The Company, as a lessor, originates retail and commercial leases either directly to the consumer or indirectly through dealer networks. Retail leases consist primarily of automobiles, while commercial leases may include high
dollar assets such as aircraft or lower cost items such as office equipment.
The components of the net investment in sales-type and direct financing leases, at December 31, were as follows:
| | | | | | | | |
| (Dollars in Millions) | 2025 | 2024 |
| Lease receivables | $ | 7,277 | | $ | 7,328 | |
| Unguaranteed residual values accruing to the lessor’s benefit | 653 | | 911 | |
| Total net investment in sales-type and direct financing leases | $ | 7,930 | | $ | 8,239 | |
The Company, as a lessor, recorded $792 million, $775 million and $738 million of revenue on its Consolidated Statement of Income for the years ended December 31,
2025, 2024 and 2023, respectively, primarily consisting of interest income on sales-type and direct financing leases.
The contractual future lease payments to be received by the Company, at December 31, 2025, were as follows:
| | | | | | | | |
| (Dollars in Millions) | Sales-type and Direct Financing Leases | Operating Leases |
| 2026 | $ | 2,611 | | $ | 145 | |
| 2027 | 2,524 | | 123 | |
| 2028 | 1,612 | | 93 | |
| 2029 | 735 | | 63 | |
| 2030 | 294 | | 41 | |
| Thereafter | 342 | | 67 | |
| Total lease payments | 8,118 | | $ | 532 | |
| Amounts representing interest | (841) | | |
| Lease receivables | $ | 7,277 | | |
The Company, as lessee, leases certain assets for use in its operations. Leased assets primarily include retail branches, operations centers and other corporate locations, and, to a lesser extent, office and computer equipment. For each lease with an original term greater than 12 months, the Company records a lease liability and a corresponding ROU asset. At December 31, 2025, the Company’s ROU assets included in premises and equipment and lease liabilities included in long-term debt and other liabilities were $1.5 billion and $1.5 billion, respectively, compared with $1.4 billion of ROU assets and
$1.5 billion of lease liabilities at December 31, 2024, respectively.
Total costs incurred by the Company, as a lessee, were $446 million, $529 million and $496 million for the years ended December 31, 2025, 2024 and 2023, respectively, and principally related to contractual lease payments on operating leases and included in net occupancy and equipment expense. The Company’s leases do not impose significant covenants or other restrictions on the Company.
The following table presents amounts relevant to the Company’s assets leased for use in its operations for the years ended December 31:
| | | | | | | | | | | |
| (Dollars in Millions) | 2025 | 2024 | 2023 |
| Cash paid for amounts included in the measurement of lease liabilities | | | |
| Operating cash flows from operating leases | $ | 339 | | $ | 389 | | $ | 409 | |
| Operating cash flows from finance leases | 7 | | 7 | | 7 | |
| Financing cash flows from finance leases | 51 | | 62 | | 49 | |
| Right of use assets obtained in exchange for new operating lease liabilities | 275 | | 268 | | 230 | |
| Right of use assets obtained in exchange for new finance lease liabilities | 14 | | 59 | | 25 | |
The following table presents the weighted-average remaining lease terms and discount rates of the Company’s assets leased for use in its operations at December 31:
| | | | | | | | |
| | 2025 | 2024 |
| Weighted-average remaining lease term of operating leases (in years) | 7.1 | 6.7 |
| Weighted-average remaining lease term of finance leases (in years) | 8.4 | 8.1 |
| Weighted-average discount rate of operating leases | 4.1 | % | 4.0 | % |
| Weighted-average discount rate of finance leases | 6.7 | % | 7.3 | % |
The contractual future lease obligations of the Company at December 31, 2025, were as follows:
| | | | | | | | |
| (Dollars in Millions) | Operating Leases | Finance
Leases |
| 2026 | $ | 326 | | $ | 43 | |
| 2027 | 304 | | 31 | |
| 2028 | 266 | | 20 | |
| 2029 | 225 | | 12 | |
| 2030 | 164 | | 9 | |
| Thereafter | 463 | | 27 | |
| Total lease payments | 1,748 | | 142 | |
| Amounts representing interest | (329) | | (17) | |
| Lease liabilities | $ | 1,419 | | $ | 125 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.