Form 424B5 Honda Auto Receivables Filed by: AMERICAN HONDA RECEIVABLES LLC

 

Filed Pursuant to Rule 424(b)(5)
Registration Statement Nos. 333-261436-05 and 333-261436

 

Prospectus

$1,842,106,000 Asset Backed Notes

Honda Auto Receivables 2023-3 Owner Trust
Issuing Entity
Central Index Key Number: 0001985449

American Honda Receivables LLC, Depositor Central Index Key Number: 0000890975

American Honda Finance Corporation, Sponsor, Originator, Servicer and Administrator Central Index Key Number: 0000864270

 

 

 

 

Joint Bookrunners

 

BofA Securities

BNP PARIBAS

MUFG

SMBC Nikko

 

Co-Managers

 

ANZ Securities

BNY Mellon Capital Markets, LLC

ING

J.P. Morgan

 

The date of this prospectus is August 15, 2023.

 

 

Table of Contents

 

		Page
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS		5
REPORTS TO NOTEHOLDERS		5
WHERE YOU CAN FIND MORE INFORMATION ABOUT YOUR NOTES		5
The Issuing Entity		5
The Depositor		5
Static Pool Data		6
SUMMARY OF PARTIES TO THE TRANSACTION1		8
SUMMARY OF MONTHLY DEPOSITS TO AND WITHDRAWALS FROM ACCOUNTS*		9
SUMMARY OF MONTHLY DISTRIBUTIONS OF AVAILABLE AMOUNTS		10
SUMMARY OF TERMS		11
DESCRIPTION OF THE RECEIVABLES; ISSUING ENTITY PROPERTY		13
SUMMARY OF RISK FACTORS		29
RISK FACTORS		31
DEFINED TERMS		45
THE ISSUING ENTITY		45
General		45
Capitalization of the Issuing Entity		47
THE DEPOSITOR		47
THE SPONSOR, ORIGINATOR, SERVICER AND ADMINISTRATOR		48
General		48
Securitization Experience		48
Origination		49
Servicing Experience		50
CREDIT RISK RETENTION		51
REPURCHASE REQUESTS		51
AFFILIATIONS AND RELATED TRANSACTIONS		52
THE OWNER TRUSTEE		52
THE DELAWARE TRUSTEE		52
THE INDENTURE TRUSTEE		53
LIMITATION OF LIABILITY AND RESIGNATION OF THE TRUSTEES		53
THE ASSET REPRESENTATIONS REVIEWER		54
THE RECEIVABLES		55
General		55
Characteristics of the Receivables		55
Pool Underwriting		56

 

 

Third-Party Collections and Repossessions		64
DELINQUENCIES, REPOSSESSIONS AND LOAN LOSS INFORMATION		65
STATIC POOLS		68
DEPOSITOR REVIEW OF RECEIVABLES		68
ASSET-LEVEL DATA FOR THE RECEIVABLES		69
USE OF PROCEEDS		69
MATURITY AND PREPAYMENT CONSIDERATIONS		70
WEIGHTED AVERAGE LIFE OF THE NOTES		70
POOL FACTORS AND TRADING INFORMATION		77
THE NOTES		77
General		77
Minimum Denominations		77
Payments of Interest		78
Payments of Principal		78
The Indenture		79
THE CERTIFICATES		85
General		85
Payments of Interest		85
Payments of Principal		86
Governing Law		86
PAYMENTS ON THE NOTES		86
Payment of Distributable Amounts		86
CREDIT ENHANCEMENT		87
Subordination		88
Reserve Fund		88
Yield Supplement Account		89
Excess Interest		89
CERTAIN INFORMATION REGARDING THE SECURITIES		89
Fixed Rate Securities		89
Book-Entry Registration		90
Definitive Securities		93
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS		94
Sale and Assignment of Receivables; Representations and Warranties		94
Asset Representations Review		96
Dispute Resolution		99
Accounts		100

 

 

Servicing Procedures		101
Servicing Compensation		102
Insurance on Financed Vehicles		103
Collections		103
Advances		105
Net Deposits		105
Statements to Securityholders		105
Noteholder Communication		107
List of Noteholders		108
Evidence as to Compliance		108
Certain Matters Regarding the Servicer		109
Servicer Default		109
Rights Upon Servicer Default; Removal of Servicer		110
Waiver of Past Defaults		110
Amendment		111
List of Certificateholders		111
Insolvency Event		112
Payment of Notes		112
Termination; Optional Redemption		112
Administration Agreement		113
Duties of the Owner Trustee, the Delaware Trustee and the Indenture Trustee		113
The Owner Trustee, the Delaware Trustee and the Indenture Trustee		115
Fees and Expenses		116
LEGAL PROCEEDINGS		116
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES		116
General		116
Security Interests		117
Repossession		119
Notice of Sale; Redemption Rights		119
Deficiency Judgments and Excess Proceeds		119
Certain Bankruptcy Considerations		120
Consumer Financial Protection Bureau		121
Dodd-Frank Act Orderly Liquidation Authority Provisions		121
Consumer Protection Laws		124
Forfeiture for Drug, RICO and Money Laundering Violations		125
Other Limitations		126

 

 

MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS		126
Tax Regulations for Related-Party Note Acquisitions		128
Tax Treatment of the Trust		129
Tax Consequences to U.S. Holders of the Notes		129
Tax Consequences to Non-U.S. Holders of the Notes		132
Foreign Account Tax Compliance		133
Backup Withholding and Information Reporting		133
Possible Alternative Treatments of the Notes and the Trust		134
STATE TAX CONSIDERATIONS		136
CERTAIN CONSIDERATIONS FOR ERISA AND OTHER U.S. BENEFIT PLANS		136
CERTAIN INVESTMENT COMPANY ACT CONSIDERATIONS		138
UNDERWRITING		139
LEGAL OPINIONS		142
GLOSSARY		143
ANNEX A GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES		A-1

 

 

SUMMARY OF TERMS

 

The following summary contains a brief description of the notes. You will find a further description of the terms of the offering of the notes following this summary. You should carefully read this entire document to understand all of the terms of the offering of the notes.

 

RELEVANT PARTIES
Issuing Entity	Honda Auto Receivables 2023-3 Owner Trust, which we refer to as the “issuing entity” or the “trust”.  The issuing entity was formed by a trust agreement between the depositor, BNY Mellon Trust of Delaware, as Delaware trustee and The Bank of New York Mellon, as owner trustee of the issuing entity.
Depositor	American Honda Receivables LLC, which we refer to as the “depositor” a wholly owned, limited purpose subsidiary of American Honda Finance Corporation.  The depositor’s address and phone number is: 1919 Torrance Boulevard, Torrance, California 90501; (310) 972-2412.
Sponsor, Originator, Servicer and Administrator	American Honda Finance Corporation, which we refer to as “AHFC”, a wholly owned subsidiary of American Honda Motor Co., Inc. American Honda Motor Co., Inc., which we refer to as “AHM”, is the exclusive distributor of Honda and Acura automobiles (including light-duty trucks), Honda motorcycles and Honda and Acura parts and accessories, and is the primary authorized distributor of Honda power equipment, in the United States.  AHM is a wholly owned subsidiary of Honda Motor Co., Ltd., a corporation organized under the laws of Japan.  The sponsor’s address and phone number is: 1919 Torrance Boulevard, Torrance, California 90501; (310) 972-2288.
Owner Trustee	The Bank of New York Mellon or the “owner trustee.”
Delaware Trustee	BNY Mellon Trust of Delaware or the “Delaware trustee.”
Indenture Trustee	Citibank, N.A. or the “indenture trustee.”
Asset Representations Reviewer	Clayton Fixed Income Services LLC or the “asset representations reviewer.”
RELEVANT AGREEMENTS
Indenture	The indenture is between the trust and the indenture trustee and acknowledged by AHFC. The indenture provides for the terms relating to the notes.
Trust Agreement	The trust agreement is among the depositor, the Delaware trustee and the owner trustee.  The trust agreement governs the creation of the trust and provides for the terms relating to the certificates.
Sale and Servicing Agreement	The sale and servicing agreement is among the trust, the servicer and the depositor, and is acknowledged and accepted by the indenture trustee.  The sale and servicing agreement governs the transfer of the receivables by the depositor to the trust and the servicing of the receivables by the servicer.

 

 

Administration Agreement	The administration agreement is among the trust, the administrator, the sponsor, the depositor and the indenture trustee.  The administration agreement governs the provision of reports by the administrator and the performance by the administrator of other administrative duties for the trust.
Receivables Purchase Agreement	The receivables purchase agreement is between the originator and the depositor.  The receivables purchase agreement governs the sale of the receivables by the originator to the depositor.
Asset Representations Review Agreement	The asset representations review agreement is among the trust, the sponsor, the servicer and the asset representations reviewer.  The asset representations review agreement provides for the terms and scope of an asset representations review by the asset representations reviewer.
RELEVANT DATES
Closing Date	Expected to be on or about August 22, 2023.
Cutoff Date	The cutoff date for the receivables to be sold to the issuing entity on the closing date is the opening of business on August 1, 2023.
Collection Period	The period commencing on the first day of the applicable month (or in the case of the first collection period, the cutoff date) and ending on the last day of the applicable month.
Payment Dates	The trust will pay interest on and principal of the securities on the 18th day of each month with amounts received from collections on the receivables during the immediately preceding collection period and other amounts available for such purpose in the applicable trust accounts.  If the 18th day of the month is not a business day, payments on the securities will be made on the next business day.  The date that any payment is made is called a payment date.  The first payment date is September 18, 2023.
Final Scheduled Payment Dates	The final principal payment for each class of notes is scheduled to be made on the applicable final scheduled payment date specified on the front cover of this prospectus.
Expected Final Payment Dates	The final principal payment for each class of notes is expected to be made on the applicable expected final payment date specified on the front cover of this prospectus.  However, due to a variety of factors described herein, there can be no assurance that your class of notes will not be paid in full on an earlier or on a later payment date.
	We refer you to “Risk Factors” in this prospectus for discussions of certain of these factors.

 

 

DESCRIPTION OF THE RECEIVABLES; ISSUING ENTITY PROPERTY

 

The Issuing Entity’s Property	The property of the issuing entity:
	·      will primarily be a pool of receivables secured by new and used automobiles and amounts due or collected under the receivables on or after the cutoff date; and
	·      will include assets related to the receivables including:
	·       security interests in the automobiles and any related property;
	·       proceeds from claims on related insurance policies;
	·       proceeds from payments collected by AHFC from dealers obligated to repurchase receivables that do not meet specified representations made by the dealers;
	·       the rights of the depositor in the transaction agreements;
	·       amounts deposited in specified bank accounts;
	·       proceeds from the realization upon any property, including liquidation proceeds; and
	·       all proceeds of the foregoing.
Receivables	Purchasers of Honda and Acura automobiles and light-duty trucks often finance their purchases by entering into retail installment sale contracts with Honda and Acura dealers who then sell the contracts to American Honda Finance Corporation. These contracts are referred to as receivables, and the underlying automobiles (including light-duty trucks) are referred to as the financed vehicles. The purchasers of the financed vehicles are referred to as the obligors. The terms of the contracts must meet specified AHFC requirements.   The trust’s main source of funds for making payments on the notes will be collections on its receivables.
	The initial pool balance will be $1,889,359,251.43.  As of the cutoff date, the receivables in such pool will have the following characteristics:

 

	Number of receivables		84,946
	Average principal balance		$22,241.89
	Range of principal balances		$1,002.38 to $82,477.19
	Weighted average annual percentage rate(1)		4.00%
	Range of annual percentage rates		0.75% to 23.99%
	Weighted average original term to maturity(1)		61.62 months
	Range of original terms to maturity		24 months to 72 months
	Weighted average remaining term to maturity(1)		49.25 months

 

 

	Range of remaining terms to maturity		7 months to 70 months
	Percentage of aggregate principal balance of receivables for new/used vehicles		85.71%/14.29%
	Range of FICO scores(2)(3)		408 to 900
	Non-Zero weighted average FICO score(1)(2)(3)		769

 

	Geographic Concentration greater than 5.00%:

		California		17.29%
		Texas		9.88%
		Pennsylvania		7.44%
		Ohio		5.57%

 

	(1)	Weighted by pool balance as of the cutoff date.
	(2)	Non-zero weighted average FICO score and the range of FICO scores are calculated excluding accounts for which we do not have a FICO score.
	(3)	FICO scores are shown for portfolio comparative purposes only.  The FICO score may not have been used in the original credit decision process.

 

	We refer you to “The Receivables” for more information on the receivables.
Removal of Pool Assets	Breaches of Representations and Warranties.  Upon sale of the receivables to the depositor, the originator will represent and warrant, among other things, that:
	·       at the time it was originated, each receivable complied in all material respects with all requirements of law in effect at the time and applicable to such receivable;
	·       pursuant to each receivable, the related obligor is required to maintain physical damage insurance covering the related financed vehicle;
	·       as of the closing date, each of the related receivables is or will be secured by a first priority perfected security interest in favor of the originator in the related financed vehicle;
	·       as of the cutoff date, no receivable was more than 30 days contractually past due;
	·       according to the servicer’s records, no receivable shall have been satisfied, subordinated or rescinded, nor shall any financed vehicle have been released in whole or in part from the lien granted by the related receivable on the cutoff date; and

 

·      each receivable is on a form contract that includes the legal and binding payment obligation in writing of the related obligor, enforceable by the holder thereof, except as enforceability may be subject to or limited by bankruptcy, insolvency,

 

reorganization, moratorium, liquidation or other laws affecting the enforcement of creditors’ rights and by general principles of equity, consumer protection laws and the Servicemembers Civil Relief Act.

 

	A breach of these representations or warranties may, subject to certain conditions, result in the originator being obligated to repurchase the related receivable.
	We refer you to “Description of the Transfer and Servicing Agreements—Sale and Assignment of Receivables; Representations and Warranties.”
	Breach of Servicer Covenants.  The servicer will be required to purchase any receivable for which any of the following is true:
	·       the servicer permitted the receivable to be modified in a manner that could be materially adverse to the trust;
	·       the servicer extended the term of the receivable beyond the final scheduled maturity date for the latest maturing class of notes;
	·       all or part of the trust’s lien has been released or subordinated; and
	·       in which the trust’s rights have been impaired.
Receivable Representations and Warranties	AHFC will make certain representations and warranties regarding the characteristics of the receivables as of the cutoff date.  A breach of these representations or warranties may, subject to certain conditions, result in AHFC being obligated to repurchase the related receivable.  See “Description of the Transfer and Servicing Agreements—Sale and Assignment of Receivables; Representations and Warranties.”  This repurchase obligation will constitute the sole remedy available to the noteholders or the trust for any uncured breach by AHFC of those representations and warranties.
	If any investor requests that the sponsor repurchase any receivable due to a breach of representation or warranty as described above, and the repurchase request has not been fulfilled or otherwise resolved to the reasonable satisfaction of the requesting party within 180 days of the receipt of notice of the request by the sponsor, the requesting party will have the right to refer the matter, at its discretion, to either mediation, non-binding arbitration or binding arbitration.  The terms of the mediation or arbitration, as applicable, are described under “Description of the Transfer and Servicing Agreements— Sale and Assignment of Receivables; Representations and Warranties” and “—Dispute Resolution.”

 

 

Review of Asset Representations

As more fully described in “Description of the Transfer and Servicing Agreements —Asset Representations Review”, if the aggregate amount of delinquent receivables exceeds certain thresholds then, subject to certain conditions, investors in the aggregate representing at least a majority of the outstanding principal amount of the notes of the voting investors, may direct the asset representations reviewer to perform a review of the delinquent receivables for compliance with the representations and warranties made by AHFC.  See “Description of the Transfer and Servicing Agreements—Asset Representations Review.”

 

 

DESCRIPTION OF THE SECURITIES
Notes	The issued notes consist of the Honda Auto Receivables 2023-3 Owner Trust class A-1 notes, class A-2 notes, class A-3 notes and class A-4 notes, as described on the cover page. See “Summary of Terms—Description of the Securities—Securities Not Offered” below.
Securities Not Offered	Any notes, or portion of any notes, retained by AHFC are not registered under the Securities Act of 1933, as amended, and are not being offered by this prospectus. AHFC will retain at least 5% (by initial principal amount) of each of the class A-1 notes, the class A-2 notes, the class A-3 notes and the class A-4 notes. See “Credit Risk Retention.” The trust will also issue $47,253,251.43 initial principal amount of certificates. The certificates will represent fractional undivided interests in the issuing entity. Payments of interest on and principal of the certificates are subordinated to the payments of interest on and principal of the notes as described herein. The certificates are not being offered by this prospectus and initially will be retained by the depositor. Any information in this prospectus regarding the certificates is intended only to give you a better understanding of the notes.
Terms of the Notes	In general, noteholders are entitled to receive payments of interest and principal from the trust only to the extent that collections from trust assets and funds resulting from credit enhancements are sufficient to make those payments.  Interest and principal collections from trust assets will be divided among the various classes of securities in specified proportions.  The trust will pay interest and principal to noteholders of record as of the preceding record date.
	Interest: The notes will accrue interest at a fixed rate. The interest rate for each class of notes is set forth on the front cover of this prospectus.
	The class A-1 notes will accrue interest on an actual/360 basis from (and including) the previous payment date to (but excluding) the related payment date, except that the first interest accrual period will be from (and including) the closing date to (but excluding) September 18, 2023.  This means that the interest due on each payment date will be the product of:
	·      the outstanding principal amount of the class A-1 notes,
	·      the applicable interest rate, and

 

 

	·      the actual number of days from the previous payment date (or, in the case of the first payment date, from the closing date) divided by 360.
	The class A-2 notes, class A-3 notes and class A-4 notes will accrue interest on a 30/360 basis from (and including) the 18th day of each calendar month to (but excluding) the 18th day of the succeeding calendar month, except that the first interest accrual period will be from (and including) the closing date to (but excluding) the 18th day of the succeeding calendar month. This means that the interest due on each payment date will be the product of:
	·      the outstanding principal amount of the related class of notes,
	·      the applicable interest rate, and
	·      30 (or, in the case of the first payment date, the number of days from (and including) the closing date to (but excluding) the 18th day of the next calendar month) divided by 360.
	Each class of notes will be entitled to interest at the same level of priority with all other classes of notes.  If noteholders of any class do not receive all interest owed to them on a payment date, the trust will make payments of interest on later payment dates to make up the shortfall together with interest on those amounts, to the extent funds from specified sources are available to cover the shortfall.
	Principal:
	Amounts allocated to the notes: Principal of the notes will be payable generally in an amount equal to the noteholders’ percentage of the sum of the following amounts referred to as the principal distributable amount:
	1.     principal collections on the receivables during the prior calendar month;
	2.     any prepayments (full or partial) on the receivables allocable to principal received during the prior calendar month;
	3.     the principal balance of each receivable which the originator repurchased during the prior calendar month; and
	4.     the principal balance of receivables that became defaulted receivables during the prior calendar month.
	The noteholders’ percentage of the principal distributable amount, plus any unpaid amounts from prior payment dates, is referred to as the noteholders’ principal distributable amount.  The certificateholders’ percentage of the principal distributable amount, plus any unpaid amounts from prior payments dates, is referred to as the certificateholders’ principal distributable amount.  The sum of the noteholders’ principal distributable amount and the

 

	certificateholders’ principal distributable amount shall equal the principal distributable amount.
	Principal payments on the notes as described above will be made from all available amounts after the servicing fee, outstanding advances, and other trust and asset representations reviewer fees, expenses and indemnities to the extent not previously paid by AHFC (which, with respect to (i) trust fees, expenses and indemnities, shall not exceed $100,000 per annum and (ii) asset representations reviewer fees, expenses and indemnities, shall not exceed $150,000 per annum, in each case, as long as any of the notes are outstanding and no event of default has occurred) have been paid and after payment of interest on the notes.
	We refer you to “Summary of Monthly Distributions of Available Amounts” for a schematic diagram of the distribution of available amounts.
	The noteholders’ percentage of the principal distributable amount will equal 100% until the aggregate principal amount of the notes has been paid in full.  After the aggregate principal amount of the notes has been paid in full, the noteholders’ percentage will be zero.
	Order of payment among classes: Generally, no principal payments will be made (1) on the class A-2 notes until the class A-1 notes have been paid in full; (2) on the class A-3 notes until the class A-1 notes and class A-2 notes have been paid in full; and (3) on the class A-4 notes until the class A-1 notes, class A-2 notes and class A-3 notes have been paid in full.
	Changes in payment priority upon acceleration of notes: Upon the acceleration of the notes following an event of default under the indenture, principal payments will be made first to the holders of the class A-1 notes until they have been paid in full.  After the class A-1 notes have been paid in full, principal payments will be made to the class A-2 notes, class A-3 notes and class A-4 notes on a pro rata basis based on the outstanding principal amount of those classes of notes until they have been paid in full.  After all classes of notes have been paid in full, principal payments will be made on the certificates until the certificates have been paid in full.  In general, events of default are limited to events occurring in connection with:
	·      a default for five business days or more in the payment of any interest on any of the notes when the same becomes due and payable;
	·      a default in the payment of the principal of or any installment of the principal of any of the notes when the same becomes due and payable on the maturity date thereof;

 

 

	·      any failure by the issuing entity to duly observe or perform in any material respect any covenant or agreement made in the indenture, which failure shall materially and adversely affect the rights of the noteholders and shall continue beyond the 60 day grace period (or such longer period not in excess of 90 days as may be reasonably necessary to remedy such failure; provided the issuing entity notifies the indenture trustee that it is a breach of the type capable of remedy within 90 days);
	·      any representation or warranty by the issuing entity made in the indenture or in any certificate delivered pursuant thereto or in connection therewith is incorrect in a material respect as of the time made, which incorrect statement shall materially and adversely affect the rights of the noteholders and is not cured within the 60 day grace period (or such longer period not in excess of 90 days as may be reasonably necessary to remedy such incorrect statement; provided the issuing entity notifies the indenture trustee that it is a breach of the type capable of remedy within 90 days); and
	·       events of bankruptcy, insolvency, receivership or liquidation of the trust,
	provided, however, that a delay in or failure of performance referred to in the first four bullet points above will not constitute an event of default for a period of 60 days after the applicable cure period under the indenture if that delay or failure was caused by force majeure or other similar occurrence.
	We refer you to “The Notes—The Indenture—Events of Default; Rights Upon Event of Default” for a more detailed discussion of events of default.
	Upon an event of default, the holders of a majority of the aggregate outstanding amount of the notes may accelerate the notes at which point the notes will become immediately due and payable.  Also, upon an event of default, the indenture trustee may liquidate or sell the assets of the trust provided that:
	·      the proceeds of the sale or liquidation of the trust assets would be sufficient to repay all noteholders and certificateholders in full; or
	·      holders of 100% of the aggregate outstanding amount of notes consent to such sale or liquidation; or

 

 

	·      the indenture trustee has determined that the assets of the trust will be insufficient to continue to make all required payments of principal of and interest on the notes and certificates when due and payable and holders of 100% of the aggregate outstanding amount of notes consent to such sale or liquidation.
	Final scheduled payment dates:  The trust must pay the outstanding principal amount of each class of notes by its final scheduled payment date as specified on the cover page of this prospectus.  We expect, but cannot assure you, that each class of notes will be paid in full on a payment date that will occur approximately on the expected final payment date shown on the cover page of this prospectus.
	We refer you to “The Notes—Payments of Principal” for more detailed information regarding payments of principal of the notes.
Minimum Denominations, Registration, Clearance and Settlement	The notes of each class shall be issued in U.S. Dollars in minimum denominations of $1,000 and integral multiples of $1,000 in excess thereof.  The offered notes will be issued in book-entry form and will be registered in the name of Cede & Co., as the nominee of The Depository Trust Company, the clearing agency.
Optional Redemption	The servicer may cause the trust to redeem any outstanding securities by purchasing all remaining receivables when the outstanding aggregate principal balance of the receivables declines to 10% or less of the initial pool balance.
	We refer you to “Description of the Transfer and Servicing Agreements—Termination; Optional Redemption” for more detailed information.
Credit and Cash Flow Enhancement	Credit enhancement is intended to protect you against losses and delays in payments on your securities by absorbing losses on the receivables and other shortfalls in cash flows. The available credit enhancement is limited. The amount of principal required to be paid to noteholders under the indenture will generally be limited to amounts available to be deposited in the collection account, including available credit enhancement. However, the failure to pay any principal of any class of notes generally will not result in the occurrence of an event of default until the final scheduled payment date for that class of notes. The credit enhancement for the notes will include:
	·        excess interest on the receivables;
	·        subordination of the certificates;
	·        the reserve fund; and
	·        the yield supplement account.

 

 

	Excess Interest:
	The depositor is entitled to receive payments of interest collected on the receivables which are not used by the trust to make other required payments.  Any excess interest released from the collection account to the depositor will no longer be available to securityholders on any later payment date.  The depositor’s right to receive this excess interest is subordinated to the payment of servicing fees and other trust and asset representations reviewer fees, expenses and indemnities to the extent not previously paid by AHFC (which, with respect to (i) trust fees, expenses and indemnities, shall not exceed $100,000 per annum and (ii) asset representations reviewer fees, expenses and indemnities, shall not exceed $150,000 per annum, in each case, as long as any of the notes are outstanding and no event of default has occurred), the payment of outstanding advances, the payment of interest on and principal of the notes, the payment of principal of and interest, if any, on the certificates and the funding of the reserve fund.  To the extent there are losses on the receivables, excess interest (to the extent available) will be used to offset these losses on the related payment date prior to any amounts being withdrawn from the reserve fund.
	Certificates:
	On the closing date, the certificates will have an initial principal amount of $47,253,251.43 and represent approximately 2.50% of the initial principal amount of all of the notes and the certificates.
	The certificates will be subordinated in priority of payment to all classes of notes.  The certificates will not receive any interest or principal distributions on any payment date until all of the principal and interest owing on the notes on that payment date have been paid in full.
	Reserve Fund:
	On each payment date, the trust will use funds in the reserve fund to cover shortfalls in payments of interest and principal required to be paid on the notes and the certificates.
	On the closing date, the depositor will cause to be deposited into the reserve fund $4,723,398.13, which represents approximately 0.25% of the initial pool balance.  On each payment date, after making required payments to the servicer, to the trustees, to the asset representations reviewer, to the noteholders and to the certificateholders, the trust will make a deposit into the reserve fund to the extent necessary to maintain the amount on deposit in the reserve fund at a specified balance.

 

 

	For more detailed information about the reserve fund, we refer you to “Credit Enhancement—Reserve Fund” and the definition of “Specified Reserve Fund Balance” contained in the Glossary.
	Yield Supplement Account:
	On the closing date, the depositor will cause to be deposited into the yield supplement account $184,670,383.64.  Neither the depositor nor the servicer will make any additional deposits to the yield supplement account after the closing date.
	On or before each payment date, the indenture trustee will withdraw from funds on deposit in the yield supplement account and deposit in the collection account the aggregate amount by which (1) one month’s interest on the principal balance of each discount receivable (other than a discount receivable that is a defaulted receivable) at a rate equal to 8.75% exceeds (2) one month’s interest on the principal balance of each such discount receivable at the annual percentage rate of that receivable.  Discount receivables are those receivables that have interest rates which are less than the required rate.
	For detailed information about the yield supplement account, we refer you to “Credit Enhancement—Yield Supplement Account.”
Servicing Fee	As compensation for its roles as servicer and administrator, AHFC will be entitled to a monthly servicing fee (which includes the annual administration fee) payable on each payment date, equal to the product of the aggregate principal balance of the receivables as of the first day of the related collection period multiplied by a servicing fee rate equal to 1.00% per annum.  In addition, as additional servicing compensation, the servicer will be entitled to retain all investment earnings on amounts on deposit in the trust accounts, and other fees, expenses and charges received from obligors on the receivables.  The servicing fee will be payable on each payment date prior to any other distributions. For more detailed information about additional servicing compensation, we refer you to “Description of the Transfer and Servicing Agreements—Servicing Compensation.”

 

 

Advances	Under certain circumstances, the servicer may advance amounts to the trust for shortfalls in scheduled payments of interest on the receivables received from obligors, in an amount equal to (1) the product of the principal balance of each receivable as of the first day of the related collection period and one-twelfth of its APR, minus (2) the amount of interest actually received from the obligor, if less. To the extent the servicer determines that any such advance is outstanding, it will be paid to the servicer on the related payment date prior to all other distributions to be made on such payment date.
	We refer you to “Description of the Transfer and Servicing Agreements—Advances” for more detailed information on advances and reimbursement of advances.
Trustee Fees and Expenses	Each trustee will be entitled to a fee (and will be entitled to be reimbursed for all costs, expenses and indemnities incurred (including its counsel’s fees and expenses)) in connection with the performance of its respective duties.
	·      The indenture trustee will be entitled to an annual fee of $5,500.
	·      The owner trustee and Delaware trustee will be entitled to an annual fee of $5,000.
	Such trustee fees (and associated costs, expenses and indemnities) will be paid directly by the administrator.  To the extent not paid by the administrator, such trustee fees, expenses and indemnities are payable by the trust on each payment date after the servicing fees are paid on that date and prior to any distributions to noteholders; provided that, such trustee fees, expenses and indemnities so paid shall not exceed an aggregate amount per annum equal to $100,000 while any notes remain outstanding, so long as an event of default has not occurred.  Any additional amounts owed to the trustees will be payable only after all amounts owed to noteholders have been distributed on the related payment date.
Asset Representations Reviewer Fees and Expenses	The asset representations reviewer will be entitled to an annual fee equal to $5,000 and will be entitled to be reimbursed for all costs and expenses incurred in connection with the performance of an asset representation review.
	Such asset representations reviewer fees, costs and expenses will be paid directly by the sponsor.  To the extent not paid by the sponsor, such fees, costs and expenses are payable by the trust on the first payment date after the servicing fees and trustee fees and expenses are paid on that date and prior to any distributions to noteholders; provided that, such asset representations reviewer fees, costs and expenses so paid shall not exceed an aggregate amount per annum equal to $150,000 while any notes remain outstanding, so long as an event of default has not occurred.  Any additional amounts owed to the asset representations reviewer will be payable

 

 

	only after all amounts owed to noteholders and the trustees have been distributed on the related payment date.
Tax Status	On the closing date, Mayer Brown LLP, special tax counsel to the trust, will deliver its opinion, subject to the assumptions and qualifications therein, to the effect that:
	·      the notes (other than notes beneficially owned by: (i) the trust or a person treated as the same person as the trust for U.S. federal income tax purposes, (ii) a member of an expanded group (as defined in Treasury Regulation section 1.385-1(c)(4) or any successor regulation then in effect) that includes the trust (or a person treated as the same person as the trust for U.S. federal income tax purposes), (iii) a “controlled partnership” (as defined in Treasury Regulation section 1.385-1(c)(1) or any successor regulation then in effect) of such expanded group or (iv) a disregarded entity owned directly or indirectly by a person described in the preceding clause (ii) or (iii)) will be characterized as debt for U.S. federal income tax purposes; and
	·      the trust will not be characterized as an association (or a publicly traded partnership) taxable as a corporation for U.S. federal income tax or California state franchise and income tax purposes.

 

	If you purchase the notes, you will be deemed to have agreed to treat the notes (other than notes beneficially owned by the trust or a person treated as the same person as the trust for U.S. federal income tax purposes) as debt for U.S. federal income, state and local income and franchise tax purposes.
	We encourage you to consult your own tax advisor regarding the U.S. federal income tax consequences of the purchase, ownership and disposition of the notes and the tax consequences arising under the laws of any state or other taxing jurisdiction. We refer you to “Material U.S. Federal Income Tax Considerations.”
Certain ERISA Considerations	The notes may be purchased by certain employee benefit plans and similar arrangements unrelated to the depositor, subject to those considerations discussed under “Certain Considerations for ERISA and other U.S. Benefit Plans.”
	If you are a benefit plan fiduciary considering the acquisition of the notes you should, among other things, consult with your counsel before investing.
Eligibility for Purchase by Money Market Funds	The class A-1 notes will be eligible for purchase by money market funds under Rule 2a-7 under the Investment Company Act of 1940, as amended (the “Investment

 

 

	Company Act”). Rule 2a-7 includes additional criteria for investments by money market funds, including additional requirements relating to portfolio maturity, liquidity and risk diversification.  A money market fund should consult its legal advisers regarding the eligibility of such notes under Rule 2a-7 and any other applicable legal requirement and whether an investment in such notes satisfies such fund’s rating requirements, investment policies and objectives.
Certain Investment Company Act Considerations	The issuing entity is intended to be structured so as not to constitute a “covered fund” for purposes of the Volcker Rule under the Dodd-Frank Act (both as defined in this prospectus).  The issuing entity will be relying on an exclusion or exemption from the definition of “investment company” under the Investment Company Act, contained in Section 3(c)(5) of the Investment Company Act, although there may be additional exclusions or exemptions available to the issuing entity.  We refer you to “Certain Investment Company Act Considerations.”
Ratings	The depositor expects that the notes will receive credit ratings from two nationally recognized statistical rating organizations hired by the sponsor to rate the notes. The ratings of the notes will address the likelihood of payment of principal of and interest on the notes according to their terms. Each rating agency rating the notes will monitor the ratings using its normal surveillance procedures. Any rating agency may change or withdraw an assigned rating at any time. Any rating action taken by one rating agency may not necessarily be taken by the other rating agency. None of the sponsor, depositor, servicer, administrator, indenture trustee, owner trustee, the Delaware trustee, the underwriters or any of their affiliates will be required to monitor any changes to the ratings of the notes.
Credit Risk Retention	Pursuant to the SEC’s credit risk retention rules, 17 C.F.R. Part 246, AHFC, as the sponsor, is required to retain an economic interest in the credit risk of the securitized receivables, either directly or through one or more majority-owned affiliates. AHFC intends to satisfy this obligation with an “eligible vertical interest” in the form of its retention of an amount equal to at least 5% of the initial principal amount of each class of notes and retention by the depositor, its wholly owned affiliate, of an amount equal to at least 5% of the initial principal amount of the certificates issued by the issuing entity on the closing date. Either of AHFC or the depositor, as applicable, is required to retain its portion of the “eligible vertical interest” and may not transfer (except to AHFC or another majority-owned affiliate of AHFC) or hedge such interest except as permitted by applicable law. The depositor initially will retain 100% of the issuing entity’s certificates. As of the closing date, AHFC expects that the certificates will have a face amount of $47,253,251.43, which is equal to approximately 2.50% of

 

 

the initial pool balance. The material terms of the notes are described in this prospectus under “The Notes,” and the material terms of the certificates are described in this prospectus under “The Certificates.” Either of AHFC or the depositor may transfer any portion of the certificates or any portion of any class of notes that is not part of the “eligible vertical interest” to a third party. Either of AHFC or the depositor may transfer all or a portion of the “eligible vertical interest” to AHFC or another majority-owned affiliate of AHFC after the closing date. We refer you to “Credit Risk Retention” in this prospectus for additional information.

EU and UK Securitization Regulations

For defined terms used in this section, “EU and UK Securitization Regulations”, we refer you to the glossary at the end of this prospectus. Although AHFC will retain credit risk in accordance with SEC’s credit risk retention rules as described in this prospectus under “Credit Risk Retention”, none of AHFC, the depositor, the servicer, the administrator, the indenture trustee, the owner trustee, the Delaware trustee, the underwriters or any other party to the transaction described in this prospectus, nor any of their respective affiliates, will undertake, or intends, to retain a material net economic interest in such transaction in a manner that would satisfy the requirements of the EU Securitization Regulation or the UK Securitization Regulation. In addition, no such person will undertake, or intends, to take any other action or refrain from taking any action to facilitate or enable the compliance by EU Affected Investors with the EU Due Diligence Requirements or by UK Affected Investors with the UK Due Diligence Requirements, or by any person with the requirements of any other law or regulation now or hereafter in effect in the EU, any EEA member state or the UK, in relation to risk retention, due diligence and monitoring, credit granting standards, transparency or any other conditions with respect to investments in securitization transactions. Consequently, the notes may not be a suitable investment for any investor required to comply with the EU Securitization Regulation, the UK Securitization Regulation or any such equivalent or similar requirement in respect of any investment in the notes; and as a result the price and liquidity of the notes in the secondary market may be adversely affected. Any failure by an EU Affected Investor to comply with the EU Due Diligence Requirements or by a UK Affected Investor to comply with the UK Due Diligence Requirements, in each case with respect to an investment in the offered notes, may result in the imposition of a penalty regulatory capital charge on that investment or other

 

 

	regulatory sanctions and/or remedial measures being taken or imposed by such investor’s competent authority.
	Prospective investors are responsible for analyzing their own legal and regulatory position and should consult with their own investment and legal advisors regarding the application of and compliance with any EU Due Diligence Requirements, UK Due Diligence Requirements or other applicable regulations and the suitability of the offered notes for investment.
Registration Under the Securities Act	The depositor has filed a registration statement relating to the notes with the SEC on Form SF-3.  The depositor has met the requirements for registration on Form SF-3 contained in General Instruction I.A.1 to Form SF-3.

 

 

SUMMARY OF RISK FACTORS

 

The notes are subject to certain risks that you should consider before making a decision to purchase any notes. This summary is included to provide an overview of the principal risks. It does not contain all of the information regarding the risks that you should consider in making your decision to purchase any notes. To understand these risks fully, you should read “Risk Factors” beginning on page 31.

 

Risks relating to the nature of the notes and the structure of the transaction	The notes are subject to risks relating to their nature as asset-backed securities and the structure of the transaction, which could lead to shortfalls in payments or losses on your notes, adversely affect the market value of your notes and/or limit your ability to resell your notes. ·       Only the issuing entity’s assets will be available to make payments on the notes. ·       A liquidation of the issuing entity’s assets following an event of default may result in insufficient funds to make payments on all notes. ·       Prepayments, repurchases or early termination of the receivables may result in reduced returns on your investment. Repurchase obligations are limited. ·       A secondary market in the notes may not develop, which could result in decreased liquidity. ·       Subordinated classes of notes are subject to a greater risk of loss, and senior classes of notes are exposed to greater reinvestment risk. ·       Failure to pay principal will not constitute an event of default until maturity. ·       Book-entry form requires any noteholder rights to be exercised indirectly through a third party. ·       An adverse change in the initial ratings of the notes, or the issuance of unsolicited ratings on the notes, may affect resale prices. ·       The notes do not have a regular or predictable schedule of payments. ·       Retention of notes by the sponsor or an affiliate thereof may reduce liquidity of the notes.
Risks relating to the characteristics, servicing and performance of the receivables	The notes are subject to risks relating to the characteristics, servicing and performance of the receivables, which could lead to shortfalls in payments or losses on your notes, adversely affect the market value of your notes and/or limit your ability to resell your notes.
	·       Adverse events in states with significant concentrations of obligors could have a more pronounced effect on the performance of the receivables. ·       The issuing entity will not be identified as the secured party on the certificate of title related to a financed vehicle. ·       If the servicer does not fulfill its contractual obligation to maintain possession or control of the contracts, the issuing entity could face competing interests in the receivables. ·       Interests of other persons in the receivables and financed vehicles could be superior to the issuing entity’s interest. ·       Paid-ahead contracts may affect the weighted average life of the notes.

 

 

	·       Historical loss experience may not accurately predict the likelihood of losses on the receivables.
Risks relating to the transaction parties	The notes are subject to risks relating to the various transaction parties, which could lead to shortfalls in payments or losses on your notes, adversely affect the market value of your notes and/or limit your ability to resell your notes, including:
	·       Adverse events with respect to the servicer or its affiliates could result in servicing disruptions. ·       Bankruptcy filings by the originator/servicer or the depositor could result in a challenge to the bankruptcy remote structure of the transaction. ·       The bankruptcy of the issuing entity could result in an “automatic stay” and delay the exercise of remedies. ·       The bankruptcy of the servicer could delay the appointment of a successor servicer. ·       A servicer default may result in additional costs, increased servicing fees or a diminution in servicing performance, including higher delinquencies and defaults. ·       A servicing fee that is paid based on a percentage of the receivables may make it more difficult to obtain a successor servicer. ·       Temporary commingling of funds by the servicer exposes the notes to a risk of loss.
Risks relating to macroeconomic, regulatory and other external factors	The notes are subject to risks relating to the macroeconomic, regulatory and other external factors, which could lead to shortfalls in payments or losses on your notes, adversely affect the market value of your notes and/or limit your ability to resell your notes, including: ·       Federal or state regulatory legislation could have an adverse effect on AHFC, the depositor and the issuing entity. ·       Receivables that fail to comply with consumer protection laws may be unenforceable. ·       Federal or state bankruptcy or debtor relief laws may impede collection efforts or alter the timing and amount of collections. ·       A deterioration of economic conditions could affect the ability of obligors to make payments on the receivables. ·       High energy prices could affect the ability of obligors to make payments on the receivables. ·       Vehicle recalls may delay the timing of sales in the used car markets and result in a decreased demand for vehicles. ·       Market factors may reduce the value of used vehicles, which could result in losses on your notes. ·       The return on your notes could be reduced by shortfalls due to military action, terrorism or similar national concerns and the Servicemembers Civil Relief Act. ·       Climate related events and climate change risks may cause losses on your notes.

 

 

RISK FACTORS

 

An investment in the notes involves significant risks. Before you decide to invest, we recommend that you carefully consider the following risk factors.

 

Risks relating to the nature of the notes and the structure of the transaction

 

You must rely only upon payments from the issuing entity’s assets for repayment, which may not be sufficient to make full payments on your notes.

 

The notes represent interests solely in the issuing entity or indebtedness of the issuing entity and will not be insured or guaranteed by any governmental agency or by the servicer, the depositor or any of their respective affiliates, or the trustees or any other person or entity other than the issuing entity. The only source of payment on your notes is payments received on the receivables and any credit or cash flow enhancement for the issuing entity, including amounts on deposit in the reserve fund established for the issuing entity, excess interest on the receivables and the yield supplement account. However, although funds in the reserve fund will be available to cover shortfalls in distributions of interest on and principal of your notes, funds to be deposited in this account and the yield supplement account are limited. Any excess amounts released from the reserve fund to the depositor will not be available to securityholders on any later payment date. In addition, no additional deposits will be made into the yield supplement account after the deposit on the closing date, and the amount on deposit in the yield supplement account will decrease over time as required withdrawals are made on each payment date. If the funds in these accounts are exhausted, your notes will be paid solely from current distributions on the receivables. We refer you to “Credit Enhancement—Reserve Fund” and “—Yield Supplement Account.”

 

You may experience a loss or a delay in receiving payments on the notes if the assets of the issuing entity are liquidated; proceeds from the liquidation may not be sufficient to pay your notes in full.

 

Payment defaults or the insolvency or dissolution of the issuing entity may result in prepayment of the notes, which may result in losses. If the issuing entity fails to pay principal of the notes when due, or fails to pay interest on the notes within five business days of the due date, the indenture trustee or the holders of a majority of the notes outstanding may declare the entire amount of the notes to be due immediately. If so directed by the holders of the requisite percentage of outstanding notes, following an acceleration of the notes upon an event of default, the indenture trustee will liquidate the assets of the issuing entity in limited circumstances. If a liquidation occurs close to the date when one or more classes of notes would otherwise be paid in full, repayment of those classes might be delayed while liquidation of the assets is occurring. It is difficult to predict the length of time that will be required for liquidation to be completed. Also, there is no assurance that the amount received from the liquidation will at any time be equal to or greater than the aggregate principal amount of the notes. Therefore, upon an event of default, there can be no assurance that sufficient funds will be available to repay you in full. See “The Notes—The Indenture—Events of Default; Rights Upon an Event of Default.” Even if liquidation proceeds are sufficient to repay the notes in full, any liquidation that causes the principal of one or more classes of notes to be paid before the related final scheduled payment date will involve the prepayment risks described under “—You may experience reduced returns on your investment resulting from prepayments, repurchases or early termination of the receivables of the issuing entity. Repurchase obligations are limited, and do not protect the issuing entity from all risks that could impact the performance of the receivables.”

 

You may experience reduced returns on your investment resulting from prepayments, repurchases or early termination of the receivables of the issuing entity. Repurchase obligations are limited, and do not protect the issuing entity from all risks that could impact the performance of the receivables.

 

You may receive payment of principal of your notes earlier than you expected. As a result, you may not be able to reinvest the principal paid to you earlier than you expected at a rate of return that is equal to or

 

 

greater than the rate of return on your notes. Prepayments on the receivables by the related obligors and purchases of the receivables by the originator and the servicer will shorten the life of the notes to an unknown extent.

 

Prepayments may occur for a number of reasons. Some prepayments may be caused or influenced by a variety of economic, social and other factors because obligors may:

 

	·	make early payments, since receivables will generally be prepayable at any time without penalty;
	·	default, resulting in the repossession and sale of the financed vehicle;
	·	become unable to pay due to death or disability, resulting in payments to the trust under any existing physical damage, credit life or other insurance; or
	·	sell their vehicles or be delinquent or default on their receivables as a result of a manufacturer recall.

 

Prepayments may also occur due to the damage, destruction or theft of a vehicle in which case insurance proceeds may be used to repay all or a portion of the amount outstanding on the related receivable.

 

Also, the originator will be required to repurchase receivables from the issuing entity if there is a breach of a representation or warranty relating to those receivables that materially adversely affects the interests of the issuing entity or the noteholders in those receivables. Any inaccuracy in the representations or warranties will be deemed not to constitute a breach if such inaccuracy does not affect the ability of the issuing entity to receive and retain payment in full on such receivable. The servicer will also be required to purchase receivables from the issuing entity if it breaches its servicing obligations with respect to those receivables. The servicer will be permitted to purchase all remaining receivables from the issuing entity when the outstanding aggregate principal balance of the receivables is 10% or less of the initial pool balance.

 

The rate of prepayments on the receivables may be influenced by a variety of economic, social and other factors in addition to those described above. There can be no assurance that any historical experience the servicer may have with respect to prepayments on receivables is predictive of future results. In addition, the servicer is not aware of publicly available industry statistics that detail the prepayment experience for contracts similar to the receivables. For these reasons, the servicer cannot predict the actual prepayment rates for the receivables. The depositor believes that the actual rate of prepayments will result in the weighted average life of the receivables being shorter than the period from the closing date to the final scheduled maturity date for the related class of notes. If this is the case, the weighted average life of each class of notes will be correspondingly shorter. However, you will bear all reinvestment risk resulting from prepayments on the receivables and the corresponding acceleration of payments on the notes.

 

The final payment of each class of notes is expected to occur prior to its final scheduled payment date because of the prepayment and purchase considerations described above. If sufficient funds are not available to pay any class of notes in full on its final scheduled payment date, an event of default will occur and final payment of that class of notes may occur later than that date.

 

You may have difficulty selling your notes and/or obtaining your desired price due to the absence of a secondary market or lack of liquidity in the secondary market.

 

The notes are not expected to be listed on any securities exchange. Therefore, in order to sell your notes, you must first locate a willing purchaser. We cannot assure you that a secondary market will develop. The underwriters may, but are not obligated to, provide a secondary market for the notes and even if the underwriters make a market in the notes, the underwriters may stop making offers at any time.

 

Disruptions or volatility in the global financial markets, including uncertainty surrounding the exit of the United Kingdom (the “UK”) (or any other country) from the European Union (the “EU”), any country’s abandonment of the Euro, the COVID-19 pandemic generally, may cause a reduction of liquidity in the secondary market. Periods of illiquidity may adversely affect the market value of your notes and affect your ability to locate a willing purchaser. Accordingly, you may not be able to sell your notes when you want to

 

 

do so or you may be unable to obtain the price that you wish to receive for your notes and, as a result, you may suffer a loss on your investment.

 

Subordinated classes of notes are subject to a greater risk of loss, and senior classes of notes are exposed to greater reinvestment risk.

 

Classes of notes that receive principal payments before other classes will be repaid more rapidly than the other classes. In addition, because principal of each class of notes will be paid sequentially, classes of notes that have higher sequential numerical class designations will be outstanding longer and therefore will be exposed to the risk of losses on the receivables during periods after other classes have been receiving most or all amounts payable on their notes, and after which a disproportionate amount of credit enhancement may have been applied and not replenished. As a result, the yields of the class A-2, class A-3 and class A-4 notes will be relatively more sensitive to losses on the receivables and the timing of such losses. If the actual rate and amount of losses exceed your expectations, and if amounts in the reserve fund are insufficient to cover the resulting shortfalls, the yield to maturity on your notes may be lower than anticipated, and you could suffer a loss.

 

Classes of notes that receive principal payments earlier than expected are exposed to greater reinvestment risk and classes of notes that receive principal payments later than expected are exposed to greater risk of loss. In either case, the yields on your notes could be materially and adversely affected.

 

Upon the occurrence of an event of default and acceleration of the notes, principal payments will be made first on the class A-1 notes until the class A-1 notes have been paid in full, and thereafter on the class A-2 notes, class A-3 notes and class A-4 notes pro rata based on the outstanding principal amount of those classes of notes until they have been paid in full. Consequently, even after an event of default and acceleration of all of the notes, the class A-2 noteholders, class A-3 noteholders and class A-4 noteholders will not receive payments of principal until the class A-1 notes have been paid in full.

 

Failure to pay principal of your notes will not constitute an event of default until maturity.

 

The amount of principal required to be paid to the noteholders will generally be limited to amounts available in the collection account (and the reserve fund). Therefore, the failure to pay principal of your notes generally will not result in the occurrence of an event of default until the final scheduled payment date or redemption date for your notes. We refer you to “The Notes—The Indenture—Events of Default; Rights upon Event of Default.”

 

Because the offered notes are in book-entry form, your rights can only be exercised indirectly.

 

Because the offered notes will be issued in book-entry form, you will be required to hold your interest in the notes through The Depository Trust Company in the United States, or Clearstream Banking, societe anonyme, or the Euroclear System in Europe. Transfers of interests in the notes within The Depository Trust Company, Clearstream, Luxembourg or Euroclear must be made in accordance with the usual rules and operating procedures of those systems. So long as the offered notes are in book-entry form, you will not be entitled to receive a physical note or certificate representing your interest. The offered notes will remain in book-entry form except in the limited circumstances described under “Certain Information Regarding the Securities—Book-Entry Registration.” Unless and until the offered notes cease to be held in book-entry form, the trustee will not recognize you as a “noteholder” except in the limited circumstances relating to an investor vote with respect to an asset representations review. Holding the offered notes in book-entry form could also limit your ability to pledge your notes to persons or entities that do not participate in The Depository Trust Company, Clearstream, Luxembourg or Euroclear and to take other actions that require a physical note representing the offered notes.

 

 

Withdrawal or downgrading of the initial ratings of the notes, or the issuance of unsolicited ratings on the notes, may affect the prices for the notes upon resale.

 

A security rating is not a recommendation to buy, sell or hold securities. Similar ratings on different types of securities do not necessarily mean the same thing. A rating agency may change its rating of the notes after the notes are issued if that rating agency believes that circumstances have changed. There can be no assurance that the receivables and/or notes will perform as expected or that the ratings will not be reduced, withdrawn or qualified in the future as a result of a change in circumstances, deterioration in the performance of the receivables, errors in analysis or otherwise. None of the depositor, the sponsor or any of their affiliates will have an obligation to replace or supplement any credit enhancement or take any other action to maintain any ratings. Any subsequent change in a rating may affect the price that a subsequent purchaser would be willing to pay for the notes and your ability to resell your notes.

 

There may be a conflict of interest because the sponsor has hired two rating agencies and will pay them a fee to assign ratings on the notes. The sponsor has not hired any other nationally recognized statistical rating organization, or “NRSRO,” to assign ratings on the notes and is not aware that any other NRSRO has assigned ratings on the notes. However, under the SEC rules, information provided to a hired rating agency for the purpose of assigning or monitoring the ratings on the notes is required to be made available to each qualified NRSRO to make it possible for such non-hired NRSROs to assign unsolicited ratings. An unsolicited rating could be assigned at any time, including prior to the closing date, and none of the depositor, sponsor, underwriters or any of their affiliates will have any obligation to inform you of any unsolicited ratings assigned after the date of this prospectus. NRSROs, including the hired rating agencies, have different methodologies, criteria, models and requirements. If any non-hired NRSRO assigns an unsolicited rating on the notes, there can be no assurance that such rating will not be lower than the ratings provided by the hired rating agencies, which could adversely affect the market value of your notes and/or limit your ability to resell your notes. In addition, if the sponsor fails to make available to the non-hired NRSROs any information provided to any hired rating agency for the purpose of assigning or monitoring the ratings on the notes, a hired rating agency could withdraw its ratings, which could affect the market value of your notes and/or limit your ability to resell your notes.

 

None of the sponsor, depositor, servicer, administrator, indenture trustee, owner trustee, Delaware trustee, underwriters or any of their affiliates will be required to monitor any changes to the ratings on the notes.

 

Potential investors in the notes are urged to make their own evaluation of the creditworthiness of the receivables and the credit enhancement on the notes, and not to rely solely on the ratings on the notes.

 

The notes are not suitable investments for all investors.

 

The notes are not a suitable investment for any investor that requires a regular or predictable schedule of payments or payment on specific dates. The notes are complex investments that should be considered only by sophisticated investors. We suggest that only investors who, either alone or with their financial, tax and legal advisors, have the expertise to analyze the prepayment, reinvestment and default risks, the tax consequences of an investment and the interaction of these factors should consider investing in the notes.

 

Risk of Non-U.S. Holders’ investment in the offered notes treated as being engaged in a U.S. trade or business on account of their own activities.

 

Investors in the offered notes are expected to be treated as lending money to a borrower for U.S. federal income tax purposes. Certain activities undertaken or performed by foreign persons in the United States (including in certain circumstances through agents) could constitute engaging in a U.S. trade or business (within the meaning of Code section 864), which may give rise to income that is effectively connected with the conduct of such a U.S. trade or business and is subject to federal and state net income taxation (and requires the filing of tax returns with the United States). These activities could include the lending of money, origination of loans and financing, or extension of credit. The determination of whether a Non-U.S. Holder is engaged in a trade or business within the United States is based on a highly factual analysis that

 

 

takes into account all facts and circumstances. There is no direct guidance provided as to which activities constitute being engaged in a U.S. trade or business and it is not certain how a court would construe the existing indirect authorities. Furthermore, the precise contours of the so-called “securities safe harbor” under Code section 864(b)(2) is similarly unclear. Therefore, prospective investors that are Non-U.S. Holders are encouraged to consult their own tax advisors to determine their treatment under these rules with respect to an investment in an offered note.

 

Retention of notes by the sponsor or an affiliate of the sponsor may reduce the liquidity of such notes.

 

AHFC will retain at least 5% (by initial principal amount) of each of the class A-1 notes, the class A-2 notes, the class A-3 notes and the class A-4 notes. Accordingly, the market for each such retained class of notes may be less liquid than would otherwise be the case. In addition, if any retained notes are subsequently sold in the secondary market, demand for and market price for notes of that class already in the market could be adversely affected.

 

Risks relating to the characteristics, servicing and performance of the receivables pool

 

The geographic concentration of the obligors and varying economic circumstances and other factors of the receivables in specific areas may increase the risk of loss on your investment.

 

Extreme weather conditions, public health concerns (including pandemics) and other natural events, such as hurricanes, tornadoes, floods, drought, wildfires, mudslides, earthquakes and other extreme conditions, could cause substantial business disruptions, extended power outages, economic losses, unemployment and an economic downturn. As a result, such obligors’ ability to make timely payments could be adversely affected which could, in turn, adversely affect the trust’s ability to make payments on the notes.

 

Economic conditions in the states where obligors reside may also affect delinquencies, losses and prepayments on the receivables. Economic conditions that may affect payments on the receivables include: unemployment, interest rates, inflation rates, price of gasoline or consumer perceptions of the economy.

 

If a large number of obligors are located in a particular state, the economic conditions in that state could increase the delinquency, credit loss or repossession experience of the receivables. If there is a concentration of obligors and receivables in particular states, any adverse economic conditions or public health concerns (including pandemics) in those states may affect the performance of the securities more than if this concentration did not exist. Economic conditions in any state or region may decline over time and from time to time. Certain states and regions may experience sudden or severe declines in economic conditions at any time. These periods of decline may also be accompanied by decreased consumer demand for automobiles, light-duty trucks, minivans or other vehicles and declining values of automobiles securing outstanding automobile loan contracts, which weakens collateral coverage and increases the amount of a loss in the event of default by an obligor, which may be disproportionately impacted based on the economic condition in any state or region. Significant increases in the inventory of used automobiles during periods of economic slowdown or recession may also depress the prices at which repossessed automobiles may be sold or delay the timing of these sales. An improvement in economic conditions could result in prepayments by the obligors on their payment obligations under the receivables.

 

As of the cutoff date, AHFC’s records indicate the billing addresses of the obligors on the receivables in the pool were concentrated in the following states:

 

State		Percentage of Pool Balance
California			17.29%
Texas			9.88%
Pennsylvania			7.44%
Ohio			5.57%

 

 

No other state, by the billing addresses of the obligors, constituted more than 5.00% of the initial pool balance.

 
For a discussion of the breakdown of the receivables by state, we refer you to “The Receivables.”

 

The issuing entity will not be identified as the secured party on the certificate of title related to a financed vehicle, which could result in delays in payments or losses on your notes.

 

Another person could acquire an interest in a vehicle financed by a receivable that is superior to the issuing entity’s interest in the vehicle because of the failure to identify the issuing entity as the secured party on the related certificate of title. While the originator, will assign its security interest in the financed vehicles to the depositor, and the depositor will assign its security interests in the financed vehicles to the issuing entity, the servicer will continue to hold the certificates of title in the capacity of an administrative lienholder of title or ownership for the vehicles. However, for administrative reasons, the servicer will not endorse or otherwise amend the certificates of title or ownership to identify the issuing entity as the new secured party. Because the issuing entity will not be identified as the secured party on any certificates of title or ownership, the security interest of the issuing entity in the vehicles may be defeated through fraud, forgery, negligence or error and as a result the issuing entity may not have a perfected security interest in the financed vehicles in every state.

 

The possibility that the issuing entity may not have a perfected security interest in the financed vehicles may affect the issuing entity’s ability to repossess and sell the financed vehicles or may limit the amount realized to less than the amount due by the related obligors. Therefore, you may be subject to delays in payment and may incur losses on your investment in the notes as a result of defaults or delinquencies by obligors and because of depreciation in the value of the related financed vehicles. We refer you to “Certain Legal Aspects of the Receivables—Security Interests.”

 

The issuing entity’s interest in the receivables could be defeated because the contracts will not be delivered to the issuing entity.

 

Although the depositor will cause financing statements to be filed with the appropriate governmental authorities to perfect the issuing entity’s interest in the receivable and the servicer will maintain (i) possession of the original contracts for each of the receivables in tangible form and (ii) “control” of the authoritative copies of the contracts in electronic form, neither the original contracts nor the authoritative copies of electronic contracts will be segregated or marked as belonging to the issuing entity. If the servicer sells or pledges the receivables and delivers the original contracts for the receivables to another party or permits another party to obtain control of the authoritative copies of the electronic contracts, in violation of its contractual obligations under the transaction documents, this party could acquire an interest in the receivable which may have priority over the issuing entity’s interest. Furthermore, if the servicer becomes the subject of an insolvency or receivership proceeding, competing claims to ownership or security interests in the receivables could arise. These claims, even if unsuccessful, could result in delays in payments on the notes. If successful, these claims could result in losses or delays in payment to you or an acceleration of the repayment of the notes.

 

In addition, another person could acquire an interest in a receivable that is superior to the issuing entity’s interest in the receivable if the receivable is evidenced by an electronic contract and the servicer loses control over the authoritative copy of the contract and another party purchases the receivable evidenced by the contract without knowledge of the issuing entity’s interest. If the servicer loses control over a contract through fraud, forgery, negligence or error, or as a result of a computer virus or a hacker’s actions or otherwise, a person other than the issuing entity may be able to modify or duplicate the authoritative copy of the contract.

 

As a result of any of the above events, the issuing entity may no longer have a perfected security interest in certain receivables, which may affect the issuing entity’s ability to receive payments on the receivables. Therefore, you may be subject to delays in payment and may incur losses on your notes.

 

 

Interests of other persons in the receivables and financed vehicles could be superior to the issuing entity’s interest, which may result in reduced payments on your notes.

 

The issuing entity could lose the priority of its security interest in a financed vehicle due to, among other things, liens for repairs or storage of a financed vehicle or for unpaid taxes of an obligor. Neither the servicer nor the seller will have any obligation to purchase or repurchase, respectively, a receivable if these liens result in the loss of the priority of the security interest in the financed vehicle after the issuance of notes by the issuing entity. Generally, no action will be taken to perfect the rights of the issuing entity in proceeds of any insurance policies covering individual financed vehicles or obligors. Therefore, the rights of a third party with an interest in the proceeds could prevail against the rights of the issuing entity prior to the time the servicer deposits the proceeds into the collection account for the notes. See “Certain Legal Aspects of the Receivables—Security Interests.”

 

Paid-ahead contracts may affect the weighted average life of the notes.

 

If an obligor on a contract makes a payment on the contract ahead of schedule (for example, because the obligor intends to go on vacation), the weighted average life of the notes could be affected. This is because the additional scheduled payments will be treated as a principal prepayment and applied to reduce the principal balance of the related receivable and the obligor will generally not be required to make any scheduled payments during the period for which it was paid-ahead. During this paid-ahead period, interest will continue to accrue on the principal balance of the contract, as reduced by the application of the additional scheduled payments, but the obligor’s contract would not be considered delinquent during this period. While the servicer may make interest advances during this period, no principal advances will be made. Furthermore, when the obligor resumes the required payments, the payments so paid may be insufficient to cover the interest that has accrued since the last payment by that obligor. This situation will continue until the regularly scheduled payments are once again sufficient to cover all accrued interest and to reduce the principal balance of the receivable.

 

Historical loss experience may not accurately predict the likelihood of losses on the receivables.

 

Historical loss and delinquency information set forth in this prospectus under “Delinquencies, Repossessions and Loan Loss Information” was affected by several variables, including general economic conditions and market interest rates, that are expected to differ in the immediate future, and are likely to differ in the longer term future. Therefore, there can be no assurance that the historical delinquency experience or the net credit loss experience calculated and presented in this prospectus with respect to AHFC’s entire portfolio of retail installment sale contracts will reflect actual experience with respect to the receivables in the receivables pool. Especially given the current extremely challenging economic climate, there can be no assurance that the future delinquency or net credit loss experience of the servicer with respect to the receivables will be better or worse than that set forth in this prospectus with respect to AHFC’s entire portfolio of retail installment sale contracts.

 

Risks relating to the transaction parties

 

Adverse events with respect to the servicer or its affiliates could affect the timing of payments on your notes or have other adverse effects on your notes.

 

Adverse events with respect to the servicer or any of its affiliates could result in servicing disruptions or affect the performance or market value of your notes and your ability to sell your notes in the secondary market. For example, servicing disruptions could result from unanticipated events beyond the servicer’s control, such as natural disasters, civil unrest, political instability (such as increased tensions between Ukraine and Russia), public health emergencies (including COVID-19 or similar outbreaks) and economic disruptions, particularly to the extent such events affected the servicer’s business or operations. In addition, in the event of a termination and replacement of the servicer, there may be some disruption of the collection activity with respect to the receivables owned by the issuing entity, leading to increased delinquencies, defaults and losses on the receivables and your notes.

 

 

The sponsor relies upon its ability to sell securities in the asset backed securities market and upon its ability to access various credit facilities to fund its operations. As discussed under “—Recent economic developments may adversely affect the performance and market value of your notes,” the global credit and financial markets have experienced, and may continue to experience, significant disruption and volatility. Recent government and regulatory actions may not succeed in mitigating the adverse economic effects of COVID-19.

 

The bankruptcy of the originator, the servicer or the depositor could result in losses or delays in payments on your notes.

 

If either AHFC, the originator and servicer, or American Honda Receivables LLC, the depositor, become subject to bankruptcy proceedings, you could experience losses or delays in the payments on your notes. AHFC, as originator, will sell the receivables to American Honda Receivables LLC, and American Honda Receivables LLC, as depositor, will in turn transfer the receivables to the issuing entity. However, if either AHFC or American Honda Receivables LLC becomes subject to a bankruptcy proceeding, the court in the bankruptcy proceeding could conclude that AHFC or American Honda Receivables LLC, as applicable, still owns the receivables by concluding that the sale to the depositor and/or to the issuing entity was not a “true sale” or, in the case of a bankruptcy of the originator, that the depositor should be consolidated with the originator for bankruptcy purposes. If a court were to reach this conclusion, you could experience losses or delays in payments on your notes as a result of, among other things:

 

·

the “automatic stay,” which prevents secured creditors from exercising remedies against a debtor in bankruptcy without permission from the court and provisions of the U.S. Bankruptcy Code that permit substitution for collateral in limited circumstances;

 

·

tax or government liens on the sponsor’s or the depositor’s property (that arose prior to the transfer of a receivable to the issuing entity) having a prior claim on collections before the collections are used to make payments on your notes; and

 

·

the issuing entity not having a perfected security interest in (a) one or more of the financed vehicles securing the receivables or (b) any cash collections held by the servicer at the time the servicer becomes the subject of a bankruptcy proceeding.

 

The depositor will take steps to minimize the risk that a court would consolidate the depositor with the originator for bankruptcy purposes or conclude that the sale of receivables to the depositor was not a “true sale.” We refer you to “Certain Legal Aspects of the Receivables—Certain Bankruptcy Considerations.”

 

The bankruptcy of the issuing entity could result in delays in payments or losses on your notes.

 

If the issuing entity were to become subject to bankruptcy proceedings, you could experience delays in the payments or losses on your notes as a result of, among other things, the “automatic stay,” which generally prevents creditors from exercising remedies against a debtor in bankruptcy without permission from the court, and provisions of the U.S. Bankruptcy Code that permit substitution for collateral in limited circumstances.

 

The bankruptcy of the servicer could delay the appointment of a successor servicer or reduce payments on your notes.

 

In an event of default by the servicer resulting solely from certain events of insolvency or the bankruptcy of the servicer, a court, conservator, receiver or liquidator may have the power to prevent either the indenture trustee or the noteholders from appointing a successor servicer or prevent the servicer from appointing a sub-servicer, as the case may be, and delays in the collection of payments on the receivables may occur. Any delay in the collection of payments on the receivables may delay or reduce payments to noteholders.

 

 

A servicer default may result in additional costs, increased servicing fees by a substitute servicer or a diminution in servicing performance, including higher delinquencies and defaults, any of which may have an adverse effect on your notes.

 

If a servicer default occurs, the indenture trustee or the noteholders may remove the servicer without the consent of the owner trustee or the certificateholders. In the event of the removal of the servicer and the appointment of a successor servicer, we cannot predict: the cost of the transfer of servicing to the successor; the ability of the successor to perform the obligations and duties of the servicer under the servicing agreement; or the servicing fees charged by the successor. In addition, the noteholders have the ability, with some exceptions, to waive defaults by the servicer.

 

Furthermore, the indenture trustee or the noteholders may experience difficulties in appointing a successor servicer and during any transition phase it is possible that normal servicing activities could be disrupted, resulting in increased delinquencies and/or defaults on the receivables.

 

Paying the servicer a fee based on a percentage of the receivables may result in the inability to obtain a successor servicer.

 

Because the servicer is paid its base servicing fee based on a percentage of the aggregate outstanding amount of the receivables, the fee the servicer receives each month will be reduced as the size of the pool decreases over time. At some point, if the need arises to obtain a successor servicer, the fee that such successor servicer would earn might not be sufficient to induce a potential successor servicer to agree to service the remaining receivables in the pool. In this event a higher servicing fee may need to be negotiated (with majority noteholder approval), resulting in less available funds that may be distributed to noteholders and certificateholders on a related payment date. Also if there is a delay in obtaining a successor servicer, it is possible that normal servicing activities could be disrupted during this period, resulting in increased delinquencies and/or defaults on the receivables.

 

The servicer’s ability to commingle collections with its own funds may result in delayed payments or losses on your notes.

 

Subject to rating agency debt rating thresholds, the servicer generally may retain all payments and proceeds collected on the receivables during each collection period. During such period, the servicer generally is not required to segregate those funds from its own accounts. Until any collections or proceeds are deposited into the collection account, the servicer will be able to invest those amounts for its own benefit at its own risk. The issuing entity and securityholders are not entitled to any amount earned on the funds held by the servicer. If the servicer does not deposit the funds in the collection account as required on any payment date, the issuing entity may be unable to make the payments owed on your notes.

 

Risks relating to macroeconomic, regulatory and other external factors

 

Federal or state regulatory legislation could have an adverse effect on AHFC, the depositor and the issuing entity, which could result in losses or delays in payments on your notes.

 

The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) is extensive and significant legislation that, among other things:

 

·

created a liquidation framework for purposes of liquidating certain bank holding companies or other nonbank financial companies determined to be “covered financial companies,” and certain of their respective subsidiaries, defined as “covered subsidiaries,” if, among other conditions, it is determined such a company is in default or in danger of default and the resolution of such a company under other applicable law would have serious adverse effects on financial stability in the United States;

 

 

·

created the Consumer Financial Protection Bureau (“CFPB”), an agency with broad rule-making examination and enforcement authority with respect to the laws and regulations that apply to consumer financial products and services, such as the extension of credit to finance the purchase of automobiles and motorcycles;

 

·

created a new framework for the regulation of over-the-counter derivatives activities; and

 

·

strengthened the regulatory oversight of securities and capital markets activities by the SEC.

 

The scope of the Dodd-Frank Act has broad implications for the financial services industry, including us, and requires the implementation of numerous rules and regulations. The Dodd-Frank Act impacts the offering, marketing, and regulation of consumer financial products and services offered by financial institutions. Compliance with the implementing regulations under the Dodd-Frank Act or the oversight of the SEC or CFPB may impose costs on, create operational constraints for, or place limits on pricing with respect to, finance companies such as AHFC.

 

The CFPB has supervisory, examination and enforcement authority over certain non-depository institutions, including those entities that are larger participants of a market for consumer financial products or services, as defined by rule. AHFC is subject to the CFPB’s supervision with respect to AHFC’s compliance with applicable consumer protection laws. Expanded CFPB jurisdiction over AHFC’s business may increase compliance costs and regulatory risks.

 

The CFPB has successfully asserted the power to investigate and bring enforcement actions directly against securitization vehicles. On December 13, 2021, in an action brought by the CFPB, the U.S. District Court for the District of Delaware denied a motion to dismiss filed by a securitization trust by holding that the trust is a “covered person” under the Dodd-Frank Act because it engages in the servicing of loans, even if through servicers and subservicers. CFPB v. Nat’l Collegiate Master Student Loan Trust, No. 1:17-cv-1323-SB (D. Del.). On February 11, 2022, the district count granted the defendant trusts’ motion to certify that order for an immediate interlocutory appeal and stayed the case pending resolution of any appeal. The U.S. Court of Appeals for the Third Circuit has granted the defendant trusts’ petition for an interlocutory appeal and on May 17, 2023 heard oral arguments in connection with this appeal. Depending upon the outcome of the appeal, the CFPB may rely on this decision as precedent in investigating and bringing enforcement actions against other trusts, including the issuing entity, in the future.

 

In February 2022, the CFPB also issued a Compliance Bulletin stating its position that automobile loan holders and servicers are responsible for ensuring that their repossession-related practices, and the practices of their service providers, do not violate the law, and the CFPB also described its intention to hold loan holders and servicers liable for unfair, deceptive, or abusive acts or practices related to the repossession of automobiles. It is possible that the CFPB may bring enforcement actions against securitization trusts holding automobile retail installment sale contracts, such as the issuing entity, and servicers in the future.

 

In its Supervisory Highlights for Spring and Fall of 2022, the CFPB also identified certain auto loan servicing concerns, including the failure to ensure customers received add-on product refunds after events such as repossession or early payoff of the account. Recently, the CFPB entered into a consent order with a large national bank, related to, among other things, the determination that such large national bank engaged in unfair auto loan servicing acts and practices by incorrectly applying consumer payments, charging borrowers incorrect fees, interest or other amounts, wrongly repossessing borrowers’ automobiles and failing to ensure consumers received refunds for certain premiums the consumers paid dealers at origination relating to retail installment contracts purchased by such large national bank. In particular, the consent order stated that such large national bank did not ensure that unearned guaranteed asset protection (“GAP”) contract premiums were refunded to all borrowers who paid off their accounts early. It is possible that the CFPB may bring enforcement actions against securitization trusts holding motor vehicle retail installment sale contracts, such as the issuing entity, and servicers in the future.

 

 

Because of the complexity of the Dodd-Frank Act, the ultimate impact of the Dodd-Frank Act and its effects on the financial markets and their participants will not be fully known for an extended period of time. Therefore, requirements imposed by the Dodd-Frank Act may have a significant future impact on the servicing of the receivables, or on the regulation and supervision of AHFC, the servicer, the sponsor, the originator, the depositor, the issuing entity or their respective affiliates.

 

In addition, state regulators, the Federal Trade Commission (“FTC”) and state attorneys general have recently increased their scrutiny of motor vehicle dealers and auto lending, particularly with respect to antidiscrimination and deception concerns related to the prices of and fees charged in connection with automobile financing, including add-on products such as GAP insurance and extended warranties and refunds associated with these products.  For example, the New York Department of Financial Services issued an industry letter on July 18, 2023 reminding regulated automobile lenders and servicers of their obligation to ensure that borrowers receive pro-rata rebates for cancelled ancillary products. In addition, California has recently enacted a law governing the sale, offering or administration of GAP in connection with retail installments contracts.  Finally, on June 23, 2022 the FTC issued a proposed rule that would (i) prohibit motor vehicle dealers from making certain misrepresentations in the course of selling, leasing, or arranging financing for motor vehicles, (ii) require accurate pricing disclosures in dealers’ advertising and sales discussions, (iii) require dealers to obtain consumers’ express, informed consent for charges, (iv) prohibit the sale of any add-on product or service that confers no benefit to the consumer, and (v) require dealers to keep records of advertisements and customer transactions.  At this stage, it is unknown whether a final rule will be issued, the exact requirements of any final rule if issued or if any final rule would have a broader potential impact on auto lending practices, including the auto lending practices of AHFC.

 

See “Certain Legal Aspects of the Receivables—Dodd-Frank Act Orderly Liquidation Authority Provisions—Potential Applicability to AHFC, the Depositor and the Trust.”

 

Receivables that fail to comply with consumer protection laws may be unenforceable, which may result in losses on your investment.

 

Many federal and state consumer protection laws regulate consumer contracts such as the receivables. Additionally, the CARES Act included various provisions, such as new requirements affecting credit reporting, designed to protect consumers. If any of the receivables do not comply with one or more of these laws, the servicer may be prevented from or delayed in collecting amounts due on the receivables. If that happens, payments on the notes could be delayed or reduced. AHFC will make representations and warranties relating to the receivables’ compliance with law. If AHFC breaches any of these representations or warranties that materially and adversely affects the issuing entity or the noteholders, the issuing entity’s sole remedy will be to require AHFC to repurchase the affected receivables. See “Certain Legal Aspects of the Receivables—Consumer Protection Laws.”

 

Federal or state bankruptcy or debtor relief laws may impede collection efforts or alter the timing and amount of collections, which may result in acceleration of or reduction in payment on your notes.

 

If an obligor sought protection under federal or state bankruptcy or debtor relief laws, a court could reduce or discharge completely the obligor’s obligations to repay amounts due on its receivable. As a result, that receivable would be written off as uncollectible. See “—Historical loss experience may not accurately predict the likelihood of losses on the receivables.” You could suffer a loss if no funds are available from credit enhancement or other sources and finance charge amounts allocated to the notes are insufficient to cover the applicable default amount.

 

Recent economic developments may adversely affect the performance and market value of your notes.

 

A deterioration in economic conditions and certain economic factors, such as reduced business activity, high unemployment, fluctuating interest rates, housing prices, energy prices (including the price of gasoline), increased consumer indebtedness (including of obligors on the receivables), lack of available credit, supply

 

 

chain disruptions, the rate of inflation and consumer perceptions of the economy, as well as other factors, such as terrorist events, civil unrest, public health emergencies, extended power outages or extreme weather conditions, could adversely affect the ability and willingness of obligors to meet their payment obligations under the receivables. The issuing entity’s ability to make payments on the notes could be adversely affected if obligors are unable to make timely payments or if the servicer elected to, or is required to, implement forbearance programs for obligors.

 

The United States has in the past experienced, and may in the future experience, a recession or period of economic contraction. During the recession that resulted from COVID-19, the United States experienced an unprecedented level of unemployment claims, economic volatility, inflation, and a decline in consumer confidence and spending. The long-term impacts of social, economic and financial disruptions caused (directly and indirectly) by COVID-19 are unknown. Although the economy improved following the initial outbreak of COVID-19, it is currently unclear whether the United States is experiencing, or soon will experience, another recession. Recently, rapidly rising inflation and related economic policies have caused periods of economic contraction that may be prolonged. A further deterioration in economic conditions and certain economic factors, such as unemployment, decreases in home values, fluctuating interest rates, the price of gasoline, high energy prices, inflation rates, lack of available credit and consumer perceptions of the economy could adversely affect the ability and willingness of obligors to meet their payment obligations under the receivables. As a result, delinquencies and credit losses on the receivables could increase, which could result in losses on your notes. In addition, consumer debt levels remain elevated, and there have been increasing trends in rates of delinquency and default frequency. As consumers assume higher debt levels, delinquencies and losses on the receivables may increase, which could result in losses on your notes.

 

No prediction or assurance can be made as to the effect of an economic downturn or economic growth on the rate of delinquencies, losses and prepayments of the receivables. An improvement in economic conditions could result in prepayments by the obligors of their payment obligations under the receivables. As a result, you may receive principal payments of your notes earlier than anticipated.

 

Significant increases in the inventory of used automobiles may also depress the prices at which repossessed automobiles may be sold or delay the timing of these sales.

 

See “Delinquencies, Repossessions and Loan Loss Information” and “Static Pools” for delinquency and loss information regarding certain automobile loans originated and serviced by AHFC.

 

High energy prices may adversely affect the trust’s ability to make payments on the notes.

 

Increases in the cost of crude oil may cause higher energy and fuel costs. These higher energy and fuel prices could reduce the amount of money that the affected obligors have available to make monthly payments. Higher energy costs could also cause business disruptions, which could cause unemployment and an economic downturn. Such obligors could potentially become delinquent in making monthly payments or default if they were unable to make payments due to increased energy or fuel bills or unemployment. The trust’s ability to make payments on the notes could be adversely affected if the related obligors were unable to make timely payments.

 

Vehicle recalls may have an adverse effect on the receivables and your notes.

 

From time to time, automobile manufacturers or their suppliers may discover a component in a vehicle, which might possibly affect the safety or other feature of the vehicle. In such cases, the manufacturer in consultation with the National Highway Traffic Safety Administration may recall the affected vehicles for repair or other necessary service. In addition, recalls or other service campaigns could cause a temporary suspension of sales of the affected vehicles, which may cause a delay of the timing of the sales in the used car markets. Numerous factors, including timing, condition, recalls, volume and location, could affect the value of used vehicles and may result in a decline in the values of those vehicles. Declines in values of used vehicles could cause an increase in credit losses. If any of these events materially affect collections on the

 

 

receivables securing your notes, you may experience delays in payments or principal losses on your notes if the available credit enhancement has been exhausted.

 

Additionally, certain Honda and Acura vehicles are currently subject to vehicle recalls for the repair of certain airbag inflators or other product issues and certain of the receivables in the pool probably will be subject to these recalls. While there can be no assurance that any of these recalls (or any other existing or future recalls and service campaigns) will not adversely affect the timing or amount of proceeds from sales of used vehicles, based on the information that they currently possess, neither the depositor nor the sponsor expects that the impact of these recalls on collections on the receivables or payments on the notes will be material.

 

Market factors may reduce the value of used vehicles, which could result in losses on your notes.

 

Vehicles that are repossessed are typically sold at vehicle auctions as used vehicles. The pricing of used vehicles is affected by supply and demand for such vehicles, which in turn is affected by consumer tastes, economic factors, fuel costs, the introduction and pricing of new car models and other factors. In addition, decisions by AHM with respect to new vehicle production, pricing and incentives may negatively affect used vehicle prices, particularly those for the same or similar models. Many government rules and regulations have resulted in additional regulations on repossessions, including temporary moratoriums on repossessions for periods of time. There can be no assurance that such actions will not reoccur in the future.

 

The return on your notes could be reduced by shortfalls due to military action, terrorism or similar national concerns and the Servicemembers Civil Relief Act.

 

The effect of any current or future military action by or against the United States, as well as any future terrorist attacks, on the performance of receivables is unclear, but there may be an adverse effect on general economic conditions, consumer confidence and general market liquidity. Investors should consider the possible effects on delinquency, default and prepayment experience of the receivables.

 

The Servicemembers Civil Relief Act, as amended, or the Relief Act, and similar state legislation, provide relief to obligors who enter active military service and to obligors in reserve status who are called to active duty after the origination of their receivables. On July 29, 2022, the CFPB and the Department of Justice sent a notification letter to certain auto leasing and lending companies reminding them of the protections offered to servicemembers and their dependents under the Servicemembers Civil Relief Act. World events may result in certain military operations by the United States, and the United States continues to be on alert for potential terrorist attacks. These military operations may increase the number of obligors who are in active military service, including persons in reserve status who have been called or will be called to active duty. The Relief Act provides, generally, that an obligor who is covered by the Relief Act may not be charged interest on the related receivable in excess of 6% per annum during the period of the obligor’s active duty. These shortfalls are not required to be paid by the obligor at any future time. The servicer is not required to advance these shortfalls as delinquent payments, and such shortfalls are not covered by any form of credit enhancement on the notes. In the event that there are not sufficient available funds to off-set interest shortfalls on the receivables due to the application of the Relief Act or similar legislation or regulations, a noteholders’ interest carryover shortfall will result. Such noteholders’ interest carryover shortfalls will be paid in subsequent periods, to the extent of available funds, before payments of principal are made on the notes and might result in extending the anticipated maturity of your class of notes or possibly result in a loss (in the absence of sufficient credit enhancement).

 

The Relief Act and the laws of some states also limit the ability of the servicer to repossess the financed vehicle securing a receivable during the related obligor’s period of active duty and a period of time after active duty and, in some cases, may require the servicer to extend the maturity of the receivable, lower the

 

 

monthly payments and readjust the payment schedule for a period of time after the completion of the related obligor’s military service. As a result, there may be delays in payment and increased losses on the receivables. Those delays and increased losses will be borne primarily by the certificates, but if such losses are greater than anticipated, you may suffer a loss.

 

We do not know how many receivables have been or may be affected by the application of the Relief Act.

 

Climate related events and climate change risks may cause losses on your notes.

 

The effects of climate change and the ongoing efforts to mitigate its impact, including through climate change-related legislation and regulation, may have a negative effect on the issuing entity.

 

Significant physical effects of climate change, such as extreme weather and natural disasters, may affect the obligors of the receivables. For example, obligors living in areas affected by extreme weather and natural disasters may suffer financial harm, reducing their ability to make timely payments on their receivables. The auto dealerships and physical auctions that facilitate the disposition of the financed vehicles after repossession are also subject to disruption as a result of extreme weather and natural disasters, which could result in an inability to sell repossessed vehicles or a temporary or permanent decline in the market value of those vehicles. In addition, extreme weather and natural disasters may have industry- or economy-wide effects due to the interdependence of market actors. If such extreme weather or a natural disaster were to occur in a geographic region in which a large number of obligors are located, these risks would be exacerbated. See “The geographic concentration of the obligors and varying economic circumstances and other factors of the receivables in specific areas may increase the risk of loss on your investment”.

 

Changes to laws or regulations enacted to address the potential impacts of climate change (including laws which may adversely impact the auto industry in particular as a result of efforts to mitigate the factors contributing to climate change) could have an adverse impact on the servicer, the sponsor, the depositor or the issuing entity and could adversely affect the timing and amount of payments on your notes.

 

Any of those effects or their confluence could adversely affect the performance of the receivables or the market value of the vehicles securing the receivables, which could result in losses or affect the timing of payments on your notes.

 

 

DEFINED TERMS

 

In later sections, we use a few terms that we either define in the glossary or provide a reference in the glossary to the section of this prospectus where such term is defined. The glossary can be found at the end of this prospectus.

 

THE ISSUING ENTITY

 

General

 

The issuing entity is Honda Auto Receivables 2023-3 Owner Trust (which we refer to as the “issuing entity” or the “trust”), which is a Delaware statutory trust that was formed pursuant to a trust agreement among American Honda Receivables LLC (which we refer to as the “depositor”), The Bank of New York Mellon (which we refer to as the “owner trustee”) and BNY Mellon Trust of Delaware (which we refer to as the “Delaware trustee”). The trust will not engage in any activity other than:

 

·

acquiring, holding and managing the pool of retail installment sale contracts, backed by new and used Honda and Acura automobiles and light-duty trucks (collectively referred to as the “automobiles”), regarding the Financed Vehicles, between the respective Dealer and the related Obligor (which we refer to in this prospectus as the “Receivables”) and the other assets of the trust and proceeds from those assets;

 

·

assigning, granting, transferring, pledging and conveying those Receivables and the other assets of the trust and proceeds from those assets pursuant to the Indenture;

 

·

issuing the notes and the certificates (which are collectively referred to as the “securities”);

 

·

entering into and performing its obligations under the Transfer and Servicing Agreements;

 

·

funding the reserve fund and the yield supplement account;

 

·

making payments on the notes and the certificates; and

 

·

engaging in other activities that are necessary, suitable or convenient to accomplish the foregoing or are incidental to or connected with the activities listed above.

 

Certain amendments to the trust agreement would require the consent of the holders of not less than a majority of the Certificate Balance of the certificates and any amendment to the trust agreement to amend, supplement or modify these permitted activities, or otherwise make any modification that would materially and adversely affect the noteholders, would require the consent of the holders of not less than a majority of the aggregate outstanding principal amount of the notes.

 

The trust will be structured, and each Transfer and Servicing Agreement will contain non-petition clauses, whereunder all applicable parties covenant not to institute any bankruptcy or insolvency proceedings (or take any related actions) against either the trust or the depositor until at least one year and one day after the date on which all securities of the trust have been paid in full.

 

The trust may not issue securities other than the notes and certificates. Except for the notes, the trust is also prohibited, pursuant to the indenture, from borrowing money or making loans to any other person.

 

On or before the date of issuance of the notes, which will occur on or about August 22, 2023 (which we refer to in this prospectus as the “Closing Date”), AHFC will sell the Receivables comprising the initial pool to the depositor, and the depositor will sell those Receivables to the trust pursuant to the sale and servicing agreement among the depositor, AHFC, in its capacity as servicer of the Receivables, and the trust. On the Closing Date, the trust will be capitalized with an amount equal to the certificate balance as of the Closing Date, which will equal $47,253,251.43 (which we refer to as the “Initial Certificate Balance”).

 

 

The certificates will initially be retained by the depositor. The equity of the trust, together with the net proceeds from the sale of the notes, will be used by the trust to purchase the Receivables from the depositor pursuant to the sale and servicing agreement and to fund the reserve fund and the yield supplement account.

 

The sponsor of the transaction, American Honda Finance Corporation (which we sometimes refer to in this capacity as “AHFC” or the “sponsor”) will be appointed to act as the servicer of the Receivables (and which we sometimes refer to in such capacity as the “servicer”). The servicer will service the Receivables pursuant to the sale and servicing agreement and will be compensated for those services as described under “Description of the Transfer and Servicing Agreements—Servicing Compensation.” AHFC, in its capacity as administrator (and which we sometimes refer to in such capacity as the “administrator”) will undertake to perform administrative obligations of the trust on behalf of the trustees as described pursuant to the administration agreement under “Description of the Transfer and Servicing Agreements—Administration Agreement.”

 

Pursuant to agreements between AHFC and each Honda and Acura dealer who originated the Receivables (each, a “Dealer”), each Dealer will repurchase from AHFC those contracts that do not meet specified representations and warranties made by the Dealer. These Dealers’ repurchase obligations are referred to in this prospectus as “Dealer Recourse.” Those representations and warranties relate primarily to the origination of the contracts and the perfection of the security interests in the related financed vehicles, and do not relate to the creditworthiness of the related retail purchaser of a Financed Vehicle who entered into a retail installment sale contract with a Dealer (each, an “Obligor”) or the collectability of those contracts. Although the Dealer Agreements with respect to the Receivables will not be assigned to the trust, the sale and servicing agreement will require that any recovery by AHFC in respect of any Receivable, excluding Receivables repurchased from the trust, pursuant to any Dealer Recourse be deposited in the collection account to satisfy AHFC’s repurchase obligations under the sale and servicing agreement. The sales by the Dealers of retail installment sale contracts to AHFC do not generally provide for recourse against the Dealers for unpaid amounts in the event of a default by an Obligor, other than in connection with the breach of the foregoing representations and warranties.

 

Each certificate represents a fractional undivided ownership interest in the trust. The trust property includes the Receivables and monies due or received under the Receivables on or after the date on which the trust will be entitled to all amounts received with respect to the Receivables, which is the opening of business on August 1, 2023 (which we refer to in this prospectus as the “Cutoff Date”). In addition, the trust will own the reserve fund and the yield supplement account, each of which will be maintained by the indenture trustee for the benefit of the noteholders and the certificateholders. In addition to the Receivables and the accounts, the property of the trust will also include the following:

 

·

amounts that may be held in the separate trust accounts established and maintained by the servicer with the indenture trustee pursuant to the sale and servicing agreement;

 

·

security interests in the Financed Vehicles and any related property;

 

·

the rights to proceeds from claims on physical damage and credit life and disability insurance policies covering the Financed Vehicles or the Obligors;

 

·

proceeds from payments collected by AHFC from Dealers obligated to repurchase Receivables from AHFC which do not meet specified representations made by the Dealers;

 

·

the depositor’s rights under, as applicable, the sale and servicing agreement and the receivables purchase agreement;

 

·

the depositor’s right to realize upon any property (including the right to receive future net liquidation proceeds) that secured a Receivable; and

 

·

all proceeds of the foregoing.

 

The trust will own no other property other than the Receivables and the property described above. The trust’s fiscal year end will occur on the 31^st day of March each year.

 

 

The trust was formed in the State of Delaware and will be administered in care of The Bank of New York Mellon, as owner trustee, at the address set forth below under “The Owner Trustee, the Delaware Trustee and the Indenture Trustee.”

 

Capitalization of the Issuing Entity

 

The expected assets and capitalization and/or liabilities of the trust as of the Closing Date will be as follows:

 

Assets

 

Receivables		$	1,889,359,251.43
Reserve Fund		$	4,723,398.13
Yield Supplement Account		$	184,670,383.64
Total		$	2,078,753,033.20

 

Capitalization and/or Liabilities

 

Class A-1 Notes		$	409,600,000.00
Class A-2 Notes		$	661,100,000.00
Class A-3 Notes		$	661,100,000.00
Class A-4 Notes		$	110,306,000.00
Certificates		$	47,253,251.43
Total		$	1,889,359,251.43

 

The depositor will initially retain all of the certificates. AHFC will retain at least 5% (by initial principal amount) of each of the class A-1 notes, the class A-2 notes, the class A-3 notes and the class A-4 notes. See “Credit Risk Retention” for a description of the “eligible vertical interest.”

 

THE DEPOSITOR

 

American Honda Receivables LLC (“AHR”) is a wholly owned, limited purpose finance subsidiary of AHFC and was formed in the State of Delaware in March 2011, and is referred to as the “depositor” in this prospectus. The depositor’s principal executive offices are located at 1919 Torrance Boulevard, Torrance, California 90501 and its telephone number is (310) 972-2412. The depositor was organized primarily for the purpose of acquiring retail installment sale contracts similar to the Receivables and associated rights from AHFC, causing the issuance of securities similar to the securities and engaging in related transactions. The depositor’s limited liability company agreement limits the activities of the depositor to the foregoing purposes and to any activities incidental to and necessary for those purposes. Other than the obligation to obtain the consent of the depositor with respect to amendments to the trust agreement or other consent rights given to the holder of the residual interest in the issuing entity, the depositor will have no ongoing duties with respect to the issuing entity.

 

The limited liability company agreement of the depositor includes requirements for independent managers, extensive corporate separateness covenants and restrictions on its permitted corporate functions (including on its ability to borrow money or incur debts), all of which are designed to prevent the consolidation of the assets of the depositor with those of either AHFC or any affiliate of AHFC in the event of a bankruptcy or insolvency proceeding of AHFC or such other affiliated entity. In addition, the depositor itself may not file a voluntary petition for bankruptcy or insolvency protection in either Federal or any state court without the consent of the two independent directors.

 

 

The depositor initially will retain all of the certificates. As the holder of certificates, the depositor will have various rights and obligations under the trust agreement, including the right to direct the owner trustee (i) to remove the administrator of the issuing entity and (ii) to appoint a successor administrator upon resignation and removal of the administrator of the issuing entity. Notwithstanding the foregoing, the rights of any holder of the certificates to take any action affecting the issuing entity’s property will be subject to the rights of the indenture trustee under the indenture.

 

THE SPONSOR, ORIGINATOR, SERVICER AND ADMINISTRATOR

 

General

 

American Honda Finance Corporation (“AHFC”) is a California corporation that was incorporated on February 6, 1980. AHFC provides various forms of financing in the United States to purchasers and lessees of Honda and Acura products and authorized independent dealers of Honda and Acura products. AHFC’s primary focus is to provide support for the sale of Honda and Acura products in the United States and maintain customer and dealer satisfaction and loyalty. AHFC’s business is substantially dependent upon the sale of those Honda and Acura products in the United States. AHFC is a wholly owned subsidiary of AHM, a California corporation, and AHM is a wholly owned subsidiary of Honda Motor Co., Ltd.

 

AHFC acquires retail loans, primarily installment sale contracts, and leases made to retail customers of Honda and Acura products and offers wholesale floorplan and commercial loans to authorized dealers of Honda and Acura products. A small portion of AHFC’s business also consists of acquiring financings of non-Honda and non-Acura used automobiles and providing wholesale loans to non-Honda and non-Acura dealerships.

 

AHFC will retain at least 5% (by initial principal amount) of each of the class A-1 notes, the class A-2 notes, the class A-3 notes and the class A-4 notes. As a holder of notes, AHFC will have certain rights as a noteholder (except with respect to voting rights) and be entitled to receive at least 5% of all payments of interest and principal made on each class of notes pari passu with the noteholders of each such class. See “Credit Risk Retention.”

 

Securitization Experience

 

AHFC has been securitizing assets since 1992, and this program is one of the many alternative sources of funding utilized by AHFC. AHFC has sponsored more than 85 public securitization trusts backed by retail installment sale contracts which have issued more than $119 billion of securities to date, none of which have defaulted or failed to pay principal in full at maturity. For additional information, see “Static Pools.”

 

		The Sponsor, Originator, Servicer and Administrator Public Asset-Backed Securitizations (Dollars in Millions)
		For the 3 Months Ended June 30,			For Fiscal Years Ended March 31,
		2023			2023			2022			2021			2020			2019
Original Principal Balance		$1,619			$2,699			$6,478			$5,128			$6,208			$5,287

 

In addition to securitizing retail installment sale contracts similar to the Receivables, since 1992 AHFC has sponsored other public securitization entities backed by pools of automobile leases which have issued more than $3.4 billion of securities to date and none of which have defaulted or failed to pay principal in full at maturity. In the U.S. securitization market, AHFC sponsors a number of programs in which it sells receivables in securitization transactions or other structured financings both in the public

 

 

markets and in private transactions. In addition to making registered public offerings, AHFC has sold retail installment sale contracts and automobile lease-backed receivables to asset-backed commercial paper conduits.

 

As sponsor, AHFC is responsible for originating, pooling and servicing the pool assets and structuring the securitization transaction. In its roles as administrator and servicer, AHFC plays a primary role in the management of the trust and the pool of Receivables. In addition, as servicer, AHFC will be authorized to exercise certain discretionary activity with regard to the administration of the Receivables, as described under “The Sponsor, Originator, Servicer and Administrator—Servicing Experience.”

 

AHFC originates all receivables in each asset pool to be securitized in the ordinary course of its business. For a description of the selection criteria used in selecting the asset pool to be securitized, see “The Receivables.” AHFC has engaged the underwriters of the notes to assist in structuring the transaction based on the forecasted cash flows of the pool. AHFC also worked with such underwriters to determine class sizes and average lives based on current market conditions.

 

Origination

 

AHFC, in its capacity as originator, which we refer to in such capacity as the “originator”, purchases all of the related retail installment sale contracts secured by new or used Honda and Acura automobiles from Dealers. The Receivables are originated by Dealers in accordance with AHFC’s requirements under existing agreements between AHFC and each Dealer governing the assignment of the Receivables to AHFC (which we refer to as the “Dealer Agreements”) and will be purchased in accordance with the AHFC’s underwriting guidelines.

 

Dealers submit customer credit applications electronically through AHFC’s online system. In addition, customers are able to submit their own credit applications for pre-approval directly through AHFC’s website. If AHFC’s requirements are met, an application received from a Dealer is approved automatically. AHFC’s system is programmed to review application information for purchase policy and legal compliance. Applications that are not automatically approved are routed to credit buyers located in AHFC’s service centers, who will evaluate and make purchase decisions within the framework of AHFC’s purchase policy and legal requirements.

 

AHFC utilizes its proprietary credit scoring system to evaluate the credit risk of applicants. Factors used by AHFC’s credit scoring system to develop a customer’s credit grade include the term of the contract, the loan- or lease-to-value ratio, the customer’s debt ratios, and credit bureau attributes, number of trade lines, utilization ratio and number of credit inquiries.

 

The following classifications are based on AHFC’s definitions and would not be comparable to other auto lenders.

 

A – Borrowers classified as an A credit are those who are very low credit risks. Based on their application and credit bureau report, they have the ability to pay and have shown a willingness to pay. Generally, A credit borrowers have an extensive credit history, an excellent payment record and extensive financial resources.

 

B – Borrowers classified as a B credit are those that are relatively low credit risks. Based on their application and credit bureau report, they have the ability to pay and have shown a willingness to pay. Generally, B credit borrowers may have one or more condition, such as, among other reasons, a shorter credit history or a minor credit weakness, that could reduce the internal credit score.

 

C – Borrowers classified as a C credit are those that are moderate credit risks. Based on their application and credit bureau report, among other reasons, they may have limited financial resources, limited credit history, or a weakness in credit history.

 

 

D – Borrowers classified as a D credit are relatively higher credit risks. Based on their application and credit bureau report, among other reasons, they may have very limited financial resources, very limited or no credit history, or a poor credit history.

 

AHFC utilizes the customer’s internal credit grade and Fair Isaac Corporation (“FICO”) score to determine the customer’s interest rate for the loan.

 

AHFC utilizes different scorecards depending on the type of product that AHFC finances and AHFC regularly reviews and analyzes its consumer financing portfolio to evaluate the effectiveness of AHFC’s underwriting guidelines, purchasing criteria and scorecard predictability of customers. Internal credit scores are determined only at the time of origination and are not reassessed during the life of the contract.

 

Servicing Experience

 

AHFC services all of the receivables it originates, including receivables sold in securitizations and other structured financings, through its regional offices. AHFC has been the servicer for its public retail securitization program since its inception in 1992. We refer to AHFC in this capacity as the “servicer.” In addition to servicing retail installment sale contracts similar to the Receivables, AHFC also services automobile leases.

 

AHFC has a managed portfolio of retail installment sales contracts of approximately $30.1 billion as of March 31, 2023, which is comprised of approximately 82.52% new Honda and Acura automobiles and 17.48% used Honda and Acura automobiles.

 

AHFC, as the servicer, at its discretion and in accordance with its customary servicing practices, shall have the option to (i) grant extensions, rebates or adjustments on a Receivable, subject to the limitations set forth under “Description of the Transfer and Servicing Agreements—Servicing Procedures,” (ii) waive any prepayment charge, late payment charge or any other fees that may be collected in the ordinary course of servicing the Receivables, (iii) appoint a subservicer to perform all or any portion of its obligations as servicer under the sale and servicing agreement in accordance with the terms of the sale and servicing agreement and (iv) appoint a subcontractor, either at its own discretion or at the discretion of its service centers, to manage various aspects of the Receivables, such as collections, repossessions and liquidations. Any additional required information regarding any material third-party providers will be disclosed in subsequent required filings with the SEC.

 

For servicing and enforcement collection purposes, the servicer considers a retail installment sale contract to be past due or delinquent when the Obligor fails to make at least 90% of a Scheduled Payment on a cumulative basis (after giving effect to any past due payments) by the related due date; any portion of a Scheduled Payment not paid on the related due date automatically becomes due with the next scheduled payment. The servicer communicates the delinquency to the Obligor through a variety of methods, including telephone calls and mail. The servicer typically decides whether or not to repossess a vehicle when the account is 45 to 60 or more days past due, subject to the laws and regulations governing repossession in the state where the automobile is located.

 

The servicer holds repossessed automobiles in inventory to comply with any applicable statutory requirements for reinstatement and then sells those automobiles (generally within 90 days after repossession). The servicer’s Remarketing Center handles automobile sales for the servicer, including the sale of repossessed automobiles. The servicer consigns the repossessed automobiles to a local auction or to an independent transport company for transport to another auction location. Each auction site is expected to sell the automobile within 90 days of taking the automobile into inventory. Any deficiencies remaining after repossession and sale of the automobile or after the full charge-off of the receivable are pursued by or on behalf of the servicer to the extent practicable and legally permitted. We refer you to “Certain Legal Aspects of the Receivables—Deficiency Judgments and Excess Proceeds.” The servicer attempts to contact

 

 

Obligors and establish and monitor repayment schedules until the deficiencies are either paid in full or become impractical to pursue.

 

CREDIT RISK RETENTION

 

Pursuant to the credit risk retention rules, 17 C.F.R. Part 246, AHFC, as the sponsor, is required to retain an economic interest in the credit risk of the securitized Receivables, either directly or through one or more majority-owned affiliates. AHFC intends to satisfy this obligation with an “eligible vertical interest” in the form of its retention of an amount equal to at least 5% of the initial principal amount of each class of notes, and retention by the depositor, its wholly owned affiliate, of at least 5% of the initial principal amount of certificates issued by the issuing entity on the Closing Date. Each of AHFC and the depositor is required to retain and may not transfer (except to AHFC or another majority-owned affiliate of AHFC) or hedge its respective portion of such interest until the latest of (i) two years after the Closing Date, (ii) the date the pool balance is 33% or less of the Initial Pool Balance, and (iii) the date the aggregate principal amount of the notes is 33% or less of the original principal amount of the notes. AHFC may not hedge or finance the retained interest during this period except as permitted under applicable law. For a description of the priority of payments on the notes and the certificates, see “Payments on the Notes—Payment of Distributable Amounts” in this prospectus.

 

By retaining the “eligible vertical interest,” AHFC will be a noteholder of at least 5% of each class of notes and will be entitled to receive at least 5% of all payments of interest and principal made on each class of notes and, if any class of notes incurs losses, will bear at least 5% of those losses. Each class of notes retained as part of the “eligible vertical interest” will have the same terms as all other notes in that class; provided, that notes owned by AHFC will not be included for purposes of determining whether a required percentage of any class of notes have taken any action under the indenture or any other transaction document. For a description of the notes, and thus of the “eligible vertical interest,” and the credit enhancement available for notes, see “The Notes” and “Credit Enhancement” in this prospectus. By retaining the certificates, the depositor will be a certificateholder and will be entitled to receive 100% of all payments on the certificates. The material terms of the certificates are described in this prospectus under “The Certificates.”

 

The depositor initially will retain 100% of the certificates. AHFC expects that the certificates will have a face amount of $47,253,251.43, which is equal to approximately 2.50% of the Initial Pool Balance. The certificates represent 100% of the beneficial interest in the issuing entity.

 

If the percentage of each class of notes and the certificates retained by AHFC or the depositor on the Closing Date is materially different from the percentage described above, within a reasonable time after the Closing Date, the issuing entity will disclose such material difference on a Form 10-D filed under the CIK number of the issuing entity.

 

AHFC or the depositor may transfer all or a portion of the “eligible vertical interest” to AHFC or another majority-owned affiliate of AHFC after the Closing Date.

 

REPURCHASE REQUESTS

 

The transaction documents for prior pools of retail installment sale contracts that were securitized by AHFC contain covenants requiring the repurchase of an underlying receivable for the breach of a related representation or warranty that materially and adversely affects the interests of the noteholders and is not cured. During the three year period ending June 30, 2023, neither AHFC nor any of its affiliated securitizers have received a demand to repurchase any receivable underlying a securitization of retail installment sale contracts sponsored by AHFC. AHFC, as the securitizer to cover all affiliated securitizers, discloses all fulfilled and unfulfilled repurchase requests for receivables that were the subject of a demand to repurchase on SEC Form ABS-15G. Please refer to the Form ABS-15G filed by AHFC, on behalf of itself and its affiliated securitizers, on January 11, 2023. American Honda Finance Corporation’s CIK

 

 

number is 0000864270. Additional information regarding AHFC in its capacities as sponsor, originator, servicer and administrator may be found under “The Sponsor, Originator, Servicer and Administrator” and “Description of the Transfer and Servicing Agreements.”

 

AFFILIATIONS AND RELATED TRANSACTIONS

 

The trust and the depositor are affiliates of the sponsor. There is not currently, and there was not during the past two years, any material business relationship, agreement, arrangement, transaction or understanding that is or was entered into outside the ordinary course of business or is or was on terms other than would be obtained in an arm’s length transaction with an unrelated third party, between any of the depositor, the trust and the sponsor. The Delaware trustee and the owner trustee are affiliates, and one of the underwriters is an affiliate of the Delaware trustee and the owner trustee.

 

THE OWNER TRUSTEE

 

The Bank of New York Mellon is the owner trustee under the trust agreement. The Bank of New York Mellon is a New York banking corporation, and it has served as owner trustee for numerous asset-backed securitizations, including the structure referred to herein. The principal executive offices of The Bank of New York Mellon are located at 240 Greenwich Street, Floor 7 West, New York, New York 10286, Attention: Asset Backed Securities Unit - Honda Auto Receivables 2023-3.

 

In the ordinary course of business, The Bank of New York Mellon, The Bank of New York Mellon Trust Company, N.A., and BNY Mellon Trust of Delaware (collectively, “BNY Mellon”) are named as a defendant in legal actions. In connection with its role as trustee of certain residential mortgage-backed securitization (“RMBS”) transactions, BNY Mellon has been named as a defendant in a number of legal actions brought by RMBS investors. These lawsuits allege that the trustee had expansive duties under the governing agreements, including the duty to investigate and pursue breach of representation and warranty claims against other parties to the RMBS transactions. While it is inherently difficult to predict the eventual outcomes of pending actions, BNY Mellon denies liability and intends to defend the litigations vigorously.

 

For additional information regarding the roles and obligations of the owner trustee, see “Description of the Transfer and Servicing Agreements—Duties of the Owner Trustee, the Delaware Trustee and the Indenture Trustee.”

 

THE DELAWARE TRUSTEE

 

The Delaware trustee is BNY Mellon Trust of Delaware (“BNY Delaware”). BNY Delaware is a Delaware banking corporation and an affiliate of The Bank of New York Mellon, a New York banking corporation, which provides support services on its behalf in this transaction. Its principal place of business is located at 301 Bellevue Parkway, 3rd Floor, Wilmington, DE 19809, Attention: Corporate Trust Administration. BNY Delaware has acted as Delaware trustee on numerous asset-backed transactions, including the structure of the transaction referred to herein. You may contact BNY Delaware by calling (302) 791-3610.

 

In the ordinary course of business, The Bank of New York Mellon, The Bank of New York Mellon Trust Company, N.A., and BNY Mellon Trust of Delaware (collectively, “BNY Mellon”) are named as a defendant in legal actions. In connection with its role as trustee of certain RMBS transactions, BNY Mellon has been named as a defendant in a number of legal actions brought by RMBS investors. These lawsuits allege that the trustee had expansive duties under the governing agreements, including the duty to investigate and pursue breach of representation and warranty claims against other parties to the RMBS transactions. While it is inherently difficult to predict the eventual outcomes of pending actions, BNY Mellon denies liability and intends to defend the litigations vigorously.

 

 

For additional information regarding the roles and obligations of the Delaware trustee, see “Description of the Transfer and Servicing Agreements—Duties of the Owner Trustee, the Delaware Trustee and the Indenture Trustee.”

 

THE INDENTURE TRUSTEE

 

The indenture trustee is Citibank, N.A. (“Citibank”), a national banking association and wholly owned subsidiary of Citigroup Inc., a Delaware corporation. Citibank performs as indenture trustee through the agency and trust line of business, a part of issuer services. Citibank has primary corporate trust offices located in both New York and London. Citibank is a leading provider of corporate trust services offering a full range of agency, fiduciary, tender and exchange, depositary and escrow services. As of the end of the second quarter of 2023, Citibank Agency and Trust manages in excess of $8 trillion in fixed income and equity investments on behalf of over 3,000 corporations worldwide. Since 1987, Citibank Agency and Trust has provided corporate trust services for asset-backed securities containing pool assets consisting of airplane leases, auto loans and leases, boat loans, commercial loans, commodities, credit cards, durable goods, equipment leases, foreign securities, funding agreement backed note programs, truck loans, utilities, student loans and commercial and residential mortgages. As of the end of the second quarter of 2023, Citibank acts as indenture trustee and/or paying agent for approximately 253 various asset backed trusts supported by either auto loans or leases or equipment loans or leases.

 

For additional information regarding the roles and obligations of the indenture trustee, see “Description of the Transfer and Servicing Agreements—Duties of the Owner Trustee, the Delaware Trustee and the Indenture Trustee.”

 

LIMITATION OF LIABILITY AND RESIGNATION OF THE TRUSTEES

 

The depositor and its affiliates may maintain normal commercial banking relations with the owner trustee, the Delaware trustee and the indenture trustee and their affiliates. We sometimes collectively refer to the indenture trustee, the Delaware trustee and the owner trustee as the “trustees.”

 

Any trustee’s liability in connection with the issuance and sale of the securities is limited solely to the express obligations of that trustee set forth in the trust agreement, sale and servicing agreement or indenture, as applicable. Under the indenture, the indenture trustee, and its officers, directors, employees and agents, are indemnified by the administrator for all costs, losses, liabilities and expenses (including, but not limited to, attorney’s fees) incurred in connection with the performance of its duties, except those resulting from its own willful misconduct, negligence or bad faith. Under the trust agreement, (i) the owner trustee will not be held answerable or accountable under any circumstances except for those arising from its own willful misconduct, bad faith or gross negligence or for inaccuracies in any representations or warranties expressly made by the owner trustee and (ii) the Delaware trustee will not be held answerable or accountable under any circumstances except for those arising from its own willful misconduct, bad faith or gross negligence or for inaccuracies in any representations or warranties expressly made by the Delaware trustee. In addition, each of the Delaware trustee and the owner trustee has the right to seek adequate security or indemnities from the related certificateholders prior to the undertaking of any course of action requested by such certificateholders. Pursuant to the administration agreement, the administrator will provide the required indemnification to each trustee; however, if the administrator is unable to pay these obligations, they would be an obligation of the issuing entity. See “Description of the Transfer and Servicing Agreements—Administration Agreement.”

 

A trustee may resign at any time, in which event the issuing entity (in the case of the indenture trustee) or the administrator, or its successor, (in the case of the owner trustee or the Delaware trustee) will be obligated to appoint a successor thereto. In addition, AHFC, in its capacity as administrator under the administration agreement, which we refer to in this prospectus as the “administrator,” on behalf of the issuing entity, may also remove a trustee that becomes insolvent or otherwise ceases to be eligible to continue in that capacity under the trust agreement or indenture, as applicable. Under the administration

 

 

agreement, the administrator will be liable for any resulting expenses, but if the administrator is not able to pay, any transition expenses would become an obligation of the issuing entity. Any resignation or removal of a trustee and appointment of a successor trustee will not become effective until acceptance of the appointment by the successor.

 

For additional information regarding the roles and obligations of the trustees, see “Description of the Transfer and Servicing Agreements—Duties of the Owner Trustee, the Delaware Trustee and the Indenture Trustee.”

 

THE ASSET REPRESENTATIONS REVIEWER

 

Clayton Fixed Income Services LLC, a Delaware limited liability company, has been appointed as asset representations reviewer pursuant to an agreement among the sponsor, the servicer, the issuing entity and the asset representations reviewer. Clayton has been engaged as the asset representations reviewer on more than 600 auto and equipment loan, lease and dealer floorplan and credit card securitization transactions since 2015.

 

The asset representations reviewer is a wholly-owned subsidiary of Covius Services, LLC, and with its affiliates has provided independent due diligence loan review and servicer oversight services since 1989.  The asset representations reviewer and its affiliates are providers of targeted due diligence reviews of securitized assets and policies and procedures of originators and servicers to assess compliance with representations and warranties, regulatory and legal requirements, investor guidelines and settlement agreements. The asset representations reviewer and its affiliates have performed over 17 million loan reviews and provided ongoing services to over $2 trillion of securitization transactions on behalf of investors, sponsors, issuers and originators, including government sponsored enterprises and other governmental agencies. These services have been performed primarily on residential mortgage loan and residential mortgage-backed security transactions, although the asset representations reviewer and its affiliates have also performed these services for transactions involving auto loans, equipment leases, credit cards, commercial mortgage loans, student loans, timeshare loans and boat and recreational vehicle loans.

 

The asset representations reviewer is not affiliated with the sponsor, the depositor, the servicer, the indenture trustee, the owner trustee, the Delaware trustee, the underwriters or any of their affiliates, nor has the asset representations reviewer been hired by the sponsor or an underwriter to perform pre-closing due diligence work on the Receivables. The asset representation reviewer may not resign unless the asset representation reviewer is merged into or becomes an affiliate of the sponsor, the servicer, the indenture trustee, the owner trustee or any person hired by the sponsor or an underwriter to perform pre-closing due diligence work on the Receivables. Upon the occurrence of such an event, the asset representations reviewer shall promptly resign and the servicer shall appoint a successor asset representations reviewer. All reasonable costs and expenses incurred in connection with the required resignation of the asset representations reviewer and the appointment of a successor asset representations reviewer shall be paid by the predecessor asset representations reviewer.

 

The asset representations reviewer will be responsible for reviewing the Subject Receivables for compliance with the Pool Asset Representations. Under the asset representations review agreement, the asset representations reviewer will be entitled to be paid the fees and expenses set forth under “Description of the Transfer and Servicing Agreements—Asset Representations Review—Fees and Expenses for Asset Review.” The asset representations reviewer is required to perform only those duties specifically required of it under the asset representations review agreement, as described under “Description of the Transfer and Servicing Agreements—Asset Representations Review.” The servicer is required under the asset representation review agreement to provide the asset representation reviewer copies of the receivable files and to make available to the asset representation reviewer the related contracts and records maintained by such person during normal business hours upon reasonable prior written notice in connection with a review of the Receivables. The asset representations reviewer will be required to keep all information about the

 

 

Receivables obtained by it in confidence and may not disclose that information other than as required by the terms of the asset representations review agreement and applicable law.

 

The asset representations reviewer will not be liable to any person for any action taken, or not taken, in good faith under the asset representations review agreement or for errors in judgment. However, the asset representations reviewer will be liable for its willful misconduct, bad faith, breach of the asset representations review agreement or negligence in performing its obligations thereunder. The sponsor will indemnify the asset representations reviewer and its officers, directors, employees and agents for all costs, expenses, losses, damages and liabilities arising from the performance of the asset representations reviewer’s obligations under the asset representations review agreement (including the costs and expenses of defending itself against any loss, damage or liability), but excluding any cost, expense, loss, damage or liability resulting from the asset representations reviewer’s willful misconduct, bad faith or negligence, failure to comply with requirements of applicable laws or breach of any of its representations, warranties, covenants or other obligations under the asset representations review agreement. The fees and expenses and indemnity payments of the asset representations reviewer due pursuant to the asset representations review agreement will be paid by the sponsor under the asset representations review agreement. To the extent these fees and expenses and indemnity payments are unpaid for at least 60 days, they will be payable out of Available Amounts as described in “Payments on the Notes—Payment of Distributable Amounts.”

 

THE RECEIVABLES

 

General

 

The property of the trust will consist of the Receivables. The Receivables were originated by Dealers in accordance with AHFC’s requirements under the Dealer Agreements. The Receivables evidence the indirect financing made available by AHFC to the Obligors. The Receivables are secured by the Financed Vehicles and all principal and interest payments due on or after the Cutoff Date and other property specified in the related Receivable.

 

AHFC purchased the Receivables from the Dealers in the ordinary course of business in accordance with AHFC’s underwriting guidelines. For a more detailed description of AHFC’s underwriting guidelines, we refer you to “The Sponsor, Originator, Servicer and Administrator—Origination.”

 

On or before the Closing Date, AHFC will sell the Receivables to the depositor pursuant to the receivables purchase agreement. The depositor will, in turn, sell the Receivables to the trust on the Closing Date pursuant to the sale and servicing agreement. For a description of the agreements governing the sale and assignment of the Receivables to the trust, see “Description of the Transfer and Servicing Agreements—Sale and Assignment of Receivables; Representations and Warranties.”

 

AHFC will continue to service the Receivables in its capacity as servicer.

 

Characteristics of the Receivables

 

The Receivables to be held by the trust will be selected from those motor vehicle retail installment sale contracts in AHFC’s portfolio that meet several criteria as of the Cutoff Date. These criteria provide that each Receivable:

 

·

was originated by a dealer located in the United States and the Obligor is not (according to the records of AHFC) a federal, state or local governmental entity;

 

·

has a contractual annual percentage rate specified in the promissory note associated with each Receivable (which we refer to in this prospectus as the “APR”) of at least 0.50%;

 

·

has an original term to maturity of not more than 72 months;

 

·

is not more than 30 days past due;

 

 

·

has been entered into by an Obligor that was not in bankruptcy proceedings or is bankrupt or insolvent (according to the records of AHFC);

 

·

is attributable to the purchase of a new or used Honda or Acura automobile or light-duty truck and is secured by that automobile;

 

·

provides for the related monthly payment on a Financed Vehicle owed by the related Obligor (each such payment, a “Scheduled Payment”) according to the simple interest method (as described below); and

 

·

except as otherwise permitted under the sale and servicing agreement, provides for scheduled monthly payments that fully amortize the amount financed by such Receivable over its original term (except that the first or last payment in the life of the Receivable may be minimally different from the level payment).

 

Payments on Receivables using the “simple interest method” will be applied first to interest accrued through the date immediately preceding the date of payment and then to unpaid principal. Accordingly, if an Obligor pays an installment before its due date, the portion of the payment allocable to interest for the payment period will be less than if the payment had been made on the due date, the portion of the payment applied to reduce the Principal Balance will be correspondingly greater, and the Principal Balance will be amortized more rapidly than scheduled.

 

The ability of the servicer to make modifications on the Receivables is not expected to have a material impact on the distributions on the notes described in this prospectus. For a description of the servicer’s ability to make modifications to the Receivables, see “Description of the Transfer and Servicing Agreements—Servicing Procedures.”

 

No selection procedures believed to be adverse to the noteholders will be utilized in selecting the Receivables from qualifying retail installment sale contracts or from the receivables in either pool. For a description of AHFC’s loss and delinquency experience on its managed pool portfolio, see “The Sponsor, Originator, Servicer and Administrator—Servicing Experience.”

 

Pool Underwriting

 

The pool of receivables for the trust consists of the Receivables sold on or before the Closing Date by AHFC to the depositor pursuant to the receivables purchase agreement and subsequently sold by the depositor to the trust pursuant to the sale and servicing agreement.

 

The Receivables have been originated by Dealers in accordance with AHFC’s requirements and subsequently purchased by AHFC in the ordinary course of business from Dealers pursuant to Dealer Agreements. The Receivables evidence the indirect financing made available by AHFC to the related Obligors in connection with the purchase by such Obligors of the related Financed Vehicles. AHFC purchases Receivables from Dealers originated in accordance with AHFC’s underwriting guidelines and credit standards, as described under “The Sponsor, Originator, Servicer and Administrator—Origination.”

 

The Receivables were selected from AHFC’s portfolio of automobile and/or light-duty truck retail installment sales contracts that meet several criteria as described above under “The Receivables—Characteristics of the Receivables.”

 

Any Receivable for which AHFC’s records as of the Cutoff Date indicate that the related obligor is currently in an extension period has been excluded from the receivables pool.

 

 

Composition of the Receivables as of the Cutoff Date

 

Aggregate Principal Balance	$1,889,359,251.43
Number of Receivables	84,946
Average Principal Balance	$22,241.89
Range of Principal Balances	$1,002.38 to $82,477.19
Average Original Amount Financed	$29,713.48
Range of Original Amount Financed	$3,715.72 to $97,437.60
Weighted Average APR(1)	4.00%
Range of APRs	0.75% to 23.99%
Weighted Average Original Term to Maturity(1)	61.62 months
Range of Stated Original Terms to Maturity	24 months to 72 months
Weighted Average Remaining Term to Maturity(1)	49.25 months
Range of Remaining Terms to Maturity	7 months to 70 months
Percentage by Principal Balance of Receivables of Used Automobiles	14.29%
Percentage by Principal Balance of Receivables of New Automobiles	85.71%
Percentage by Principal Balance of Receivables of Honda Automobiles	82.77%
Percentage by Principal Balance of Receivables of Acura Automobiles	17.23%
Range of FICO scores(2)(3)	408 to 900
Non-Zero Weighted Average FICO score(1)(2)(3)	769

 

(1)

Weighted by Pool Balance as of the Cutoff Date.

 

(2)

Non-zero weighted average FICO score and the range of FICO scores are calculated excluding accounts for which we do not have a FICO score.

 

(3)

FICO scores are shown for portfolio comparative purposes only. The FICO score may not have been used in the original credit decision process.

 

 

Distribution of the Receivables by APR as of the Cutoff Date
(Percentages may not add to 100.00% due to rounding)

 

Range of APRs (%)		Number of Receivables				Percentage of Aggregate Number of Receivables				Pool Balance				Percentage of Pool Balance				Non-Zero Weighted Average FICO Scores(1)(2)
0.01 - 1.00			5,607				6.60%			$	91,530,871.29				4.84%				791
1.01 - 2.00			18,676				21.99				313,752,457.50				16.61				787
2.01 - 3.00			13,493				15.88				285,844,358.97				15.13				770
3.01 - 4.00			17,711				20.85				456,794,235.01				24.18				781
4.01 - 5.00			13,168				15.50				346,590,785.23				18.34				772
5.01 - 6.00			7,888				9.29				209,287,051.94				11.08				742
6.01 - 7.00			3,709				4.37				87,686,134.97				4.64				735
7.01 - 8.00			2,409				2.84				54,706,993.97				2.90				737
8.01 - 9.00			890				1.05				19,054,055.38				1.01				691
9.01 - 10.00			450				0.53				8,998,304.43				0.48				660
10.01 - 11.00			299				0.35				5,493,491.19				0.29				645
11.01 - 12.00			231				0.27				3,780,018.85				0.20				626
12.01 - 13.00			142				0.17				2,062,867.82				0.11				611
13.01 - 14.00			71				0.08				1,018,828.54				0.05				607
14.01 - 15.00			42				0.05				587,475.47				0.03				610
15.01 - 16.00			35				0.04				433,785.34				0.02				579
16.01 - 17.00			30				0.04				497,142.90				0.03				582
17.01 - 18.00			32				0.04				396,156.35				0.02				582
18.01 - 19.00			29				0.03				401,874.75				0.02				572
19.01 - 20.00			17				0.02				206,941.66				0.01				549
20.01 - 21.00			8				0.01				76,761.29				0.00(3)				571
21.01 - 22.00			4				0.00(3)				61,654.20				0.00(3)				586
22.01 - 23.00			3				0.00(3)				61,743.87				0.00(3)				543
23.01 - 24.00			2				0.00(3)				35,260.51				0.00(3)				571
Total:			84,946				100.00%			$	1,889,359,251.43				100.00%				769

 

(1)

Non-zero weighted average FICO scores are weighted by Pool Balance as of the Cutoff Date and calculated excluding accounts for which we do not have a FICO score.

 

(2)

FICO scores are shown for portfolio comparative purposes only. The FICO score may not have been used in the original credit decision process.

 

(3)

Less than 0.005% but greater than zero.

 

 

Distribution of the Receivables by Top 25 States as of the Cutoff Date⁽¹⁾ 
(Percentages may not add to 100.00% due to rounding)

 

Distribution of the Receivables by State(1)		Number of Receivables				Percentage of Aggregate Number of Receivables				Pool Balance				Percentage of Pool Balance				Weighted Average APR(2)				Non-Zero Weighted Average FICO Scores(3)(4)
California			14,420				16.98%			$	326,684,183.57				17.29%				4.23%				750
Texas			6,877				8.10				186,721,618.99				9.88				4.30				761
Pennsylvania			8,062				9.49				140,621,583.06				7.44				3.22				786
Ohio			5,071				5.97				105,271,307.71				5.57				3.79				781
Illinois			4,045				4.76				93,302,605.07				4.94				4.08				774
Florida			4,167				4.91				93,261,951.04				4.94				4.19				761
New Jersey			4,087				4.81				87,699,237.73				4.64				4.14				772
North Carolina			3,503				4.12				79,624,035.40				4.21				4.03				766
New York			3,514				4.14				72,861,047.52				3.86				4.03				773
Virginia			2,654				3.12				63,164,100.45				3.34				4.03				780
Georgia			2,478				2.92				60,322,863.36				3.19				4.21				763
Arizona			1,522				1.79				35,158,316.86				1.86				4.01				761
Massachusetts			1,651				1.94				33,966,519.99				1.80				4.13				778
Tennessee			1,415				1.67				33,471,972.05				1.77				3.96				775
South Carolina			1,442				1.70				31,889,305.46				1.69				4.04				770
Indiana			1,398				1.65				30,634,980.19				1.62				4.05				777
Louisiana			1,292				1.52				30,606,759.39				1.62				4.25				751
Washington			1,234				1.45				29,840,034.17				1.58				3.74				779
Wisconsin			1,222				1.44				26,046,664.78				1.38				3.78				792
Missouri			1,236				1.46				25,740,095.07				1.36				3.68				782
Minnesota			1,142				1.34				25,516,844.62				1.35				3.65				783
Connecticut			1,271				1.50				25,436,203.26				1.35				3.86				771
Michigan			1,056				1.24				22,763,428.47				1.20				3.71				779
Colorado			931				1.10				22,213,487.30				1.18				3.81				780
Alabama			867				1.02				20,228,255.93				1.07				3.93				761
Other			8,389				9.88				186,311,849.99				9.86				3.88				776
Total:			84,946				100.00%			$	1,889,359,251.43				100.00%				4.00%				769

 

(1)

Based solely on the billing address of the related Obligor.

 

(2)

Weighted by Pool Balance as of the Cutoff Date.

 

(3)

Non-zero weighted average FICO scores are weighted by Pool Balance as of the Cutoff Date and calculated excluding accounts for which we do not have a FICO score.

 

(4)

FICO scores are shown for portfolio comparative purposes only. The FICO score may not have been used in the original credit decision process.

 

 

Distribution of the Receivables by Principal Balance as of the Cutoff Date
(Percentages may not add to 100.00% due to rounding)

 

Range of Principal Balances ($)		Number of Receivables				Percentage of Aggregate Number of Receivables				Pool Balance				Percentage of Pool Balance				Weighted Average APR(1)				Non-Zero Weighted Average FICO Scores(2)(3)
0.01 - 5,000.00			2,276				2.68%			$	8,106,299.18				0.43%				3.72%				771
5,000.01 - 10,000.00			9,260				10.90				72,366,374.75				3.83				3.30				776
10,000.01 - 15,000.00			13,576				15.98				170,884,903.57				9.04				3.30				774
15,000.01 - 20,000.00			14,923				17.57				261,186,745.38				13.82				3.45				772
20,000.01 - 25,000.00			13,363				15.73				300,077,672.94				15.88				3.70				771
25,000.01 - 30,000.00			11,537				13.58				316,272,447.65				16.74				4.16				766
30,000.01 - 35,000.00			8,666				10.20				280,086,133.23				14.82				4.46				763
35,000.01 - 40,000.00			5,384				6.34				200,821,393.56				10.63				4.50				764
40,000.01 - 45,000.00			2,956				3.48				124,895,956.79				6.61				4.47				769
45,000.01 - 50,000.00			1,551				1.83				73,190,110.68				3.87				4.38				772
50,000.01 - 55,000.00			752				0.89				39,237,594.10				2.08				4.54				771
55,000.01 - 60,000.00			411				0.48				23,507,104.77				1.24				4.41				772
60,000.01 - 65,000.00			192				0.23				11,943,804.77				0.63				4.42				780
65,000.01 - 70,000.00			75				0.09				5,014,956.79				0.27				4.66				767
70,000.01 - 75,000.00			16				0.02				1,147,779.77				0.06				4.74				812
75,000.01 - 80,000.00			7				0.01				537,496.31				0.03				5.15				776
80,000.01 - 85,000.00			1				0.00(4)				82,477.19				0.00(4)				6.34				776
Total:			84,946				100.00%			$	1,889,359,251.43				100.00%				4.00%				769

 

(1)

Weighted by Pool Balance as of the Cutoff Date.

 

(2)

Non-zero weighted average FICO scores are weighted by Pool Balance as of the Cutoff Date and calculated excluding accounts for which we do not have a FICO score.

 

(3)

FICO scores are shown for portfolio comparative purposes only. The FICO score may not have been used in the original credit decision process.

 

(4)

Less than 0.005% but greater than zero.

 

 

Distribution of the Receivables by Original Amount Financed as of the Cutoff Date
(Percentages may not add to 100.00% due to rounding)

 

Range of Original Amount Financed ($)		Number of Receivables				Percentage of Aggregate Number of Receivables				Pool Balance				Percentage of Pool Balance				Weighted Average APR(1)				Non-Zero Weighted Average FICO Scores(2)(3)
0.01 - 5,000.00			25				0.03%			$	84,633.67				0.00%(4)				3.85%				779
5,000.01 - 10,000.00			1,291				1.52				7,722,214.96				0.41				4.03				776
10,000.01 - 15,000.00			5,076				5.98				44,842,910.65				2.37				4.03				779
15,000.01 - 20,000.00			10,455				12.31				127,906,603.93				6.77				3.97				780
20,000.01 - 25,000.00			13,914				16.38				218,508,790.80				11.57				3.76				777
25,000.01 - 30,000.00			15,507				18.26				307,549,628.81				16.28				3.88				771
30,000.01 - 35,000.00			14,340				16.88				346,288,421.84				18.33				4.05				764
35,000.01 - 40,000.00			10,402				12.25				298,818,171.76				15.82				4.16				760
40,000.01 - 45,000.00			6,232				7.34				209,409,691.91				11.08				4.14				764
45,000.01 - 50,000.00			3,694				4.35				139,941,619.77				7.41				3.98				769
50,000.01 - 55,000.00			1,932				2.27				82,323,037.03				4.36				3.99				772
55,000.01 - 60,000.00			1,056				1.24				49,714,594.32				2.63				4.04				768
60,000.01 - 65,000.00			534				0.63				27,617,778.84				1.46				4.00				773
65,000.01 - 70,000.00			307				0.36				17,178,810.33				0.91				4.01				780
70,000.01 - 75,000.00			122				0.14				7,463,701.07				0.40				4.16				777
75,000.01 - 80,000.00			40				0.05				2,603,791.34				0.14				4.33				791
80,000.01 - 85,000.00			15				0.02				1,077,737.64				0.06				5.08				779
>=85,000.01			4				0.00(4)				307,112.76				0.02				4.62				783
Total:			84,946				100.00%			$	1,889,359,251.43				100.00%				4.00%				769

 

(1)

Weighted by Pool Balance as of the Cutoff Date.

 

(2)

Non-zero weighted average FICO scores are weighted by Pool Balance as of the Cutoff Date and calculated excluding accounts for which we do not have a FICO score.

 

(3)

FICO scores are shown for portfolio comparative purposes only. The FICO score may not have been used in the original credit decision process.

 

(4)

Less than 0.005% but greater than zero.

 

 

Distribution of the Receivables by Original Term to Maturity as of the Cutoff Date
(Percentages may not add to 100.00% due to rounding)

 

Range of Original Term to Maturity (months)		Number of Receivables				Percentage of Aggregate Number of Receivables				Pool Balance				Percentage of Pool Balance				Weighted Average APR(1)				Non-Zero Weighted Average FICO Scores(2)(3)
13 - 24			100				0.12%			$	923,858.04				0.05%				3.91%				770
25 - 36			1,294				1.52				17,955,444.61				0.95				3.19				780
37 - 48			12,421				14.62				232,474,620.39				12.30				3.00				792
49 - 60			42,163				49.64				898,976,414.92				47.58				3.71				785
61 - 72			28,968				34.10				739,028,913.47				39.12				4.69				741
Total:			84,946				100.00%			$	1,889,359,251.43				100.00%				4.00%				769

 

(1)

Weighted by Pool Balance as of the Cutoff Date.

 

(2)

Non-zero weighted average FICO scores are weighted by Pool Balance as of the Cutoff Date and calculated excluding accounts for which we do not have a FICO score.

 

(3)

FICO scores are shown for portfolio comparative purposes only. The FICO score may not have been used in the original credit decision process.

 

Distribution of the Receivables by Remaining Term to Maturity as of the Cutoff Date
(Percentages may not add to 100.00% due to rounding)

 

Range of Remaining Term to Maturity (months)		Number of Receivables				Percentage of Aggregate Number of Receivables				Pool Balance				Percentage of Pool Balance				Weighted Average APR(1)				Non-Zero Weighted Average FICO Scores(2)(3)
1 - 12			690				0.81%			$	2,972,231.86				0.16%				5.12%				722
13 - 24			4,480				5.27				37,256,587.41				1.97				3.40				766
25 - 36			18,159				21.38				257,104,152.21				13.61				2.46				781
37 - 48			24,394				28.72				508,539,186.48				26.92				3.16				777
49 - 60			27,402				32.26				759,632,454.60				40.21				4.40				772
61 - 72			9,821				11.56				323,854,638.87				17.14				5.67				738
Total:			84,946				100.00%			$	1,889,359,251.43				100.00%				4.00%				769

 

(1)

Weighted by Pool Balance as of the Cutoff Date.

 

(2)

Non-zero weighted average FICO scores are weighted by Pool Balance as of the Cutoff Date and calculated excluding accounts for which we do not have a FICO score.

 

(3)

FICO scores are shown for portfolio comparative purposes only. The FICO score may not have been used in the original credit decision process.

 

 

Distribution of the Receivables by Credit Grade at Time of Origination as of the Cutoff Date
(Percentages may not add to 100.00% due to rounding)

 

Credit Grade(1)			Number of Receivables				Percentage of Aggregate Number of Receivables				Pool Balance				Percentage of Pool Balance				Non-Zero Weighted Average FICO Scores(2)(3)(4)				Range of FICO Scores(3)(4)
A				67,080				78.97%			$	1,454,779,028.26				77.00%				794				469 to 900
B				9,990				11.76				245,550,147.64				13.00				701				510 to 887
C				6,404				7.54				159,854,493.96				8.46				673				432 to 877
D				1,472				1.73				29,175,581.57				1.54				618				408 to 750
Total:				84,946				100.00%			$	1,889,359,251.43				100.00%				769				408 to 900

 

(1)

Credit Grade is based on AHFC’s classification using proprietary internal scoring methodology in evaluating customers’ credit quality. We refer you to “The Sponsor, Originator, Servicer and Administrator—Origination” for a description of AHFC’s scoring methodology.

 

(2)

Weighted by Pool Balance as of the Cutoff Date.

 

(3)

Non-zero weighted average FICO scores and the range of FICO scores are calculated excluding accounts for which we do not have a FICO score.

 

(4)

FICO scores are shown for portfolio comparative purposes only. The FICO score may not have been used in the original credit decision process.

 

Distribution of the Receivables by Model as of the Cutoff Date
(Percentages may not add to 100.00% due to rounding)

 

Model			Number of Receivables				Percentage of Aggregate Number of Receivables				Pool Balance				Percentage of Pool Balance				Weighted Average APR(1)				Non-Zero Weighted Average FICO Scores(2)(3)
CRV				21,793				25.66%			$	438,867,703.52				23.23%				4.00%				773
Accord				13,465				15.85				284,876,326.95				15.08				4.29				744
Civic				13,787				16.23				241,985,074.03				12.81				4.72				742
Pilot				6,999				8.24				198,291,418.42				10.50				3.42				778
MDX				5,221				6.15				175,301,625.30				9.28				3.71				799
HR-V				6,666				7.85				122,404,069.61				6.48				4.18				749
Odyssey				4,174				4.91				116,407,361.73				6.16				4.37				783
RDX				3,194				3.76				79,977,354.90				4.23				3.61				795
Ridgeline				2,888				3.40				76,291,441.46				4.04				3.07				792
Passport				2,528				2.98				68,550,999.98				3.63				3.48				784
Integra				1,183				1.39				32,194,126.96				1.70				4.39				778
TLX				1,379				1.62				31,154,372.33				1.65				3.35				785
Other(4)				1,669				1.96				23,057,376.24				1.22				3.53				755
Total:				84,946				100.00%			$	1,889,359,251.43				100.00%				4.00%				769

 

(1)

Weighted by Pool Balance as of the Cutoff Date.

 

(2)

Non-zero weighted average FICO scores are weighted by Pool Balance as of the Cutoff Date and calculated excluding accounts for which we do not have a FICO score.

 

(3)

FICO scores are shown for portfolio comparative purposes only. The FICO score may not have been used in the original credit decision process.

 

(4)

Individual models in this category make up less than 1.00% of the Pool Balance as of the Cutoff Date.

 

 

Third-Party Collections and Repossessions

 

AHFC conducts repossessions of automobiles between 30 and 120 days of delinquency. Efforts are made to collect and maintain the account in good standing prior to ordering repossession. However, when normal collection efforts fail, AHFC may resort to repossession. AHFC uses independent contractors/repossession agencies when repossessing automobiles.

 

Post-repossession and charged-off accounts are sent to AHFC’s centralized operation, the Recovery and Bankruptcy Center (the “RB Center”), for resolution. After repossession, each service center and the RB Center follow specific procedures conforming to both federal and state regulations pertaining to the sale and disposal of repossessed automobiles. Repossessed automobiles are normally sold at dealer auctions no later than 90 days after repossession, and typically 40 to 50 days after the legal redemption period mandated by applicable statute. The accounts are tracked and reported by a recovery management system created and installed by Fair Isaac Corporation.

 

The RB Center’s staff sends out a series of letters notifying the charged-off account holders of their deficient balance. According to our operating policy, if there is no response, the accounts generally are placed with outside collection agencies.

 

All prospective collection agencies submit an RFI (request for information) and are scored through the Kepner Tregoe assessment process. Agencies that meet the criteria are required to make a formal presentation to RB Center management. Those scoring highest on the Kepner Tregoe assessment, and considered qualified have site visits made by RB Center management. The agencies must execute a contract with AHFC and comply with mutually agreed upon service level agreements. The contractors/repossession agencies must provide current licenses and have active membership in one or more approved recovery associations. Agencies must be bonded and have an established code of ethics that conform to industry standards. The agencies must also produce adequate insurance coverage, usually in the form of a garage liability policy that protects AHFC from claims resulting from the repossessor’s acts during the repossession. Regular reporting on accounts and a scoring system, developed by AHFC, are also used to monitor effectiveness of the agency. Operational issues or important matters are discussed in monthly conference calls with RB Center management. Annual site audits are conducted to ensure compliance of the contract and service levels. If the primary agency is not successful with the recovery in 180 days of placement, responsibility for the account is transferred to a secondary collection agency. Tertiary and quaternary agencies may also be used.

 

 

DELINQUENCIES, REPOSSESSIONS AND LOAN LOSS INFORMATION

 

Set forth below is information concerning AHFC’s experience with respect to its entire portfolio of new and used Honda and Acura automobile retail installment sale contracts (excluding balloon contracts), which includes contracts sold by but still being serviced by AHFC. Credit losses are an expected cost of extending credit and are considered in AHFC’s rate-setting process. AHFC’s strategy is to minimize credit losses while providing financing support for the sale of new or used Honda and Acura automobiles.

 

Except in limited circumstances, AHFC establishes an allowance for expected credit losses and deducts amounts reflecting charge-offs. For retail financing, the account balance related to a retail installment sale contract is charged-off when the contract has been delinquent for 120 days, unless AHFC has repossessed the collateral associated with the contract. In these cases, the account balances are not charged-off until AHFC has either sold the repossessed automobile or held it in repossession inventory for more than 90 days. AHFC credits any recoveries from gross charge-offs related to a retail installment sale contract.

 

Delinquency, repossession and loss experience may be influenced by a variety of economic and geographic conditions and other factors beyond the control of AHFC. There is no assurance that AHFC’s delinquency, repossession and loss experience with respect to its retail installment sale contracts, or the experience of the trust with respect to the contracts, will be similar to that set forth below, particularly during periods of economic disruption or downturn. See “Risk Factors—The geographic concentration of the obligors and varying economic circumstances and other factors of the receivables in specific areas may increase the risk of loss on your investment”. Accordingly, the delinquency, repossession and net loss percentages would be expected to be higher than those shown if a group of receivables were isolated at a period in time and the delinquency, repossession and net loss data showed the activity only for that isolated group over the periods indicated.

 

 

Delinquency Experience⁽¹⁾⁽⁵⁾
(Dollars In Thousands)

 

		At March 31,
		2023				2022				2021				2020				2019
Principal Amount Outstanding(2)		$	30,094,598			$	30,678,359			$	32,646,002			$	29,791,265			$	30,298,663
Delinquencies(3)
31 – 60 Days		$	292,386			$	247,162			$	176,868			$	279,243			$	248,391
61 – 90 Days		$	63,456			$	65,682			$	42,316			$	62,100			$	49,257
91 – 120 Days		$	14,752			$	14,020			$	8,320			$	15,670			$	11,873
121 Days or more		$	99			$	137			$	23			$	143			$	49
Repossessions(4)		$	31,799			$	24,097			$	36,007			$	56,417			$	48,640
Total Delinquencies and Repossessions		$	402,492			$	351,098			$	263,534			$	413,574			$	358,211
Total Delinquencies and Repossessions as a Percentage of Principal Amount Outstanding			1.34	%			1.14	%			0.81	%			1.39	%			1.18	%

 

		At March 31,
		2023				2022				2021				2020				2019
Units Outstanding			1,707,298				1,804,163				1,940,190				1,860,182				1,880,277
Delinquencies-Units
31 – 60 Days			16,310				14,010				10,029				16,108				14,136
61 – 90 Days			3,506				3,674				2,352				3,556				2,790
91 – 120 Days			821				825				551				959				777
121 Days or more			6				6				1				6				4
Repossessions-Units			1,293				1,084				1,577				2,485				2,154
Total Delinquencies and Repossessions-Units			21,936				19,599				14,510				23,114				19,861
Total Delinquencies and Repossessions as a Percentage of Units Outstanding			1.28	%			1.09	%			0.75	%			1.24	%			1.06	%

 

	(1)	Includes contracts that have been sold but are still being serviced by AHFC.
	(2)	Remaining principal balance and unearned finance charges for all outstanding contracts.
	(3)	For the purposes of determining whether a contract is delinquent, payment is generally considered to have been made upon receipt of 90% of the sum of the current monthly payment plus any overdue monthly payments. Delinquent amounts presented are the aggregated principal balances of delinquent finance receivables.
	(4)	Amounts shown represent the outstanding principal balance for contracts for which the related automobile had been repossessed and not yet liquidated.
	(5)	Totals may not add exactly due to rounding.

 

 

Net Credit Loss and Repossession Experience^(1)(4)(6)
(Dollars in Thousands)

 

		For the Fiscal Year Ended March 31,
		2023				2022				2021				2020				2019
Principal Amount Outstanding(2)		$	30,094,598			$	30,678,359			$	32,646,002			$	29,791,265			$	30,298,663
Average Principal Amount Outstanding(3)		$	29,129,084			$	32,844,749			$	31,066,216			$	30,422,586			$	29,307,846
Number of Contracts Outstanding			1,707,298				1,804,163				1,940,190				1,860,182				1,880,277
Average Number of Contracts Outstanding(3)			1,712,092				1,906,840				1,896,957				1,877,319				1,860,116
Number of Repossessions			7,469				8,086				9,231				16,472				14,366
Number of Repossessions as a Percentage of the Average Number of Contracts Outstanding(A)			0.44	%			0.42	%			0.49	%			0.88	%			0.77	%
Gross Charge-Offs(4)		$	141,658			$	108,677			$	190,163			$	237,761			$	212,280
Recoveries(5)		$	77,252			$	74,953			$	101,690			$	84,813			$	77,482
Net Losses		$	64,406			$	33,724			$	88,472			$	152,949			$	134,799
Net Losses as a Percentage of Average Principal Amount Outstanding(A)			0.22	%			0.10	%			0.28	%			0.50	%			0.46	%

 

	(A)	Annualized.
	(1)	Includes contracts that have been sold but are still being serviced by AHFC.
	(2)	Remaining principal balance and unearned finance charges for all outstanding contracts.
	(3)	Average of the principal amounts or number of contracts, as the case may be, is calculated for a period by dividing the total monthly amounts by the number of months in the period.
	(4)	Amount charged-off is the remaining principal balance, excluding any expenses associated with collection, repossession or disposition of the related automobile, plus earned but not yet received finance charges, net of any proceeds collected prior to charge-off.
	(5)	Proceeds received on previously charged-off contracts.
	(6)	Totals may not add exactly due to rounding.

 

 

STATIC POOLS

 

You can find published charts that reflect the static pool performance data of previous public securitizations of the sponsor on a Form 8-K filed with the SEC and dated August 9, 2023, which may be found under American Honda Receivables LLC’s CIK 0000890975. All of the information therein is incorporated by reference into, and deemed to be part of, this prospectus and the registration statement to which this prospectus relates. We caution you that the pool of Receivables described in this prospectus may not perform in a similar manner to the receivables in other trusts.

 

AHFC’s underwriting standards and procedures have remained stable over time; thus, the prior securitized portfolios are generally comparable to the pool of receivables described in this prospectus. Nevertheless, the original characteristics of each prior securitized portfolio will likely differ in certain respects from the pool of receivables described in this prospectus. Additionally, recent changes in economic, social and geographic conditions may have a greater impact on the losses, prepayments and delinquencies for the pool of receivables described in the prospectus, which may differ from the information shown on Form 8-K for prior securitized portfolios. To further understand how differing pool characteristics and changing conditions could impact performance, see “Risk Factors—Recent economic developments may adversely affect the performance and market value of your notes” and “Risk Factors—Historical loss experience may not accurately predict the likelihood of losses on the receivables.”

 

DEPOSITOR REVIEW OF RECEIVABLES

 

The depositor performed a review of the pool of Receivables in order to provide reasonable assurance that the information contained in this prospectus, including information incorporated by reference from the related Form ABS-EE, regarding the pool of Receivables is accurate in all material respects. The Form ABS-EE includes the asset data file (as defined under “Asset-Level Data for the Receivables”) and the asset related document. This review consisted of an underwriting review, eligibility review, contract review, and a review of the disclosures concerning the assets in this prospectus. The depositor consulted with and was assisted by appropriate securitization personnel of AHFC in performing the review and confirmed with senior management that they performed a comprehensive review of the information about the Receivables contained in this prospectus. The depositor and AHFC designed the nature and extent of the procedures used for the receivables review. Portions of the review of legal matters and the review of statistical information were performed by AHFC personnel with the assistance of third parties engaged by the depositor and AHFC. In addition, the descriptions of the general information about the Receivables was reviewed and confirmed as accurate by relevant personnel at AHFC. The depositor takes full responsibility for the review of the Receivables and attributes all findings and conclusions of the review to itself.

 

As described under “The Sponsor, Originator, Servicer and Administrator—Origination” and “The Receivables—Pool Underwriting”, the pool of Receivables being sold to the trust was underwritten in accordance with the originator’s underwriting guidelines.

 

AHFC performed a review of the receivables to confirm that they satisfy the criteria set forth in this prospectus under “The Receivables”. Manual cross-checks were performed to ensure that the applicable systematic and manual filters, which are designed to ensure that the pool conforms with the established characteristics criteria, were being applied accurately. A review was performed to confirm that the information in AHFC’s data tape and asset data file accurately matched the individual receivables files. Both the data tape and asset data file are electronic records maintained by AHFC, which includes certain attributes of the Receivables compiled by AHFC’s system.

 

A random sample of 287 receivables files was selected from the initial data tape. For each selected receivable file, 14 different data points were compared to confirm that the attributes of such receivable files conform to the applicable information on the aggregate initial data tape of 111,994 records. In addition, 10 different data points from the asset data file were reviewed. Of those 10 data points, 6 were compared to the receivable files, 2 were checked against AHFC’s system and 2 were recomputed to confirm their accuracy.

 

 

The final pool aggregate data tape containing 84,946 records included 263 of the sampled receivables files. A decrease in the sample size is due to the normal monthly activity of the loans, along with a decrease of receivables no longer meeting the eligibility criteria. There was one receivable that had two attributes in the related contract that did not match AHFC’s system, which led to two exceptions. The exceptions were immaterial, and the receivable was excluded from the pool.

 

The composition and stratification tables relating to the pool presented under “Composition of the Receivables as of the Cutoff Date” as well as the credit quality tables under “Delinquencies, Repossessions and Loan Loss Information” were created by AHFC systems and were reviewed by multiple parties.  No discrepancies in such pool composition and stratification tables were found and the depositor takes full responsibility for the contents thereof.

 

The depositor’s review of the Receivables, including the initial asset-level data, is supported by AHFC’s extensive compliance procedures used in the day-to-day operation of its business. These procedures include regular audits of key business functions, including receivables contract purchasing, servicing and systems processing, controls to verify compliance with procedures and quality assurance reviews for credit decisions, contract purchases and securitization processes. In addition, AHFC has an integrated network of computer applications to make certain that information about the Receivables is accurately captured and maintained in its receivables files and other systems. These computer systems are subject to change control processes, automated controls testing and control review programs to determine whether systems controls are operating effectively and accurately. All of these controls and procedures ensure integrity of data and information and accuracy of securitization disclosures.

 

After completion of the review described above, the depositor has concluded that it has reasonable assurance that the disclosure about the Receivables, including the initial asset-level data, is accurate in all material respects.

 

ASSET-LEVEL DATA FOR THE RECEIVABLES

 

The issuing entity has provided asset-level data and an asset related document regarding the pool of Receivables described in this prospectus, which will be owned by the issuing entity as of the Closing Date (the “asset data file”), as an exhibit to Form ABS-EE that was filed by the issuing entity and the depositor by the date of filing of this prospectus, which exhibit is hereby incorporated by reference. The asset-level data comprises each of the data points required with respect to automobile loans identified on Schedule AL to Regulation AB and generally includes, with respect to each Receivable, the related asset number, the reporting period covered, general information about the Receivable, information regarding the related Financed Vehicle, information about the related Obligor, information about activity on the Receivable, information about delinquencies on the Receivables and information about modifications and charge-offs of the Receivable since it was originated. In addition, the issuing entity will provide an updated asset-level data file about the Receivables that are owned by the issuing entity for each Collection Period and file it with the SEC on Form ABS-EE at or before the time of the filing of the related Form 10-D.

 

USE OF PROCEEDS

 

The trust will use the net proceeds from the sale of the notes to purchase the Receivables from the depositor. The depositor will use the net proceeds from the sale of the notes to purchase the Receivables from AHFC pursuant to the receivables purchase agreement, and to fund the reserve fund and the yield supplement account. There are no other expenses incurred in connection with the selection and acquisition of the pool assets that will be payable from offering proceeds, nor are there any such material expenses that would be paid by a transaction party.

 

 

MATURITY AND PREPAYMENT CONSIDERATIONS

 

No principal payments will be made on the class A-2 notes until the class A-1 notes have been paid in full, and, except upon the occurrence of an Event of Default, (i) no principal payments will be made on the class A-3 notes until the class A-1 and class A-2 notes have been paid in full and (ii) no principal payments will be made on the class A-4 notes until the class A-1, class A-2 and class A-3 notes have been paid in full. However, following an Event of Default, principal payments will be made first to the holders of the class A-1 notes until they have been paid in full and after the class A-1 notes have been paid in full, principal payments will be made to the class A-2 notes, class A-3 notes and class A-4 notes on a pro rata basis, based on the outstanding principal amount of those classes of notes until they have been paid in full. We refer you to “The Notes—The Indenture—Events of Default; Rights Upon Event of Default” for a more detailed description of the events of default. In addition, no principal payments will be made on the certificates until all classes of notes have been paid in full. We refer you to “Payments on the Notes.”

 

In addition, the proceeds of any liquidation of the assets of the trust may be insufficient to pay in full all accrued interest on and principal of each outstanding class of notes.

 

Because the rate of payment of principal of each class of notes depends primarily on the rate of payment (including prepayments) of the principal balance of the Receivables, final payment of any class of notes could occur significantly earlier or later than their respective expected final payment dates set forth on the front cover in this prospectus. For this purpose, the term “prepayments” includes prepayments in full, partial prepayments (including those related to rebates of extended warranty contract costs and insurance premiums), liquidations due to default as well as receipts of proceeds from physical damage, credit life and disability insurance policies and repurchases or purchases by AHFC of particular Receivables for administrative reasons or for breaches of representations and warranties. All of the Receivables will be prepayable at any time. The rate of prepayment of retail installment sale contracts are influenced by a variety of economic, social and other factors, including the fact that an Obligor generally may not sell or transfer the Financed Vehicle securing a Receivable without the consent of the servicer. The rate of prepayment on the Receivables may also be influenced by the structure of the related contract. In addition, under some circumstances, the servicer will be obligated to repurchase Receivables from the trust pursuant to the sale and servicing agreement as a result of breaches of particular representations and warranties or covenants. We refer you to “Description of the Transfer and Servicing Agreements—Sale and Assignment of Receivables; Representations and Warranties” and “—Servicing Procedures.” We also refer you to “Description of the Transfer and Servicing Agreements—Termination; Optional Redemption” regarding the servicer’s option to purchase the Receivables from the trust. No assurance can be made as to the rate of prepayments on the Receivables in either stable or changing interest rate environments. No assurance can be given that any historical experience the servicer may have with respect to prepayments on the Receivables is predictive of future results.

 

WEIGHTED AVERAGE LIFE OF THE NOTES

 

The term “weighted average life” means the average amount of time during which each dollar of principal of a Receivable is outstanding. The weighted average life of the notes will generally be influenced by the rate at which the Principal Balances of the Receivables are paid, which payment may be in the form of scheduled amortization or prepayments.

 

Prepayments on automobile receivables can be measured relative to a payment standard or model. The model used in this prospectus, the Absolute Prepayment Model (“ABS”), represents an assumed rate of prepayment each month relative to the original number of receivables in a pool of receivables. ABS further assumes that all the receivables in question are the same size and amortize at the same rate and that each receivable in each month of its life will either be paid as scheduled or be paid in full. For example, in a pool of receivables originally containing 10,000 receivables, a 1.0% ABS rate means that 1.0% of the receivables, or 100 receivables, prepay each month.

 

 

ABS does not purport to be a historical description of prepayment experience or a prediction of the anticipated rate of prepayment of any pool of receivables, including the Receivables.

 

The tables below (the “ABS Tables”) have been prepared on the basis of the characteristics of the Receivables described under “The Receivables” above. The ABS Tables indicate the projected weighted average life of each class of notes and set forth the percentage of the initial principal amount of each class of notes that is projected to be outstanding after each of the Payment Dates shown at various constant ABS percentages. In calculating the expected final payment date shown on the cover to this prospectus, an ABS percentage of 1.30% was utilized and the servicer’s Clean-up Call Option was assumed to be exercised on the earliest Payment Date on which it is permitted.

 

The ABS Tables assume that:

 

·

the Receivables prepay in full at the specified constant percentage of ABS monthly, with no defaults, losses or repurchases,

 

·

each scheduled monthly payment on each Receivable is scheduled to be made and is made on the last day of each month and each month has 30 days,

 

·

payments are made on the notes on each Payment Date (and each such date is assumed to be the 18th day of each applicable month),

 

·

there is no event resulting in the acceleration of the notes,

 

·

except as indicated in the ABS Tables, the servicer does not exercise its option to purchase the Receivables on the earliest Payment Date on which such option may be exercised,

 

·

the hypothetical pools each have a cutoff date as of the opening of business on August 1, 2023,

 

·

all classes of notes accrue interest at fixed rates, and

 

·

the class A-1 notes accrue interest on an actual/360 basis and the class A-2 notes, class A-3 notes and class A-4 notes accrue interest on a 30/360 basis.

 

The ABS Tables also assume that the Receivables have been aggregated into hypothetical pools with all of the receivables within each such pool having the following characteristics and that the level scheduled monthly payment for each of the pools (which is based on the aggregate principal balance, APR, original term to maturity and remaining term to maturity as of the assumed cutoff date) will be such that each pool will be fully amortized by the end of its remaining term to maturity.

 

Pool			Aggregate Principal Balance ($)				Weighted Average APR (%)				Weighted Average Remaining Term to Maturity (in months)				Weighted Average Age (in months)				Weighted Average Original Term to Maturity (in months)
1				2,972,231.86				5.123				10				56				66
2				37,256,587.41				3.397				21				38				59
3				257,104,152.21				2.461				31				24				55
4				508,539,186.48				3.160				42				15				57
5				759,632,454.60				4.397				55				8				63
6				323,854,638.87				5.672				65				7				72
Total:				1,889,359,251.43

 

The actual characteristics and performance of the Receivables will differ from the assumptions used in constructing the ABS Tables. The assumptions used are hypothetical and have been provided only to give a general sense of how the principal cash flows might behave under varying prepayment scenarios. For example, it is very unlikely that the Receivables will prepay at a constant level of ABS until maturity or that

 

 

all of the Receivables will prepay at the same level of ABS. Moreover, the diverse terms of receivables within each of the hypothetical pools could produce slower or faster principal distributions than indicated in the ABS Table at the various constant percentages of ABS specified, even if the original and remaining terms to maturity of the Receivables are as assumed. Any difference between such assumptions and the actual characteristics and performance of the Receivables, or actual prepayment experience, will affect the percentages of initial amounts outstanding over time and the weighted average life of each class of notes.

 

 

Percentage of Initial Class A-1 Note Principal at Various ABS Percentages

 

Payment Date			0.50%				1.00%				1.30%				1.50%				1.70%				2.00%
Closing Date			100.00%				100.00%				100.00%				100.00%				100.00%				100.00%
September 18, 2023			88.24%				85.45%				83.53%				82.10%				80.40%				77.31%
October 18, 2023			76.55%				71.09%				67.34%				64.55%				61.25%				55.90%
November 18, 2023			64.94%				56.93%				51.44%				47.36%				42.61%				35.03%
December 18, 2023			53.40%				42.97%				35.82%				30.53%				24.56%				14.72%
January 18, 2024			41.93%				29.20%				20.49%				14.05%				6.92%				0.00%
February 18, 2024			30.53%				15.63%				5.44%				0.00%				0.00%				0.00%
March 18, 2024			19.22%				2.27%				0.00%				0.00%				0.00%				0.00%
April 18, 2024			7.97%				0.00%				0.00%				0.00%				0.00%				0.00%
May 18, 2024			0.00%				0.00%				0.00%				0.00%				0.00%				0.00%
Weighted Average Life To Maturity (years)(1)(2)			0.39				0.33				0.29				0.27				0.25				0.22
Weighted Average Life To Call (years)(1)(3)			0.39				0.33				0.29				0.27				0.25				0.22

 

	(1)	The weighted average life of a note is determined by (x) multiplying the amount of each principal payment on a note by the number of years from the date of issuance of the note to the related Payment Date, (y) adding the results and (z) dividing the sum by the original principal amount of the note.
	(2)	This calculation assumes that the servicer does not exercise its Clean-up Call Option.
	(3)	This calculation assumes that the servicer exercises its Clean-up Call Option on the earliest Payment Date on which it is permitted.

 

This table has been prepared based on the assumptions herein (including the assumptions regarding the characteristics and performance of the Receivables, which will differ from the actual characteristics and performance thereof) and should be read in conjunction therewith.

 

 

Percentage of Initial Class A-2 Note Principal at Various ABS Percentages

 

Payment Date		0.50%		1.00%		1.30%		1.50%		1.70%		2.00%
Closing Date		100.00%		100.00%		100.00%		100.00%		100.00%		100.00%
September 18, 2023		100.00%		100.00%		100.00%		100.00%		100.00%		100.00%
October 18, 2023		100.00%		100.00%		100.00%		100.00%		100.00%		100.00%
November 18, 2023		100.00%		100.00%		100.00%		100.00%		100.00%		100.00%
December 18, 2023		100.00%		100.00%		100.00%		100.00%		100.00%		100.00%
January 18, 2024		100.00%		100.00%		100.00%		100.00%		100.00%		96.88%
February 18, 2024		100.00%		100.00%		100.00%		98.72%		93.62%		84.99%
March 18, 2024		100.00%		100.00%		94.23%		88.96%		83.22%		73.44%
April 18, 2024		100.00%		93.25%		85.27%		79.43%		73.08%		62.24%
May 18, 2024		98.02%		85.21%		76.50%		70.12%		63.21%		51.39%
June 18, 2024		91.15%		77.30%		67.90%		61.04%		53.60%		40.90%
July 18, 2024		84.36%		69.56%		59.51%		52.19%		44.25%		30.75%
August 18, 2024		77.63%		61.93%		51.30%		43.56%		35.18%		20.96%
September 18, 2024		70.94%		54.43%		43.27%		35.15%		26.38%		11.71%
October 18, 2024		64.30%		47.06%		35.42%		26.97%		17.84%		2.78%
November 18, 2024		57.70%		39.81%		27.75%		19.01%		9.58%		0.00%
December 18, 2024		51.15%		32.70%		20.26%		11.27%		1.59%		0.00%
January 18, 2025		44.66%		25.70%		12.96%		3.76%		0.00%		0.00%
February 18, 2025		38.21%		18.84%		5.85%		0.00%		0.00%		0.00%
March 18, 2025		31.80%		12.11%		0.00%		0.00%		0.00%		0.00%
April 18, 2025		25.45%		5.50%		0.00%		0.00%		0.00%		0.00%
May 18, 2025		19.15%		0.00%		0.00%		0.00%		0.00%		0.00%
June 18, 2025		13.13%		0.00%		0.00%		0.00%		0.00%		0.00%
July 18, 2025		7.17%		0.00%		0.00%		0.00%		0.00%		0.00%
August 18, 2025		1.24%		0.00%		0.00%		0.00%		0.00%		0.00%
September 18, 2025		0.00%		0.00%		0.00%		0.00%		0.00%		0.00%
Weighted Average Life To Maturity (years)(1)(2)		1.39		1.18		1.06		0.98		0.91		0.80
Weighted Average Life To Call (years)(1)(3)		1.39		1.18		1.06		0.98		0.91		0.80

 

	(1)	The weighted average life of a note is determined by (x) multiplying the amount of each principal payment on a note by the number of years from the date of issuance of the note to the related Payment Date, (y) adding the results and (z) dividing the sum by the original principal amount of the note.
	(2)	This calculation assumes that the servicer does not exercise its Clean-up Call Option.
	(3)	This calculation assumes that the servicer exercises its Clean-up Call Option on the earliest Payment Date on which it is permitted.

 

This table has been prepared based on the assumptions herein (including the assumptions regarding the characteristics and performance of the Receivables, which will differ from the actual characteristics and performance thereof) and should be read in conjunction therewith.

 

 

Percentage of Initial Class A-3 Note Principal at Various ABS Percentages

 

Payment Date		0.50%		1.00%		1.30%		1.50%		1.70%		2.00%
Closing Date		100.00%		100.00%		100.00%		100.00%		100.00%		100.00%
September 18, 2023		100.00%		100.00%		100.00%		100.00%		100.00%		100.00%
October 18, 2023		100.00%		100.00%		100.00%		100.00%		100.00%		100.00%
November 18, 2023		100.00%		100.00%		100.00%		100.00%		100.00%		100.00%
December 18, 2023		100.00%		100.00%		100.00%		100.00%		100.00%		100.00%
January 18, 2024		100.00%		100.00%		100.00%		100.00%		100.00%		100.00%
February 18, 2024		100.00%		100.00%		100.00%		100.00%		100.00%		100.00%
March 18, 2024		100.00%		100.00%		100.00%		100.00%		100.00%		100.00%
April 18, 2024		100.00%		100.00%		100.00%		100.00%		100.00%		100.00%
May 18, 2024		100.00%		100.00%		100.00%		100.00%		100.00%		100.00%
June 18, 2024		100.00%		100.00%		100.00%		100.00%		100.00%		100.00%
July 18, 2024		100.00%		100.00%		100.00%		100.00%		100.00%		100.00%
August 18, 2024		100.00%		100.00%		100.00%		100.00%		100.00%		100.00%
September 18, 2024		100.00%		100.00%		100.00%		100.00%		100.00%		100.00%
October 18, 2024		100.00%		100.00%		100.00%		100.00%		100.00%		100.00%
November 18, 2024		100.00%		100.00%		100.00%		100.00%		100.00%		94.15%
December 18, 2024		100.00%		100.00%		100.00%		100.00%		100.00%		85.85%
January 18, 2025		100.00%		100.00%		100.00%		100.00%		93.88%		77.86%
February 18, 2025		100.00%		100.00%		100.00%		96.48%		86.44%		70.19%
March 18, 2025		100.00%		100.00%		98.92%		89.43%		79.28%		62.83%
April 18, 2025		100.00%		100.00%		92.17%		82.60%		72.39%		55.81%