Series 2012-R1 Asset-Backed Notes

Transcription

1 This prospectus supplement, or the "prospectus supplement'', together with the short form base shelf prospectus dated February 7, 2011, or the "prospectus'', to which it relates, as amended or supplemented, and each document incorporated or deemed to be incorporated by reference in the prospectus, constitutes a public offering of the securities offered pursuant to this prospectus supplement only in the jurisdictions where they may be lawfully offered for sale and in those jurisdictions only by persons permitted to sell such securities. No securities regulatory authority has expressed an opinion about these securities and it is an offence to claim otherwise. The securities offered under this prospectus supplement have not been, and will not be, registered under the United States Securities Act of 1933, as amended, or the "U.S. Securities Act'', or under the securities laws of any state of the United States of America, and may not be offered or sold within the United States of America or to U.S. persons within the meaning of Regulation S under the U.S. Securities Act, or "Regulation S'', unless the securities are registered under the U.S. Securities Act or an exemption from the registration requirements of the U.S. Securities Act is available. PROSPECTUS SUPPLEMENT To Short Form Base Shelf Prospectus dated February 7, 2011 New Issue May 15, MAY $540,110,000 Ford Auto Securitization Trust Series 2012-R1 Asset-Backed Notes Ford Credit Canada Limited Promoter, Seller, Servicer and Financial Services Agent Final Scheduled Expected Ratings Series 2012-R1 Notes Principal Amount Interest Rate Payment Date DBRS S&P Fitch Class A-1 notes... $186,790, % April 15, 2014 AAA(sf) AAA(sf) AAAsf Class A-2 notes ,350, % March 15, 2016 AAA(sf) AAA(sf) AAAsf Class A-3 notes ,900, % April 15, 2017 AAA(sf) AAA(sf) AAAsf Class B notes... 15,890, % August 15, 2017 AA(sf) AA+(sf) AAsf Class C notes... 10,590, % December 15, 2017 A(sf) AA(sf) Asf Class D notes... 10,590, % November 15, 2018 BBB(sf) A(sf) BBBsf Total... $540,110,000 The Series 2012-R1 notes to be issued by Ford Auto Securitization Trust will be backed by a pool of car, light truck and utility vehicle receivables purchased by Ford Credit Canada Limited, or "FCCL'', from dealers. The trust will pay interest and principal on the notes on the 15th day of each month (or, if not a business day, the next business day). The first payment date will be June 15, The trust will pay each class of notes in full on its final scheduled payment date if not paid in full prior to such date. The trust will pay principal sequentially to each class of notes in order of seniority until each class is paid in full. The credit enhancement for the notes will be a reserve account, subordination, overcollateralization and excess spread. The pricing terms of the notes are: Underwriting Fees (2) Proceeds to the Trust (3) % of Principal % of Principal Price to Public (1) Total Amount Total Amount Class A-1 notes... Non-fixed price $ 326, % $186,790, % Class A-2 notes... Non-fixed price 535, % 214,350, % Class A-3 notes... Non-fixed price 305, % 101,900, % Class B notes... Non-fixed price 55, % 15,890, % Class C notes... Non-fixed price 42, % 10,590, % Class D notes... Non-fixed price 47, % 10,590, % Total... Non-fixed price $1,314, % $540,110, % (1) The notes are being offered at prices to be negotiated by the underwriters with purchasers. Accordingly, the price at which the notes will be offered and sold to the public may vary from purchaser to purchaser and during the period of distribution of the notes. (2) Consisting of the underwriting fee of $1.75 per $1,000 principal amount of Class A-1 notes, $2.50 per $1,000 principal amount of Class A-2 notes, $3.00 per $1,000 principal amount of Class A-3 notes, $3.50 per $1,000 principal amount of Class B notes, $4.00 per $1,000 principal amount of Class C notes, and $4.50 per $1,000 principal amount of Class D notes. To the extent the Class B notes, the Class C notes or the Class D notes are purchased by FCCL on the closing of this offering, the underwriting fees for such class or classes of notes will be zero. The underwriters overall compensation will increase or decrease by the amount by which the aggregate price paid for the notes exceeds or is less than the gross proceeds paid by the underwriters to the trust. (3) Before deducting expenses of the offering, estimated to be $1,000,000, and the underwriting fees. Expenses of the offering and the underwriting fees will be paid by the trust out of the proceeds of the offering. (continued on next page) BMO NESBITT BURNS INC. CIBC WORLD MARKETS INC. RBC DOMINION SECURITIES INC. SCOTIA CAPITAL INC. TD SECURITIES INC.

2 (continued from cover) BMO Nesbitt Burns Inc., CIBC World Markets Inc., RBC Dominion Securities Inc., Scotia Capital Inc. and TD Securities Inc. are the "underwriters'' of the notes. The underwriters, as principals, conditionally offer the notes, in each case, subject to prior sale, if, as and when issued by the trust and accepted by the underwriters in accordance with the conditions contained in the underwriting agreement referred to in "Plan of Distribution'' in this prospectus supplement and subject to the approval of certain legal matters at closing on behalf of the trust by McCarthy Tétrault LLP and on behalf of the underwriters by Osler, Hoskin & Harcourt LLP which are described in "Plan of Distribution'' in this prospectus supplement. The notes are being offered by this prospectus supplement outside the United States to non-u.s. persons (as defined in Regulation S under the U.S. Securities Act) in reliance on Regulation S. The notes are being offered concurrently but separately within the United States to "qualified institutional buyers'' (as defined in Rule 144A under the U.S. Securities Act) in reliance on Rule 144A. There is no market through which the notes may be sold and you may not be able to resell notes purchased under this prospectus supplement. This may affect the pricing of the notes in the secondary market, the transparency and availability of trading prices, the liquidity of the notes and the extent of issuer regulation. As further described in "Plan of Distribution'' in this prospectus supplement, the underwriters currently intend to make a market in the classes of notes purchased by them, but are under no obligation to do so. See "Risk Factors'' in this prospectus supplement. There can be no assurance that a secondary market will develop or that, if a secondary market does develop, it will provide you with liquidity or that it will continue for the life of the notes purchased. The underwriters may effect transactions that stabilize or maintain the price of the classes of notes purchased by them at a level different from that which might otherwise prevail in an open market. Such transactions, if commenced, may be discontinued at any time. An investment in the notes also bears certain additional risks. For a more detailed description of certain risk factors relating to an investment in the notes (including risk factors relating to the secondary market for the notes), you should read "Risk Factors'' in this prospectus supplement and the prospectus. Subscriptions for the notes will be received subject to rejection or allotment in whole or in part and the right is reserved to close the subscription books at any time without notice. It is expected that the closing of this offering will occur on or about May 23, Delivery of the notes in book-entry form will be made through CDS Clearing and Depository Services Inc. on or about the closing date against payment for the notes in immediately available funds. Definitive notes will not be issued to purchasers except in certain limited circumstances. For a more detailed description of the book-entry registration for the notes, you should read "Description of the Notes Book-Entry Registration'' in the prospectus. The notes will represent indebtedness of the trust and will not represent obligations of or interests in the seller, the servicer, the performance guarantor, the promoter, the issuer trustee (other than solely in its capacity as trustee of the trust), the indenture trustee, the financial services agent, the administrative agent, the underwriters, any beneficiary of the trust or any of their respective affiliates. No one is personally liable for the payments due by the trust or on any notes. The notes will represent limited recourse obligations of the trust. Only the collateral described in this prospectus supplement will secure payment of the notes and expenses described in this prospectus supplement. This prospectus supplement relates only to the notes described in this prospectus supplement and not to any other securities issued by the trust. TM Ford Motor Company of Canada, Limited has adopted the trademarks "Ford Auto Securitization Trust'' and "Fiducie de titrisation automobile Ford''. Such trademarks are used by Computershare Trust Company of Canada, as issuer trustee of Ford Auto Securitization Trust, under licence. S-2

3 TABLE OF CONTENTS Reading this Prospectus Supplement Description of the Notes... S-32 and the Prospectus... S-4 Available Funds... S-32 Documents Incorporated by Reference... S-4 Payments of Interest... S-33 Eligibility for Investment... S-5 Payments of Principal... S-33 Transaction Structure Diagram... S-6 Priority of Payments... S-35 Transaction Parties and Documents Events of Default and Acceleration.. S-37 Diagram... S-7 Post-Acceleration Priority of Payments S-37 Summary... S-8 Clean Up Call Option... S-38 Risk Factors... S-14 Servicer Termination Events... S-38 Transaction Parties... S-17 Credit Enhancement... S-38 Trust... S-17 Reserve Account... S-38 Issuer Trustee... S-17 Subordination... S-39 Indenture Trustee... S-17 Overcollateralization... S-39 Financial Services Agent... S-17 Excess Spread... S-41 Administrative Agent... S-17 Monthly Investor Reports... S-42 Promoter... S-18 Annual Compliance Certificate... S-42 Seller... S-18 Material Changes to Origination, Use of Proceeds... S-42 Purchasing and Underwriting Plan of Distribution... S-43 Policies and Procedures... S-19 Ratings... S-45 Vintage Originations Information... S-20 Certain Canadian Federal Income Tax Static Pool Information Prior Considerations... S-47 Securitized Pools... S-20 Interest... S-48 Servicer... S-20 Refundable Tax... S-48 Material Changes to Servicing Policies and Procedures... S-22 Disposition... S-48 Performance Guarantor... S-22 Material Contracts... S-49 Receivables... S-22 Independent Auditors... S-49 Criteria for Selecting the Receivables. S-22 Legal Considerations... S-49 Composition of the Receivables... S-23 Statutory Rights of Withdrawal and Sale of the Receivables... S-26 Rescission... S-49 Representations About the Auditors Consent... S-50 Receivables... S-26 Certificate of the Underwriters... S-51 Obligation to Repurchase Ineligible Index of Defined Terms in the Receivables Upon Breach... S-26 Prospectus Supplement... S-52 Maturity and Prepayment Annex A: Canadian Originations Considerations... S-27 Information... A-1 General... S-27 Annex B: Static Pool Information Weighted Average Life of the Notes.. S-27 Prior Securitized Pools... B-1 S-3

4 READING THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS This prospectus supplement and the prospectus provide information about the trust and the terms of the notes of this series. You should only rely on the information provided or referenced in this prospectus supplement and the prospectus. The trust has not authorized anyone to provide you with different information. The information in this prospectus supplement and the prospectus is correct only as of their respective dates. This prospectus supplement includes the following brief introductory sections: Transaction Structure Diagram illustrates the structure of this series, including the credit enhancement available to the notes, Transaction Parties and Documents Diagram illustrates the role that each transaction party and transaction document plays in this series, Summary describes the main terms of the notes, the cash flows in this series and the credit enhancement available for the notes, and Risk Factors describes the most significant risks of investing in the notes. The other sections of this prospectus supplement contain more detailed descriptions of the notes and the structure of this series as well as describe the most significant risks of investing in the notes. Cross-references refer you to more detailed descriptions of a particular topic or related information elsewhere in this prospectus supplement or the prospectus. The Table of Contents on the preceding page contains references to key topics. An index of defined terms is at the end of this prospectus supplement and at the end of the prospectus. DOCUMENTS INCORPORATED BY REFERENCE This prospectus supplement is deemed to be incorporated by reference into the prospectus solely for the purpose of the offering of the notes described in this prospectus supplement. Other documents that have been filed with Canadian securities regulators are also incorporated or deemed to be incorporated by reference into the prospectus as of the date of this prospectus supplement solely for the purpose of the offering of the notes described in this prospectus supplement. Any statement contained in this prospectus supplement or in a document incorporated or deemed to be incorporated by reference into this prospectus supplement will be deemed to be modified or superseded for the purposes of this prospectus supplement to the extent that a statement contained in this prospectus supplement or in any other subsequently filed document which also is or is deemed to be incorporated by reference in this prospectus supplement modifies or supersedes such statement. The modifying or superseding statement need not state that it has modified or superseded a prior statement or include any other information contained in the document that it modifies or supersedes. The making of a modifying or superseding statement will not be deemed to be an admission for any purposes that the modified or superseded statement, when made, constituted a misrepresentation, an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made. Any statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this prospectus supplement. S-4

5 ELIGIBILITY FOR INVESTMENT Subject to compliance with the prudent investment standards and general investment provisions and restrictions of the following statutes (and, where applicable, the regulations under such statutes) and, in certain cases, subject to the satisfaction of additional requirements relating to investment or lending policies, guidelines or goals established pursuant to the applicable statute and, in certain cases, the filing of such policies, guidelines or goals, the notes will not at the date of their issue be precluded as investments under the following statutes: Bank Act (Canada) Cooperative Credit Associations Act (Canada) Insurance Companies Act (Canada) Pension Benefits Standards Act, 1985 (Canada) Trust and Loan Companies Act (Canada) Financial Institutions Act (British Columbia) Pension Benefits Standards Act (British Columbia) Alberta Heritage Savings Trust Fund Act (Alberta) Financial Administration Act (Alberta) Insurance Act (Alberta) Loan and Trust Corporations Act (Alberta) Employment Pensions Plans Act (Alberta) The Pension Benefits Act, 1992 (Saskatchewan) The Trust and Loan Corporations Act, 1997 (Saskatchewan) The Insurance Act (Manitoba) The Trustee Act (Manitoba) Pension Benefits Act (Ontario) Trustee Act (Ontario) An Act respecting insurance (Québec) (for an insurer (as defined therein), other than a guarantee fund) An Act respecting trust companies and savings companies (Québec) (for a trust company (as defined therein), investing its own funds and funds received as deposits, and for a savings company (as defined therein), investing its funds) Supplemental Pension Plans Act (Québec) Pension Benefits Act (New Brunswick) Trustees Act (New Brunswick) Pension Benefits Act (Nova Scotia) Trustee Act (Nova Scotia) Insurance Companies Act (Newfoundland and Labrador) Pension Benefits Act, 1997 (Newfoundland and Labrador) In the opinion of McCarthy Tétrault LLP and Osler, Hoskin & Harcourt LLP, the Class A notes, if issued on the date of this prospectus supplement and assuming that, at such time of issue, the notes would have an investment grade rating as contemplated in "Ratings'' in this prospectus supplement, would be qualified investments under the Income Tax Act (Canada) and the regulations thereunder, or the "Tax Act'', for a trust governed by a registered retirement savings plan ( RRSP ), a registered retirement income fund ( RRIF ), a deferred profit sharing plan, a registered disability savings plan, a registered education savings plan and a tax-free savings account ("TFSA''). Prospective holders of Class B, C and D notes should consult their own tax advisors. The notes will not be "prohibited investments'' for a TFSA, RRSP or RRIF on the date of this prospectus supplement provided the holder of the TFSA or annuitant of the RRSP or RRIF, as the case may be, for purposes of the Tax Act, deals at arm s length with the trust and does not have a "significant interest'' in the trust or a corporation, partnership or trust that does not deal at arm s length with the trust. A "significant interest'' of a holder in a trust generally means the ownership by the holder, either alone or together with persons and partnerships with which the holder does not deal at arm s length for purposes of the Tax Act, of interests as a beneficiary under the trust that have a fair market value of 10% or more of the fair market value of the interests of all beneficiaries under the trust. If the notes are "prohibited investments'' for a TFSA, RRSP or RRIF, the holder of the TFSA or annuitant of the RRSP or RRIF, as the case may be, will be subject to penalty taxes set out in the Tax Act. S-5

6 TRANSACTION STRUCTURE DIAGRAM The following diagram provides a simplified overview of the structure of this series and the credit enhancement available for the notes. You should read this prospectus supplement and the prospectus in their entirety for a more detailed description of this series. Ford Credit Canada Limited (seller, servicer, promoter and financial services agent) $574,394, initial pool balance Ford Auto Securitization Trust (trust) Series 2012-R1 Notes Reserve Account Deposit (1) $5,743, Overcollateralization - Initial amount: $34,284, which is 5.97% of the initial pool balance (2) - Targeted overcollateralization amount (3) - Yield supplement overcollateralization amount (4) Excess Spread (5) Notes (6)(7) $186,790,000 A-1 notes $214,350,000 A-2 notes $101,900,000 A-3 notes $ 15,890,000 B notes $ 10,590,000 C notes $ 10,590,000 D notes Deferred Purchase Price (8) 3MAY (1) The reserve account will be funded on the closing date at 1.00% of the initial pool balance. (2) Overcollateralization is the amount by which the pool balance or adjusted pool balance exceeds the principal amount of the notes. The "adjusted pool balance'' is the pool balance reduced by the yield supplement overcollateralization amount. Initially, the Class A, Class B and Class C notes will be approximately fully collateralized on an adjusted pool balance basis and together with the Class D notes will be undercollateralized by approximately 2% on an adjusted pool balance basis. (3) The targeted overcollateralization amount will adjust each period and is calculated as described under "Credit Enhancement Overcollateralization'' in this prospectus supplement. (4) The yield supplement overcollateralization amount is a component of the targeted overcollateralization amount and is calculated as described under "Credit Enhancement Overcollateralization'' in this prospectus supplement. (5) Excess spread is available, as a component of available funds, to make required principal payments on the notes and, as a result, provides a source of funds to absorb losses on the receivables and to increase overcollateralization until the targeted overcollateralization amount is reached. (6) All notes other than the Class D notes benefit from subordination of more junior classes to more senior classes. The subordination varies depending on whether interest or principal is being paid and whether an event of default that results in acceleration has occurred. For a more detailed description of subordination within this series, you should read "Description of the Notes Priority of Payments'', " Post-Acceleration Priority of Payments'' and "Credit Enhancement Subordination'' in this prospectus supplement. (7) All available funds remaining after payments of the senior fees and expenses of the trust, the interest on the notes, any required priority principal payments and any required deposits in the reserve account, including the portion of such remaining available funds that constitutes excess spread, will be used to pay principal on the notes until the targeted overcollateralization amount is reached. (8) The seller will be entitled to receive as deferred purchase price for the receivables all funds not needed to make required payments on the notes, pay fees and expenses of the trust for this series or make deposits in the reserve account. S-6

7 TRANSACTION PARTIES AND DOCUMENTS DIAGRAM The following diagram shows the role of each transaction party and the obligations that are governed by each transaction document in this series. The transaction documents identified in this diagram may be examined during normal business hours at the principal office of the indenture trustee in Toronto, Ontario. Ford Credit Canada Limited (seller, servicer, promoter and financial services agent) Ford Motor Credit Company LLC (performance guarantor) SALE AND SERVICING AGREEMENT - the seller sells the receivables to the trust - the seller makes representations to the trust about the receivables and repurchases ineligible receivables - FCCL is the servicer of the receivables - the servicer purchases any servicer impaired receivables or servicer modified receivables - the performance guarantor guarantees the obligations of the seller, including its obligations as servicer DECLARATION OF TRUST - Ford Auto Securitization Trust was established as an Ontario trust - Computershare Trust Company of Canada is the issuer trustee ADMINISTRATION AGREEMENT Ford Auto Securitization Trust (trust) - Canadian Road Credit Company, Limited is administrative agent and performs certain administrative services for the trust under the transaction documents INDENTURE AND INDENTURE SUPPLEMENT - the trust issues the notes and pledges the receivables and related assets to the indenture trustee to secure the notes - the trust applies available funds to pay related expenses of the trust and makes payments on the notes in the priorities specified - BNY Trust Company of Canada is the indenture trustee FINANCIAL SERVICES AGREEMENT - FCCL is financial services agent and performs certain financial services for the trust under the transaction documents UNDERWRITING AGREEMENT - the trust sells the notes to the underwriters - the underwriters purchase the notes and offer them to investors Underwriters Investors 2MAY S-7

8 SUMMARY This summary describes the main terms of the issuance of and payments on the notes, the assets of the trust, the cash flows in this series and the credit enhancement available for the notes. It does not contain all of the information that you should consider in making your investment decision. To understand fully the terms of the notes and the transaction structure, you should read this prospectus supplement, especially "Risk Factors'' beginning on page S-14 and the prospectus in their entirety. Transaction Overview Cutoff Date The trust will use the proceeds from the sale of The trust will be entitled to collections on the the notes to purchase from FCCL on the receivables applied on or after May 1, 2012, closing date a pool of retail conditional sale the "cutoff date''. contracts, or the "receivables'', that were purchased by FCCL from motor vehicle Notes dealers. For purposes of the prospectus, this The trust will issue the following classes of pool of receivables will be the "series notes, each of which will represent a "class'' receivables'' for the notes and this series. The and together will represent a "series'' for trust will sell the notes to the underwriters who purposes of the prospectus: will sell them to investors. Principal Transaction Parties Amount Interest Rate Class A-1 notes... $186,790, % Trust Class A-2 notes... $214,350, % Class A-3 notes... $101,900, % Ford Auto Securitization Trust Class B notes... $ 15,890, % Issuer Trustee Class C notes... $ 10,590, % Class D notes... $ 10,590, % Computershare Trust Company of Canada, or the "issuer trustee'' Indenture Trustee BNY Trust Company of Canada, or the "indenture trustee'' Promoter, Seller, Servicer and Financial Services Agent Ford Credit Canada Limited, or "FCCL'' Administrative Agent Canadian Road Credit Company, Limited, or "Canadian Road'' or the "administrative agent'' Performance Guarantor Ford Motor Credit Company LLC, or "Ford Credit'' or the "performance guarantor'' For more information about the transaction parties, you should read "Transaction Parties'' in this prospectus supplement. Closing Date The trust expects to issue the notes on or about May 23, 2012, the "closing date''. The notes are being offered by this prospectus supplement and the prospectus and are referred to as the "notes''. The notes will be issued under the indenture and a supplement to the indenture to be entered into between the trust and the indenture trustee, or the "indenture supplement''. Payment Dates The trust will pay interest and principal on the notes on "payment dates'' which will be the 15th day of each month (or, if not a business day, the next business day). The first payment date will be June 15, The notes will accrue interest on a "30/360'' basis from the 15th day of the preceding month to the 15th day of the current month (or from the closing date to June 15, 2012, for the first period). The final scheduled payment date for each class is listed below. It is expected that each S-8

9 class will be paid in full earlier than its final rights to funds in the reserve account and scheduled payment date. the collection account, and Final Scheduled Payment Date rights under the other transaction documents for this series, including for the repurchase Class A-1 notes... April 15, 2014 Class A-2 notes... March 15, 2016 of ineligible receivables, and purchase of Class A-3 notes... April 15, 2017 servicer impaired receivables and servicer Class B notes... August 15, 2017 modified receivables. Class C notes... December 15, 2017 Class D notes... November 15, 2018 For purposes of the prospectus, these assets will be the "series assets'' for the notes and this For a more detailed description of the payment series. The notes will not have recourse to any of interest and principal on each payment date, other assets of the trust and no other series you should read "Description of the Notes will have recourse to the series assets. Payments of Interest'' and "Payments of Principal'' in this prospectus supplement. Receivables Clean Up Call Option The receivables that will be sold to the trust (on the closing date) are retail conditional sale The servicer will have a "clean up call'' option contracts secured by new and used cars, light to purchase all of the receivables on any trucks and utility vehicles. As of the cutoff date, payment date that the pool balance is 5% or the aggregate principal balance of the less of the initial pool balance. The servicer receivables was $574,394, the "initial may exercise its clean up call option only if the pool balance''. purchase price for the receivables will be sufficient to pay in full the notes and all other Summary characteristics of the receivables on secured obligations of the trust for this series. the cutoff date: Upon the servicer s exercise of its clean up call Number of receivables... 23,958 option, the notes will be redeemed by the trust Average principal balance... $23, and paid in full. Weighted average (1) APR % Weighted average (1) FICO score For more information about optional Weighted average (1) remaining term months redemption, you should read "Maturity and Weighted average (1) original term months Prepayment Considerations Clean Up Call Original term over 60 months (2) % Remaining term over 60 months (2) % Option'' in this prospectus supplement. Percentage new vehicle (2) % Percentage car (2)(3) % Form and Minimum Denomination Percentage light truck (2)(3) % The notes will be issued in book-entry form Percentage utility (2)(3) % and will be available in minimum (1) Weighted averages are weighted by the principal denominations of $100,000 and in multiples balance of each receivable on the cutoff date. of $1,000. (2) As a percentage of the initial pool balance. (3) "Car'' includes sedans, hatchbacks and coupes. "Light Trust Assets truck'' includes vans, mini-vans and light pick-up trucks. "Utility'' includes wagons, SUVs and crossovers. The assets of the trust from which the notes Non-Ford and Lincoln vehicles are not are payable are: categorized by FCCL and are excluded from these categories. the receivables and collections on the For more information about the characteristics receivables applied on or after the of the receivables, you should read cutoff date, "Receivables Composition of the security interests in the financed vehicles, Receivables'' in this prospectus supplement. proceeds from claims on any insurance policies covering the financed vehicles or the Servicer related obligors, FCCL will be the servicer of the receivables. S-9

10 For so long as FCCL is the servicer, the trust (6) Second Priority Principal Payment to the will not be required to pay the servicer a Class A and Class B noteholders, servicing fee. If FCCL ceases to be the sequentially by class, the amount equal to servicer, the trust will pay the successor the excess of (a) the principal amount of servicer a servicing fee on each payment date the Class A and Class B notes, over equal to 1/12 of 1.00% of the pool balance at (b) the adjusted pool balance, which the beginning of the preceding month. amount will be reduced by any first priority For more information about the Servicer, you principal payment on that payment date, should read "Transaction Parties Servicer'' in (7) Class C Note Interest to the Class C this prospectus supplement. noteholders, interest due on the Class C notes, Performance Guarantor (8) Third Priority Principal Payment to the Ford Credit will guarantee to the trust the Class A, Class B and Class C noteholders, performance of the obligations of the seller sequentially by class, the amount equal to under the sale and servicing agreement, the excess of (a) the principal amount of including its obligations as servicer. the Class A, Class B and Class C notes, over (b) the adjusted pool balance, which Priority of Payments amount will be reduced by any first and second priority principal payment on that On each payment date, the trust will apply payment date, available funds for the preceding month to make payments in the order of priority listed (9) Class D Note Interest to the Class D below. Available funds generally will include all noteholders, interest due on the amounts collected on the receivables. This Class D notes, priority will apply unless the notes are (10) Reserve Account to the reserve account, accelerated after an event of default: the amount, if any, required to replenish (1) Trustee Fees and Expenses to the the reserve account to its original balance, indenture trustee and the issuer trustee, all unless such payment date is on or after amounts due which are attributable solely the final scheduled payment date for the to the series and the series percentage of Class D notes, amounts due to the indenture trustee and (11) Regular Principal Payment to the the issuer trustee for general trust noteholders, sequentially by class, the expenses, up to a maximum of amount equal to the excess of the $150,000 per year, principal amount of the notes over an (2) Servicing Fee if the servicer is not amount equal to the pool balance minus FCCL, to the successor servicer, all the targeted overcollateralization amount, servicing fees due, which amount will be reduced by any first, (3) second and third priority principal Class A Note Interest to the Class A payments on that payment date, noteholders, interest due on the Class A notes, pro rata based on the principal (12) Additional Fees and Expenses to the amount of the Class A notes, indenture trustee and the issuer trustee, all (4) amounts due to the extent not paid in First Priority Principal Payment to the item (1) above, Class A noteholders, sequentially by class, the amount equal to the excess, if any, of (13) Administrative Agent and Financial Services (a) the principal amount of the Class A Agent Fees and Expenses, Tax Payments notes, over (b) the adjusted pool balance, and Beneficiary Payments to (a) the administrative agent and the financial (5) Class B Note Interest to the Class B services agent, all amounts due which are noteholders, interest due on the attributable solely to the series and the Class B notes, series percentage of all amounts due to the administrative agent and the financial S-10

11 services agent for general trust expenses, such amount as available funds. The indenture (b) the tax authority to pay any taxes trustee also will withdraw funds from the attributable solely to the series and the reserve account to the extent needed to pay series percentage of any non-series taxes, any class of notes in full on its final scheduled and (c) any beneficiary of the trust, the payment date or to pay the notes following an series percentage of any amount due event of default and acceleration of the notes. pursuant to the declaration of trust, and If amounts are withdrawn from the reserve (14) Remaining Amount to the seller, all account, they will be replenished to the extent remaining available funds as deferred of available funds on subsequent payment purchase price. dates occurring prior to the final scheduled payment date for the Class D notes after all The trust will not pay principal on any class of higher priority payments are made. notes until the principal amount of all senior classes of notes are paid in full. For more information about the reserve account, you should read "Credit For a more detailed description of the priority Enhancement Reserve Account'' in this of payments on each payment date you should prospectus supplement. read "Description of the Notes Priority of Payments'' in this prospectus supplement. For a more detailed description of the targeted Subordination overcollateralization amount and how it is used The trust will pay interest to all classes of the to determine the principal payable on the Class A notes and then will pay interest notes, you should read "Credit Enhancement sequentially to the remaining classes of notes Overcollateralization'' in this prospectus in order of seniority. The trust will not pay supplement. interest on the Class B, Class C or Class D notes until all interest due on the Class A Credit Enhancement notes is paid in full. Credit enhancement provides protection for the The trust will pay principal sequentially to each notes against losses on the receivables and class of notes in order of seniority (beginning potential shortfalls in the amount of cash with the Class A-1 notes). The trust will not pay available to the trust to make required principal on any class of notes until the payments. If the credit enhancement is not principal amounts of all senior classes of notes sufficient to cover all amounts payable on the are paid in full. notes, notes with a later final scheduled In addition, if a priority principal payment is payment date will bear a greater risk of loss required on any payment date, the trust will than notes with an earlier final scheduled pay principal to the most senior class of notes payment date. outstanding prior to the payment of interest on The following credit enhancement will be the affected subordinated notes on that available to the trust. payment date. Reserve Account For a more detailed description of the priority of payments, including changes to the priority On the closing date, the trust will, or cause the after an event of default and acceleration of the servicer to, deposit $5,743, to the notes, you should read "Description of the reserve account, which is 1.00% of the initial Notes Priority of Payments'' and pool balance. " Post-Acceleration Priority of Payments'' and "Credit Enhancement Subordination'' in this If collections on the receivables and certain prospectus supplement. other amounts are insufficient to cover the fees and expenses of the trust payable under this series, including interest payments and any Overcollateralization priority principal payments on the notes, the Overcollateralization is the amount by which indenture trustee will withdraw funds from the the pool balance exceeds the principal amount reserve account to cover the shortfall and treat of the notes. Overcollateralization means there S-11

12 will be additional receivables generating collections that will be available to cover losses on the receivables and shortfalls in interest collections due to any low APR receivables. The initial amount of overcollateralization for the notes will be $34,284, or 5.97% of the initial pool balance. Overcollateralization may also be expressed as a percentage of the "adjusted pool balance'', which is the pool balance less the yield supplement overcollateralization amount. The adjusted pool balance as of the closing date will be approximately equal to the aggregate initial principal amount of the Class A, Class B and Class C notes. On an adjusted pool balance basis, the initial amount of overcollateralization for the notes is actually negative resulting in undercollateralization of approximately 2% of the adjusted pool balance, which is approximately the initial principal amount of the Class D notes. This series is structured to use all available funds remaining after payment of the senior fees and expenses of the trust, the interest on the notes, any required priority principal payments and any required deposits in the reserve account, including the portion of such remaining available funds that constitutes excess spread, to make principal payments on the notes until the targeted overcollateralization amount is reached. After reaching the targeted overcollateralization amount, the regular principal payment will be used to maintain the overcollateralization at the targeted level. The targeted overcollateralization amount will adjust each month and generally will equal the sum of (a) the yield supplement overcollateralization amount for that month, plus (b) the excess, if any, of 1.50% of the current pool balance over 1.00% of the initial pool balance (the amount required to be in the reserve account). When the pool balance has decreased to the point where 1.50% of the current pool balance is equal to or less than 1.00% of the initial pool balance, the targeted overcollateralization amount for each payment date will be the yield supplement overcollateralization amount for that payment date. At that point, on an adjusted pool balance basis, the overcollateralization will be zero. For a more detailed description of the targeted overcollateralization amount, you should read "Credit Enhancement Overcollateralization'' in this prospectus supplement. Yield Supplement Overcollateralization Amount A substantial portion of the receivables have an annual percentage rate, or "APR'', less than the highest interest rate paid on the notes. To compensate for the low APRs on these receivables, this series is structured with a type of overcollateralization known as yield supplement overcollateralization. The "yield supplement overcollateralization amount'' for each payment date approximates the present value of the amount by which future payments on receivables with APRs below a specified rate are less than future payments would be on such receivables if their APRs were equal to the specified rate. The specified rate is set by the trust at a level that will result in an amount of excess spread sufficient to obtain the required ratings on the notes and will at least equal the highest interest rate on the notes plus a 1.00% servicing fee. The yield supplement overcollateralization amount is included in the targeted overcollateralization amount for each payment date. For a more detailed description of the calculation of the yield supplement overcollateralization amount and its effect on the payment of principal, you should read "Credit Enhancement Overcollateralization'' in this prospectus supplement. Excess Spread For any payment date, excess spread is equal to the excess of (a) the sum of the interest collections and principal collections equal to the decline in the yield supplement overcollateralization amount from the preceding payment date (or the closing date, as applicable), over (b) the sum of the senior fees and expenses of the trust, the interest on the notes and any required deposits in the reserve account. Any excess spread will be applied on each payment date, as a component of available funds to make principal payments on the most senior class of notes to the extent necessary to reach the targeted overcollateralization amount. In general, excess spread provides a source of funds to absorb losses on the receivables. To S-12

13 the extent the amount of excess spread exceeds the amount of any losses, it is available to pay principal on the notes. This causes the principal of the notes to be paid more rapidly than the principal of the receivables, which increases the overcollateralization as described under "Description of the Notes Payments of Principal'' in this prospectus supplement. For a more detailed description of the use of excess spread as credit enhancement for the notes, you should read "Credit Enhancement Overcollateralization'' and " Excess Spread'' in this prospectus supplement. Repurchases of Receivables Receivables'' and " Servicer Modifications and Obligation to Purchase Modified Receivables'' in the prospectus. Controlling Class Holders of the controlling class will control certain decisions regarding the trust, including whether to declare or waive events of default and servicer termination events, or accelerate the notes, cause a sale of the receivables or direct the indenture trustee to exercise other remedies following an event of default. Holders of notes that are not part of the controlling class will not have these rights. The "controlling class'' will be the outstanding classes of the Class A notes, voting as a single class, as long as any Class A notes are outstanding. After the Class A notes are paid in full, the most senior class of notes outstanding will be the controlling class. FCCL will make representations about the origination, characteristics and sale of the receivables. If a representation is later discovered to be untrue then any affected receivable was not eligible to be sold to the trust. FCCL must repurchase any ineligible Ratings receivable unless it cures the breach. Similarly, The trust expects that the notes will receive the if FCCL, as servicer, materially impairs any indicated ratings from the rating agencies receivable, it must purchase the impaired listed below. receivable unless it cures the impairment. In addition, FCCL, as servicer, will purchase a DBRS S&P Fitch receivable from the trust if it makes certain Class A-1 notes... AAA(sf) AAA(sf) AAAsf modifications including if it grants payment Class A-2 notes... AAA(sf) AAA(sf) AAAsf Class A-3 notes... AAA(sf) AAA(sf) AAAsf extensions that extend the final payment date Class B notes... AA(sf) AA+(sf) AAsf of the receivable beyond six months past the Class C notes... A(sf) AA(sf) Asf last scheduled payment date of any receivable Class D notes... BBB(sf) A(sf) BBBsf in this series. The servicer also will purchase a receivable if it modifies the amount financed or the APR of the receivable or rewrites or reschedules the contract to increase the number of originally scheduled payment due dates of the receivable. For a more detailed description of the representations made about the receivables and the repurchase obligation if these representations are breached, you should read "Sale of the Receivables'' in this prospectus supplement. For a more detailed description of servicer impaired and servicer modified receivables and the purchase obligation for these receivables, you should read "Servicing the Series Receivables and the Series Obligation to Purchase Servicer Impaired The ratings on the notes address, in the case of DBRS, the risk of default in payment on the notes, in the case of S&P, the likelihood of the payment of interest and principal on the notes and, in the case of Fitch, the relative vulnerability to default, in each case according to the terms of the notes. Each rating agency will monitor its ratings on the notes using its normal surveillance procedures. A 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 agencies. No transaction party will be responsible for monitoring any changes to the ratings on the notes. S-13

14 RISK FACTORS In addition to the risk factors starting on page 8 of the prospectus, you should consider the following risk factors in deciding whether to purchase the notes. The Class B, Class C and Class D notes will be subject to greater risk because of subordination The Class B notes will bear greater risk than the Class A notes because no interest will be paid on the Class B notes until all interest on the Class A notes is paid in full, and no principal will be paid on the Class B notes until the principal amount of the Class A notes is paid in full. The Class C and Class D notes bear even greater risk because of similar subordination to all more senior classes of notes. An event of default and acceleration of the notes may result in earlier than expected payment of your notes, losses on your notes and changes in the priority of payments An event of default may result in an acceleration of payments on your notes. You will suffer losses if collections on the receivables and the proceeds of any sale of receivables are insufficient to pay the amounts owed on your notes. If your notes are paid earlier than expected, you may not be able to reinvest the principal at a rate of return that is equal to or greater than the rate of return on your notes. If the notes are accelerated after an event of default, the trust will not pay interest or principal on any notes that are not part of the controlling class until all interest and principal on the notes of the controlling class are paid in full. For a more detailed description of events of default and acceleration of the notes, you should read "Description of the Notes Events of Default and Remedies'' in the prospectus and "Description of the Notes Events of Default and Acceleration'' in this prospectus supplement. For a more detailed description of the change in the priority of payments following certain events of default and acceleration of the notes, you should read "Description of the Notes Priority of Payments'' and " Post-Acceleration Priority of Payments'' in this prospectus supplement. Overcollateralization may not increase as expected The overcollateralization is expected to increase to the targeted overcollateralization amount as excess spread is used to pay principal of the notes in an amount greater than the decrease in the pool balance. There can be no assurance that the targeted overcollateralization amount will be reached or maintained, or that the receivables will generate sufficient collections to pay your notes in full. For a more detailed description of overcollateralization as a form of credit enhancement for your notes, you should read "Credit Enhancement Overcollateralization'' in this prospectus supplement. The Class D notes will be undercollateralized on the closing date The initial principal balance of the Class D notes will be approximately 2.00% of the adjusted pool balance on the cutoff date. On the closing date, the aggregate principal balance of the Class A, Class B and Class C notes will be approximately 100% of the adjusted pool balance. As a result, because the Class D notes are subordinate to the other classes of notes, on an adjusted pool balance basis there will be no receivables supporting the Class D notes on the closing date. Although overcollateralization is expected to increase to the targeted overcollateralization amount, there can be no assurance as to when or whether such targeted level of overcollateralization will be achieved or maintained. Excessive prepayments and defaults on the higher APR receivables may adversely impact your notes Some of the receivables will have APRs that are less than the highest interest rate on the notes plus various fees. Interest payments on receivables with higher APRs help compensate for the lower S-14