

Note 6 – Derivatives, Hedging Activities and Interest Expense

Derivative Instruments

Our liabilities consist mainly of fixed and variable rate debt, denominated in U.S. dollars and various other currencies, which we issue in the global capital markets, while our assets consist primarily of U.S. dollar denominated, fixed rate receivables.  We enter into interest rate swaps, interest rate floors, and foreign currency swaps to economically hedge the interest rate and foreign currency risks that result from the different characteristics of our assets and liabilities.  Our use of derivative transactions is intended to reduce long-term fluctuations in the fair value of assets and liabilities caused by market movements.  All of our derivative activities are authorized and monitored by our management and our Asset Liability Committee which provides a framework for financial controls and governance to manage market risk.    

Offsetting of Derivatives

The accounting guidance permits the net presentation on our Consolidated Balance Sheets of derivative receivables and derivative payables with the same counterparty and the related cash collateral when a legally enforceable master netting agreement exists.  When we meet this condition, we elect to present such balances on a net basis.  

Our International Swaps and Derivatives Association (“ISDA”) Master Agreements are our master netting agreements which permit multiple transactions to be cancelled and settled with a single net balance paid to either party.  The master netting agreements also contain reciprocal collateral agreements which require the transfer of cash collateral to the party in a net asset position across all transactions.  Our collateral agreements with substantially all our counterparties include a zero threshold, full collateralization arrangement.  Although we have daily valuation and collateral exchange arrangements with all of our counterparties, due to the time required to move collateral, there may be a delay of up to one day between the exchange of collateral and the valuation of our derivatives.  We would not be required to post additional collateral to the counterparties with whom we were in a net liability position at September 30, 2019 if our credit ratings were to decline, since we fully collateralize without regard to credit ratings with these counterparties.  In addition, as our collateral agreements include legal right of offset provisions, collateral amounts are netted against derivative assets or derivative liabilities, the net amount of which is included in Other assets or Other liabilities in our Consolidated Balance Sheets.

Note 6 – Derivatives, Hedging Activities and Interest Expense (Continued)

Derivative Activity Impact on Financial Statements

The following tables show the financial statement line item and amount of our derivative assets and liabilities that are reported in our Consolidated Balance Sheets:

	September 30, 2019					March 31, 2019
			Fair					Fair
	Notional		value			Notional		value
Other assets:
Interest rate swaps	$	37,394	$	689		$	49,254	$	472
Foreign currency swaps		54		21			2,771		72
Total	$	37,448	$	710		$	52,025	$	544
Counterparty netting				(456	)				(441	)
Collateral held				(204	)				(42	)
Carrying value of derivative contracts – Other assets			$	50				$	61
Other liabilities:
Interest rate swaps	$	63,632	$	928		$	57,593	$	622
Foreign currency swaps		12,696		1,081			9,796		785
Total	$	76,328	$	2,009		$	67,389	$	1,407
Counterparty netting				(456	)				(441	)
Collateral posted				(1,515	)				(940	)
Carrying value of derivative contracts – Other liabilities			$	38				$	26

As of September 30, 2019, we held excess collateral of $1 million, which we did not use to offset derivative assets and was recorded in Other liabilities in our Consolidated Balance Sheets, and we posted excess collateral of $2 million, which we did not use to offset derivative liabilities and was recorded in Other assets in our Consolidated Balance Sheets.  As of March 31, 2019, we held excess collateral of $2 million, which we did not use to offset derivative assets and was recorded in Other liabilities in our Consolidated Balance Sheets and we posted excess collateral of $17 million, which we did not use to offset derivative liabilities and was recorded in Other assets in our Consolidated Balance Sheets.

Note 6 – Derivatives, Hedging Activities and Interest Expense (Continued)

The following table summarizes the components of interest expense, including the location and amount of gains and losses on derivative instruments and related hedged items, as reported in our Consolidated Statements of Income:

	Three Months Ended						Six Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Interest expense on debt	$	639		$	637		$	1,294		$	1,238
Interest expense (income) on derivatives		37			(22	)		49			(47	)
Interest expense on debt and derivatives		676			615			1,343			1,191
Gains on debt denominated in foreign currencies		(475	)		(161	)		(460	)		(807	)
Losses on foreign currency swaps		474			172			366			855
(Gains) losses on U.S. dollar interest rate swaps		(62	)		76			61			145
Total interest expense	$	613		$	702		$	1,310		$	1,384

Interest expense on debt and derivatives represents net interest settlements and changes in accruals.  Gains and losses on derivatives and debt denominated in foreign currencies exclude net interest settlements and changes in accruals.  Cash flows associated with derivatives are reported in Net cash provided by operating activities in our Consolidated Statements of Cash Flows.

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Investments in Marketable Securities

6 Months Ended

Sep. 30, 2019

Marketable Securities [Abstract]

Investments in Marketable Securities

Note 2 – Investments in Marketable Securities

Investments in marketable securities consist of debt securities and equity investments.  We classify all of our debt securities as available-for-sale.  All equity investments are recorded at fair value with changes in fair value included in Investment and other income, net within our Consolidated Statements of Income.

Investments in marketable securities consisted of the following:

	September 30, 2019
	Amortized		Unrealized		Unrealized		Fair
	cost		gains		losses		value
Available-for-sale debt securities:
U.S. government and agency obligations	$	196	$	8	$	-	$	204
Municipal debt securities		9		2		-		11
Certificates of deposit		150		-		-		150
Commercial paper		350		-		-		350
Corporate debt securities		164		10		-		174
Mortgage-backed securities:
U.S. government agency		32		1		-		33
Non-agency residential		1		-		-		1
Non-agency commercial		44		1		-		45
Asset-backed securities		79		2		-		81
Total available-for-sale debt securities	$	1,025	$	24	$	-	$	1,049
Equity investments							$	2,403
Total investments in marketable securities							$	3,452

	March 31, 2019
	Amortized		Unrealized		Unrealized			Fair
	cost		gains		losses			value
Available-for-sale debt securities:
U.S. government and agency obligations	$	213	$	2	$	(3	)	$	212
Municipal debt securities		9		2		-			11
Certificates of deposit		50		-		-			50
Commercial paper		70		-		-			70
Corporate debt securities		160		3		(1	)		162
Mortgage-backed securities:
U.S. government agency		35		-		-			35
Non-agency residential		1		-		-			1
Non-agency commercial		39		-		-			39
Asset-backed securities		52		1		-			53
Total available-for-sale debt securities	$	629	$	8	$	(4	)	$	633
Equity investments									2,275
Total investments in marketable securities								$	2,908

A portion of our equity investments are investments in funds that are privately placed and managed by an open-end investment management company (the “Trust”).  If we elect to redeem shares, the Trust will normally redeem all shares for cash, but may, in unusual circumstances, redeem amounts exceeding the lesser of $250 thousand or 1 percent of the Trust’s asset value by payment in kind of securities held by the respective fund during any 90-day period.

We also invest in actively traded open-end mutual funds.  Redemptions are subject to normal terms and conditions as described in each fund’s prospectus.

Note 2 – Investments in Marketable Securities (Continued)

Unrealized Losses on Securities

Available-for-sale debt securities in a continuous loss position for less than twelve months and greater than twelve months were not significant as of September 30, 2019 and March 31, 2019.  

Gains and Losses on Securities

The following table represents gains and losses on our investments in marketable securities presented in our Consolidated Statements of Income:

	Three Months Ended					Six Months Ended
	September 30,					September 30,
	2019		2018			2019		2018
Available-for-sale debt securities:
Realized gains (losses)	$	1	$	(1	)	$	1	$	(1	)
Equity investments:
Unrealized gains (losses) recognized	$	31	$	(15	)	$	86	$	(40	)
Realized gains (losses) on sales	$	1	$	-		$	3	$	-

Contractual Maturities

The amortized cost and fair value, by contractual maturity of available-for-sale debt securities are summarized in the following table.  Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay certain obligations.

	September 30, 2019
	AmortizedCost		Fair Value
Available-for-sale debt securities:
Due within 1 year	$	542	$	542
Due after 1 year through 5 years		128		130
Due after 5 years through 10 years		124		131
Due after 10 years		75		86
Mortgage-backed and asset-backed securities1		156		160
Total	$	1,025	$	1,049

¹ Mortgage-backed and asset-backed securities are shown separately from other maturity groupings as these securities have multiple maturity dates.

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Income Taxes

6 Months Ended

Sep. 30, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Note 10 – Income Taxes

Our effective tax rate was 26 percent and 24 percent for the three and six months ended September 30, 2019, compared to 31 percent and 28 percent for the same periods in fiscal 2019.  Our provision for income taxes was $158 million and $262 million for the three and six months ended September 30, 2019, compared to $87 million and $109 million for the same periods in fiscal 2019.  The increase in the provision for income taxes for the three and six months ended September 30, 2019 was primarily due to the increase in our income before taxes compared to the same periods in fiscal 2019.  The decrease in the effective tax rate for the three and six months ended September 30, 2019 compared to the same periods in fiscal 2019, was primarily due to state tax law changes taking effect in this fiscal year.

Tax-related Contingencies

As of September 30, 2019, we remain under IRS examination for fiscal 2020, 2019 and 2018.  

We periodically review our uncertain tax positions.  Our assessment is based on many factors including any ongoing IRS audits.  For the three months ended September 30, 2019, our assessment did not result in a material change in unrecognized tax benefits.

Our deferred tax assets were $1.4 billion and $2.9 billion at September 30, 2019 and March 31, 2019, respectively, and were primarily due to the deferred deduction of allowance for credit losses and residual value losses and federal tax loss carryforward which has no expiration.  The total deferred tax liability, net of these deferred tax assets, was $5.6 billion and $5.5 billion at September 30, 2019 and March 31, 2019, respectively.  Realization with respect to the federal tax loss carryforward is dependent on generating sufficient income.  Although realization is not assured, management believes it is more likely than not that the deferred tax assets will be realized.  The amount of the deferred tax assets considered realizable could be reduced if management’s estimates change.

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Related Party Transactions (Tables)

6 Months Ended

Sep. 30, 2019

Related Party Transactions [Abstract]

Related Party Transactions Included in Consolidated Statements of Income

The tables below show the financial statement line items and amounts included in our Consolidated Statements of Income and in our Consolidated Balance Sheets under various related party agreements or relationships:

	Three Months Ended						Six Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Net financing revenues:
Manufacturer's subvention and other revenues	$	508		$	467		$	1,020		$	934
Depreciation on operating leases	$	(13	)	$	(5	)	$	(23	)	$	(10	)
Interest expense:
Credit support fees, interest and other expenses	$	24		$	24		$	48		$	49
Insurance earned premiums and contract revenues:
Insurance premiums and contract revenues	$	45		$	44		$	90		$	89
Investment and other income, net:
Interest and other income	$	6		$	2		$	12		$	4
Expenses:
Operating and administrative expenses	$	21		$	24		$	42		$	47
Insurance losses and loss adjustment expenses1	$	-		$	(1	)	$	-		$	(3	)

¹ Amount includes the transfer of insurance losses and loss adjustment expenses under a reinsurance contract.

Related Party Transactions Included in Consolidated Balance Sheets

The tables below show the financial statement line items and amounts included in our Consolidated Statements of Income and in our Consolidated Balance Sheets under various related party agreements or relationships:

	September 30,			March 31,
	2019			2019
Assets:
Investments in marketable securities
Commercial paper	$	350		$	70
Finance receivables, net
Accounts receivable	$	111		$	150
Deferred retail subvention income	$	(1,207	)	$	(1,257	)
Investments in operating leases, net
Investments in operating leases, net	$	(51	)	$	1
Deferred lease subvention income	$	(2,147	)	$	(2,062	)
Other assets
Notes receivable	$	688		$	601
Other receivables, net	$	94		$	11
Liabilities:
Other liabilities
Unearned affiliate insurance premiums and contract revenues	$	339		$	337
Other payables, net	$	226		$	147
Notes payable	$	18		$	16

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Investments in Marketable Securities - Summary of Investments in Marketable Securities (Details) - USD ($) $ in Millions	Sep. 30, 2019	Mar. 31, 2019
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale debt securities, Amortized cost	$ 1,025	$ 629
Available-for-sale debt securities, Unrealized gains	24	8
Available-for-sale debt securities, Unrealized losses	0	(4)
Available-for-sale debt securities, Fair value	1,049	633
Equity investments, Fair value	2,403	2,275
Investments in marketable securities total	3,452	2,908
U.S. government and agency obligations [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale debt securities, Amortized cost	196	213
Available-for-sale debt securities, Unrealized gains	8	2
Available-for-sale debt securities, Unrealized losses	0	(3)
Available-for-sale debt securities, Fair value	204	212
Municipal debt securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale debt securities, Amortized cost	9	9
Available-for-sale debt securities, Unrealized gains	2	2
Available-for-sale debt securities, Unrealized losses	0	0
Available-for-sale debt securities, Fair value	11	11
Certificates of deposit [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale debt securities, Amortized cost	150	50
Available-for-sale debt securities, Unrealized gains	0	0
Available-for-sale debt securities, Unrealized losses	0	0
Available-for-sale debt securities, Fair value	150	50
Commercial paper [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale debt securities, Amortized cost	350	70
Available-for-sale debt securities, Unrealized gains	0	0
Available-for-sale debt securities, Unrealized losses	0	0
Available-for-sale debt securities, Fair value	350	70
Corporate debt securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale debt securities, Amortized cost	164	160
Available-for-sale debt securities, Unrealized gains	10	3
Available-for-sale debt securities, Unrealized losses	0	(1)
Available-for-sale debt securities, Fair value	174	162
U.S. government agency mortgage-backed securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale debt securities, Amortized cost	32	35
Available-for-sale debt securities, Unrealized gains	1	0
Available-for-sale debt securities, Unrealized losses	0	0
Available-for-sale debt securities, Fair value	33	35
Non-agency residential mortgage-backed securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale debt securities, Amortized cost	1	1
Available-for-sale debt securities, Unrealized gains	0	0
Available-for-sale debt securities, Unrealized losses	0	0
Available-for-sale debt securities, Fair value	1	1
Non-agency commercial mortgage-backed securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale debt securities, Amortized cost	44	39
Available-for-sale debt securities, Unrealized gains	1	0
Available-for-sale debt securities, Unrealized losses	0	0
Available-for-sale debt securities, Fair value	45	39
Asset-backed securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale debt securities, Amortized cost	79	52
Available-for-sale debt securities, Unrealized gains	2	1
Available-for-sale debt securities, Unrealized losses	0	0
Available-for-sale debt securities, Fair value	$ 81	$ 53

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Allowance for Credit Losses (Tables)

6 Months Ended

Sep. 30, 2019

Loans And Leases Receivable Disclosure [Abstract]

Allowance for Credit Losses on Finance Receivables and Investments in Operating Leases

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

	Three Months Ended						Six Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Allowance for credit losses at beginning of period	$	605		$	600		$	602		$	597
Charge-offs		(106	)		(105	)		(208	)		(218	)
Recoveries		26			23			56			50
Provision for credit losses		61			67			136			156
Allowance for credit losses at end of period	$	586		$	585		$	586		$	585

Allowance for Credit Losses and Finance Receivables by Portfolio Segment

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

	Three Months Ended September 30, 2019
	Retail Loan			DealerProducts			Total
Allowance for Credit Losses for Finance Receivables:
Beginning balance, July 1, 2019	$	327		$	177		$	504
Charge-offs		(80	)		-			(80	)
Recoveries		13			-			13
Provision for credit losses		57			11			68
Ending balance, September 30, 2019	$	317		$	188		$	505
	Six Months Ended September 30, 2019
Allowance for Credit Losses for Finance Receivables:	Retail Loan			DealerProducts			Total
Beginning balance, April 1, 2019	$	304		$	195		$	499
Charge-offs		(152	)		-			(152	)
Recoveries		27			-			27
Provision for credit losses		138			(7	)		131
Ending balance, September 30, 2019	$	317		$	188		$	505
Ending balance: Individually evaluated for impairment	$	-		$	90		$	90
Ending balance: Collectively evaluated for impairment	$	317		$	98		$	415
Finance Receivables:
Ending balance, September 30, 2019	$	56,602		$	17,331		$	73,933
Ending balance: Individually evaluated for impairment	$	-		$	610		$	610
Ending balance: Collectively evaluated for impairment	$	56,602		$	16,721		$	73,323

	Three Months Ended September 30, 2018
	Retail Loan			DealerProducts			Total
Allowance for Credit Losses for Finance Receivables:
Beginning balance, July 1, 2018	$	313		$	150		$	463
Charge-offs		(76	)		-			(76	)
Recoveries		12			-			12
Provision for credit losses		58			(10	)		48
Ending balance, September 30, 2018	$	307		$	140		$	447
	Six Months Ended September 30, 2018
Allowance for Credit Losses for Finance Receivables:	Retail Loan			DealerProducts			Total
Beginning balance, April 1, 2018	$	312		$	151		$	463
Charge-offs		(151	)		-			(151	)
Recoveries		26			-			26
Provision for credit losses		120			(11	)		109
Ending balance, September 30, 2018	$	307		$	140		$	447
Ending balance: Individually evaluated for impairment	$	-		$	57		$	57
Ending balance: Collectively evaluated for impairment	$	307		$	83		$	390
Finance Receivables:
Ending balance, September 30, 2018	$	53,957		$	16,538		$	70,495
Ending balance: Individually evaluated for impairment	$	-		$	446		$	446
Ending balance: Collectively evaluated for impairment	$	53,957		$	16,092		$	70,049

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Interim Financial Data (Policies)

6 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The information furnished in these unaudited interim consolidated financial statements as of and for the three and six months ended September 30, 2019 and 2018 has been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”).  In the opinion of management, the unaudited consolidated financial information reflects all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the results for the interim periods presented.  The results of operations for the three and six months ended September 30, 2019 do not necessarily indicate the results which may be expected for the full fiscal year ending March 31, 2020 (“fiscal 2020”).

These financial statements should be read in conjunction with the Consolidated Financial Statements and Notes to Consolidated Financial Statements included in Toyota Motor Credit Corporation’s Annual Report on Form 10-K (“Form 10-K”) for the fiscal year ended March 31, 2019 (“fiscal 2019”), which was filed with the Securities and Exchange Commission on June 4, 2019.  References herein to “TMCC” denote Toyota Motor Credit Corporation, and references herein to “we”, “our”, and “us” denote Toyota Motor Credit Corporation and its consolidated subsidiaries.

Certain prior period amounts have been reclassified to conform to current period presentation.  Related party transactions are disclosed in Note 11 – Related Party Transactions.

Other Matters

On April 16, 2019, we announced that we will restructure our field operations over the next two years to better serve our dealer partners by streamlining our field office structure into three regional locations and investing in new technology.  Costs associated with this restructure are not expected to be significant.

TMCC has commenced preparations to launch private label finance services for third-party automotive and mobility companies.  In furtherance of this new business initiative, on August 28, 2019, we entered into an agreement with Mazda Motor of America, Inc. (“Mazda”) pursuant to which we will offer exclusive private label automotive retail, lease, and dealer financing products and services, and vehicle protection products and services, to Mazda customers and dealers in the United States, launching at various times through fiscal year 2021 for an initial term of approximately five years.  We intend to leverage our existing processes and personnel to service the newly originated assets, and we expect to make certain technology investments to support the Mazda program.  TMCC will not acquire any existing Mazda assets or liabilities pursuant to the agreement and we do not expect launch costs to be significant through fiscal year 2021.

Recently Adopted Accounting Guidance

Recently Adopted Accounting Guidance

On April 1, 2019, we adopted the following new accounting standards:

Leases

We adopted Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) (“ASU 2016-02”), along with the subsequently issued guidance amending and clarifying various aspects of the new lease guidance, using the modified retrospective method.  In accordance with that method, the comparative period’s information has not been restated and continues to be reported under the lease accounting guidance in effect for that period.  We also elected to apply the package of practical expedients permitted under the transition guidance of the new standard which allowed us to not reassess our historical lease classification, initial direct costs, and whether or not contracts entered into prior to adoption are or contain leases.  As a lessor, the adoption of ASU 2016-02, did not have a significant impact on our financial statements.  As a lessee, the adoption of ASU 2016-02 added right-of-use (“ROU”) assets of $115 million and operating lease liabilities of $122 million, which are included in Other assets, and in Other liabilities, respectively, in our Consolidated Balance Sheet.  The adoption of this new guidance did not impact our Consolidated Statement of Income and did not result in a cumulative-effect adjustment to opening retained earnings.

Refer to Note 4 – Investments in Operating Leases, Net and Note 9 – Commitments and Contingencies for additional information.

Other Recently Adopted Standards

Other Recently Adopted Standards

We adopted ASU 2017-08, Receivables – Nonrefundable Fees and Other Costs, which requires certain premiums on callable debt securities to be amortized to the earliest call date.  The adoption of this guidance did not have a material impact on our consolidated financial statements and related disclosures.

We adopted ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.  The adoption of this guidance did not have an impact on our consolidated financial statements and related disclosures as we no longer have hedge accounting derivatives.

In the second quarter of fiscal 2020, we adopted ASU 2019-07, Codification Updates to Securities and Exchange Commission (“SEC”) Sections – Amendments to SEC Paragraphs Pursuant to SEC Final Rule Releases No. 33-10532, “Disclosure Update and Simplification,” and Nos. 33-10231 and 33-10442, “Investment Company Reporting Modernization,” and Miscellaneous Updates.  This guidance was effective upon issuance in July 2019 and aligns the guidance in various SEC sections to the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) with the requirements of certain already effective SEC final rules.  While most of the amendments in this release eliminate outdated or duplicative disclosure requirements, the final rule release amends the interim financial statement requirements to include a reconciliation of changes in shareholder’s equity for each period for which an income statement is required to be filed.  We have disclosed the required information in the Consolidated Statements of Shareholder’s Equity.  The other eliminations or amendments did not have a material impact on our consolidated financial statements and related disclosures.

Accounting Guidance Issued But Not Yet Adopted

Accounting Guidance Issued But Not Yet Adopted

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.  This guidance introduces a new impairment model based on expected losses rather than incurred losses for certain types of financial instruments.  It also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination.  The FASB subsequently issued guidance amending and clarifying aspects of the new impairment model.  This ASU is effective for us on April 1, 2020.  We are in the process of developing, refining and testing the models and procedures that will be used to calculate the credit loss reserves in accordance with this new accounting guidance.  We expect this new guidance will result in an increase in our allowance for credit losses with a cumulative-effect adjustment to our opening retained earnings in the period of adoption.  The magnitude of the increase in our allowance for credit losses is under evaluation.  We are currently evaluating the other potential impacts of this guidance on our consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), which modifies disclosure requirements related to fair value measurement.  This ASU is effective for us on April 1, 2020.  The adoption of this guidance will not have a material impact on our consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software, which aligns the accounting for costs incurred to implement a cloud computing arrangement that is a service arrangement with the guidance on capitalizing costs associated with developing or obtaining internal-use software.  This ASU is effective for us on April 1, 2020.  We are currently evaluating the potential impacts of this guidance on our consolidated financial statements and related disclosures.

In October 2018, the FASB issued ASU 2018-17, Consolidation (Topic 810), which requires indirect interests held through related parties in common control arrangements to be considered on a proportional basis for determining whether fees paid to decision makers and service providers are variable interests.  This ASU is effective for us on April 1, 2021.  The adoption of this guidance will not have a material impact on our consolidated financial statements and related disclosures.   

In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. The applicable provisions of this ASU are effective for us on April 1, 2020. We are currently evaluating the potential impacts of this guidance on our consolidated financial statements and related disclosures.

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Finance Receivables, Net - Aging of Finance Receivables by Class (Details) - USD ($) $ in Millions	Sep. 30, 2019	Mar. 31, 2019
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	$ 1,042	$ 897
Current	72,891	70,738
Total Finance Receivables	73,933	71,635
90 Days orGreater PastDue andAccruing	60	47
30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	754	657
60-89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	195	162
90 Days or Greater Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	93	78
Retail Loan [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	1,037	892
Current	55,565	53,047
Total Finance Receivables	56,602	53,939
90 Days orGreater PastDue andAccruing	60	47
Retail Loan [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	754	657
Retail Loan [Member] | 60-89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	194	162
Retail Loan [Member] | 90 Days or Greater Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	89	73
Wholesale [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	1
Current	10,011	10,439
Total Finance Receivables	10,011	10,440
90 Days orGreater PastDue andAccruing	0	0
Wholesale [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Wholesale [Member] | 60-89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Wholesale [Member] | 90 Days or Greater Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	1
Real estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	1	0
Current	4,637	4,671
Total Finance Receivables	4,638	4,671
90 Days orGreater PastDue andAccruing	0	0
Real estate [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Real estate [Member] | 60-89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	1	0
Real estate [Member] | 90 Days or Greater Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Working capital [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	4	4
Current	2,678	2,581
Total Finance Receivables	2,682	2,585
90 Days orGreater PastDue andAccruing	0	0
Working capital [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Working capital [Member] | 60-89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Working capital [Member] | 90 Days or Greater Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	$ 4	$ 4

XML

Investments in Operating Leases, Net - Investments in Operating Leases, Net (Details) - USD ($) $ in Millions	Sep. 30, 2019	Mar. 31, 2019
Property Subject To Or Available For Operating Lease [Line Items]
Investments in operating leases, net	$ 37,687	$ 37,927
Investments in operating leases [Member]
Property Subject To Or Available For Operating Lease [Line Items]
Investments in operating leases	43,908	42,869
Securitized investments in operating leases [Member]
Property Subject To Or Available For Operating Lease [Line Items]
Investments in operating leases	5,913	7,532
Investments In Operating Leases, Net [Member]
Property Subject To Or Available For Operating Lease [Line Items]
Investments in operating leases	49,821	50,401
Deferred origination (fees) and costs, net	(236)	(225)
Deferred income	(2,170)	(2,085)
Accumulated depreciation	(9,647)	(10,061)
Allowance for credit losses	$ (81)	$ (103)

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Consolidated Balance Sheets (Supplemental) - USD ($) $ in Millions	Sep. 30, 2019	Mar. 31, 2019
ASSETS
Finance receivables, net	$ 72,988	$ 70,517
Investments in operating leases, net	37,687	37,927
Other assets	2,206	1,981
Total assets	119,938	116,516
LIABILITIES
Debt	95,093	92,922
Other liabilities	4,840	4,564
Total liabilities	105,527	102,938
Variable Interest Entity, Primary Beneficiary
ASSETS
Finance receivables, net	12,272	11,075
Investments in operating leases, net	4,153	5,307
Other assets	117	192
Total assets	16,542	16,574
LIABILITIES
Debt	12,837	12,401
Other liabilities	11	12
Total liabilities	$ 12,848	$ 12,413

XML

Consolidated Statements of Comprehensive Income - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Statement Of Income And Comprehensive Income [Abstract]
Net income	$ 459	$ 194	$ 818	$ 286
Other comprehensive income (loss), net of tax:
Net unrealized gains (losses) on available-for-sale marketable securities [net of tax provision of ($2), ($1), ($5) and ($1), respectively]	6	1	16	(3)
Reclassification adjustment for net (gains) losses on available-for-sale marketable securities included in investment and other income, net [net of tax provision of $0, $0, $0 and $0, respectively]	(1)	1	(1)	1
Other comprehensive income (loss)	5	2	15	(2)
Comprehensive income	$ 464	$ 196	$ 833	$ 284

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Related Party Transactions - Related Party Transactions Included in Consolidated Statements of Income (Details) - USD ($) $ in Millions		3 Months Ended		6 Months Ended
		Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Net financing revenues:
Depreciation on operating leases		$ (1,583)	$ (1,662)	$ (3,208)	$ (3,428)
Insurance earned premiums and contract revenues:
Insurance premiums and contract revenues		232	226	461	450
Expenses:
Operating and administrative expenses		358	348	695	672
TMCC-affiliated companies [Member]
Net financing revenues:
Manufacturer's subvention and other revenues		508	467	1,020	934
Depreciation on operating leases		(13)	(5)	(23)	(10)
Interest expense:
Credit support fees, interest and other expenses		24	24	48	49
Insurance earned premiums and contract revenues:
Insurance premiums and contract revenues		45	44	90	89
Investment and other income, net:
Interest and other income		6	2	12	4
Expenses:
Operating and administrative expenses		21	24	42	47
Insurance losses and loss adjustment expenses	[1]	$ 0	$ (1)	$ 0	$ (3)

[1] Amount includes the transfer of insurance losses and loss adjustment expenses under a reinsurance contract.

XML

Commitments and Contingencies - Commitments under Operating Lease Agreements (Details) - USD ($) $ in Millions		Sep. 30, 2019	Mar. 31, 2019
Amounts due on operating lease liabilities as of September 30, 2019
2020	[1]	$ 11
2021		20
2022		21
2023		13
2024		11
Thereafter		62
Total		138
Present value discount		(19)
Total operating lease liability		$ 119
Future minimum lease payments as of March 31, 2019
2020	[1]		$ 22
2021			19
2022			20
2023			12
2024			10
Thereafter			61
Total			$ 144

[1] Amounts due on operating lease liabilities as of September 30, 2019 excludes the amounts incurred for the six months ended September 30, 2019.

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Fair Value Measurements - Assets and Liabilities Not Carried at Fair Value on Recurring Basis on Consolidated Balance Sheets (Details) - USD ($) $ in Millions	Sep. 30, 2019	Mar. 31, 2019
Carrying value [Member]
Financial liabilities
Unsecured notes and loans payable	$ 82,256	$ 80,521
Secured notes and loans payable	12,837	12,401
Fair value [Member]
Financial liabilities
Unsecured notes and loans payable	83,685	81,369
Secured notes and loans payable	12,954	12,428
Fair value [Member] | Level 1 [Member]
Financial liabilities
Unsecured notes and loans payable	0	0
Secured notes and loans payable	0	0
Fair value [Member] | Level 2 [Member]
Financial liabilities
Unsecured notes and loans payable	82,110	79,056
Secured notes and loans payable	0	0
Fair value [Member] | Level 3 [Member]
Financial liabilities
Unsecured notes and loans payable	1,575	2,313
Secured notes and loans payable	12,954	12,428
Retail Loan [Member] | Carrying value [Member]
Financial assets
Finance receivables, net	55,842	53,013
Retail Loan [Member] | Fair value [Member]
Financial assets
Finance receivables, net	56,665	53,247
Retail Loan [Member] | Fair value [Member] | Level 1 [Member]
Financial assets
Finance receivables, net	0	0
Retail Loan [Member] | Fair value [Member] | Level 2 [Member]
Financial assets
Finance receivables, net	0	0
Retail Loan [Member] | Fair value [Member] | Level 3 [Member]
Financial assets
Finance receivables, net	56,665	53,247
Wholesale [Member] | Carrying value [Member]
Financial assets
Finance receivables, net	9,892	10,293
Wholesale [Member] | Fair value [Member]
Financial assets
Finance receivables, net	9,977	10,369
Wholesale [Member] | Fair value [Member] | Level 1 [Member]
Financial assets
Finance receivables, net	0	0
Wholesale [Member] | Fair value [Member] | Level 2 [Member]
Financial assets
Finance receivables, net	0	0
Wholesale [Member] | Fair value [Member] | Level 3 [Member]
Financial assets
Finance receivables, net	9,977	10,369
Real estate [Member] | Carrying value [Member]
Financial assets
Finance receivables, net	4,575	4,550
Real estate [Member] | Fair value [Member]
Financial assets
Finance receivables, net	4,676	4,534
Real estate [Member] | Fair value [Member] | Level 1 [Member]
Financial assets
Finance receivables, net	0	0
Real estate [Member] | Fair value [Member] | Level 2 [Member]
Financial assets
Finance receivables, net	0	0
Real estate [Member] | Fair value [Member] | Level 3 [Member]
Financial assets
Finance receivables, net	4,676	4,534
Working capital [Member] | Carrying value [Member]
Financial assets
Finance receivables, net	2,567	2,510
Working capital [Member] | Fair value [Member]
Financial assets
Finance receivables, net	2,593	2,554
Working capital [Member] | Fair value [Member] | Level 1 [Member]
Financial assets
Finance receivables, net	0	0
Working capital [Member] | Fair value [Member] | Level 2 [Member]
Financial assets
Finance receivables, net	0	0
Working capital [Member] | Fair value [Member] | Level 3 [Member]
Financial assets
Finance receivables, net	$ 2,593	$ 2,554