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Ally Bank Lease Trust, et al. – ‘SF-3’ on 2/8/16

On:  Monday, 2/8/16, at 5:12pm ET   ·   Accession #:  1193125-16-453985   ·   File #s:  333-209435, -01

Previous ‘SF-3’:  None   ·   Next:  ‘SF-3/A’ on 3/31/16   ·   Latest:  ‘SF-3/A’ on 4/13/16   ·   1 Reference:  By:  SEC – ‘UPLOAD’ on 3/7/16

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 2/08/16  Ally Bank Lease Trust             SF-3                   8:3.5M                                   RR Donnelley/FA
          Ally Auto Assets LLC

Document/Exhibit                   Description                      Pages   Size 

 1: SF-3        Shelf Registration Statement for a Qualified        HTML   1.35M 
                          Offering of Asset-Backed Securities                    
 8: EX-36.1     Form of Certification                               HTML      9K 
 2: EX-3.2      Declaration of Trust                                HTML    143K 
 3: EX-5.1      Opinion of Kirkland & Ellis LLP                     HTML     20K 
 4: EX-8.1      Opinion of Kirkland & Ellis LLP                     HTML     18K 
 5: EX-24.1     Power of Attorney With Respect to Signatories for   HTML     11K 
                          Acol LLC                                               
 6: EX-24.2     Power of Attorney With Respect to Signatories for   HTML     11K 
                          Ablt                                                   
 7: EX-24.3     Power of Attorney With Respect to Signatories for   HTML     11K 
                          Ally Auto                                              

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As filed with the Securities and Exchange Commission on February 8, 2016

Registration Nos. 333-            

333-            

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM SF-3

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Ally Auto Assets LLC

(Depositor of the Issuing Entities Described Herein and Transferor of the Secured Notes to the Issuing Entities)

Ally Bank Lease Trust

(Issuer with respect to the Secured Notes)

(Exact name of each Registrant as Specified in its Charter)

With A Copy To:

Approximate Date of Commencement of Proposed Sale to the Public: from time to time after the effective date of this Registration Statement as determined in light of market conditions.

If any of the securities being registered on this Form SF-3 are to be offered pursuant to Rule 415 under the Securities Act of 1933, check the following box.  x

If this Form SF-3 is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this Form SF-3 is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

CALCULATION OF REGISTRATION FEE

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

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The information in this prospectus is not complete and may be changed. We may not sell the securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities, and we are not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to completion, dated            , 20    

Prospectus

ALLY AUTO RECEIVABLES TRUST 20     -SN

Issuing Entity (CIK:                     )

$            Asset Backed Notes, Class A

$            Asset Backed Notes, Class B

$            Asset Backed Notes, Class C

ALLY AUTO ASSETS LLC

Depositor (CIK: 0001477336)

ALLY BANK

Sponsor (CIK: 0001601846)

ALLY FINANCIAL INC.

Servicer and Administrator (CIK: 0000040729)

The interest rate for [each class of notes] will be a fixed rate [or a floating rate or a combination of a fixed rate and a floating rate if that class has both a fixed rate tranche and a floating rate tranche.] [If the Class A-2 Notes have a floating rate tranche, the issuing entity expects that the principal balance of the floating rate tranche will not exceed $         ].

The aggregate principal amount of the notes being offered under this prospectus is $[        ].

[As described in “Credit Risk Retention” in this prospectus, the depositor will retain [5]% of the principal balance of each class of the notes.]

The primary assets of the issuing entity will consist of a series of non-recourse secured notes. The secured notes have a security interest in a pool of new [and used] automobile and light duty truck leases and the related leased vehicles.

Credit Enhancement and Liquidity

[Revolving Period

The issuing entity will not pay principal during the revolving period, which is scheduled to terminate after the distribution date occurring on             , 20    . However, if the revolving period terminates early as a result of an early amortization event, principal payments may commence prior to that date.]

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these notes or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

[Underwriters]

The date of this prospectus is             , 20    

[CALCULATION OF REGISTRATION FEE

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IMPORTANT NOTICE ABOUT INFORMATION

PRESENTED IN THIS PROSPECTUS

You should rely only on the information provided in this prospectus and any pricing supplement hereto, including the information incorporated by reference in this prospectus. We have not authorized anyone to provide you with other or different information. We are not offering the notes in any state where the offer is not permitted.

This prospectus provides information regarding the pool of lease assets supporting a series of secured notes held by the issuing entity and the terms of your notes.

You can find definitions of the capitalized terms used in this prospectus in the “Glossary of Terms to Prospectus,” which appears at the end of this prospectus.

The term “Ally Bank,” when used in connection with Ally Bank’s capacity as [acquirer of the lease assets or as] acquisition agent with respect to the lease assets on behalf of ABLT, seller of the secured notes to the depositor or sponsor of the notes, includes any successors or assigns of Ally Bank in such capacity permitted pursuant to the transaction documents.

The term “Ally Financial,” when used in connection with Ally Financial Inc.’s capacity as underwriting agent on behalf of ABLT with respect to the lease assets, servicer of the lease assets, administrator of the secured notes or custodian of the lease asset files, includes any successors or assigns of Ally Financial Inc. in such capacity permitted pursuant to the transaction documents.

[To be included in each prospectus:] Ally Auto Assets LLC has met the registration requirements of General Instruction I.A.1 of Form SF-3 by filing no later than the date of the filing of the final prospectus, and determining that each of its affiliated depositors and issuing entities have timely filed, or have cured by filing at least 90 days prior to the date hereof:

FORWARD LOOKING STATEMENTS

Whenever we use words like “intends,” “anticipates” or “expects” or similar words in this prospectus we are making a forward-looking statement, or a projection of what we think will happen in the future. Forward-looking statements are inherently subject to a variety of circumstances, many of which are beyond our control and could cause actual results to differ materially from what we anticipate. Any forward-looking statements in this prospectus speak only as of the date of this prospectus. We do not assume any responsibility to update or review any forward-looking statement contained in this prospectus to reflect any change in our expectation about the subject of that forward-looking statement or to reflect any change in events, conditions or circumstances on which we have based any forward-looking statement, except as required by the federal securities laws.

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APPENDIX A: STATIC POOL DATA

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OVERVIEW

Under this prospectus, we are offering a series of notes that are backed by a pool of new [and used] automobile and light duty truck leases and the related leased vehicles. We refer to this pool as the “20    -SN pool” and to each lease and a beneficial interest in the related leased vehicle in the 20    -SN pool as a “lease asset.”

Ally Bank Lease Trust (“ABLT”) is a limited purpose trust that is wholly-owned by Ally Central Originating Lease LLC, or “ACOL LLC,” a wholly-owned special purpose subsidiary of Ally Bank. ABLT acquired each lease asset in the 20    -SN pool by purchasing the lease and the beneficial interest in related leased vehicle from a dealer [or from Ally Bank]. The leases in the 20    -SN pool generally are acquired by ABLT [or Ally Bank] under special incentive financing or residual support programs. ABLT financed the acquisition of the lease assets from dealers with the proceeds of advances extended to ABLT by Ally Bank under a revolving secured note issued pursuant to an intercompany advance and security agreement. Each leased vehicle in the 20    -SN pool is titled upon acquisition in the name of Vehicle Asset Universal Leasing Trust or V.A.U.L. Trust, which we refer to herein as “VAULT.” Ally Financial established VAULT for the purpose of holding and facilitating the transfer of legal title to the automobiles and light duty trucks subject to leases acquired by Ally Financial, Ally Bank or their subsidiaries, including ABLT. Ally Bank or Ally Financial, as agent of ABLT, will be noted as first lienholder on all of the certificates of title to the leased vehicles in the 20    -SN pool, and the AART indenture trustee will hold a perfected first priority security interest in these leased vehicles on behalf of the noteholders.

Upon the acquisition by ABLT of the lease assets in the 20    -SN pool, ABLT pledged the lease assets to secure its obligations to Ally Bank under the revolving secured note. On or before the [initial] closing date [and on each additional closing date during the revolving period], lease assets, including the beneficial interest in the related leased vehicles, will be allocated within ABLT to the 20    -SN pool. [We refer to these lease assets as the “initial lease assets.”] ABLT will issue a series of non-recourse secured notes, which we refer to herein as the “secured notes” or the “20    -SN secured notes,” to Ally Bank in exchange for a portion of the revolving notes issued under the intercompany advance and security agreement. Each secured note will be secured by a perfected first priority security interest in all of the lease assets in the 20    -SN pool. Two secured notes will be issued for the lease assets allocated to the 20    -SN pool on the “[initial] closing date.” Each of these “[initial] secured notes” will be in the amount equal to 50% of the secured note percentage of the aggregate ABS Value of the [initial] lease assets as of the cutoff date. [An additional secured note will be issued for the lease assets allocated to the 20    -SN pool on each “additional closing date.” We refer to these lease assets as the “additional lease assets.” Each of the “additional secured notes” secured by additional lease assets will be in the amount of     % of the aggregate ABS Value of the additional lease assets.] All secured notes will be paid ratably from aggregate collections on the entire 20    -SN pool.

ABLT also holds lease assets that are not part of the 20    -SN pool, which lease assets ABLT has financed with other non-recourse secured notes. Each pool of lease assets that secures a series of secured notes is a separate series interest under the ABLT declaration of trust and is not an asset of, or allocated as security to, any other series of secured notes.

On the [initial] closing date, Ally Bank will transfer the 20    -SN secured notes to the depositor, which in turn will transfer them to the issuing entity. The issuing entity is issuing the offered notes described in this prospectus and other securities that are not being offered under this prospectus.

VAULT and ABLT have been established to satisfy specific legal and operational requirements for the securitization of the lease assets. The 20    -SN secured notes serve the primary purpose of providing the issuing entity with the right to receive the cash flows generated by the 20    -SN pool of lease assets on a first priority perfected basis. These cash flows—along with the funds in the reserve account—will provide the primary source of payment on the notes issued by the issuing entity. Accordingly, this prospectus will principally describe the lease assets, the cash flows on the lease assets and the terms of the offered notes.

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RISK FACTORS

You should consider the following risk factors in deciding whether to purchase the offered notes.

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SUMMARY OF TRANSACTION PARTIES^*

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SUMMARY OF MONTHLY DEPOSITS TO AND WITHDRAWALS FROM ABLT AND AART

ACCOUNTS*

[DURING THE AMORTIZATION PERIOD]

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SUMMARY OF MONTHLY DEPOSITS TO AND WITHDRAWALS FROM ABLT AND AART

ACCOUNTS*

[DURING THE REVOLVING PERIOD]

See “The Transfer Agreements and Servicing Agreements—Distributions on the Notes—Priorities for Distributions from AART Collection Account: Revolving Period” for a description of the relative priorities of each class.

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SUMMARY OF MONTHLY DEPOSITS TO AND WITHDRAWALS FROM ABLT AND AART

ACCOUNTS*

[DURING THE AMORTIZATION PERIOD]

See “The Notes—Distributions on the Notes—Priorities for Distributions from AART Collection Account[: Amortization Period]” for a description of the relative priorities of each class.

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THE SPONSOR

Ally Bank was incorporated in 2004 under the laws of the State of Utah relating to industrial loan corporations under the name “GMAC Automotive Bank,” and changed its name to “GMAC Bank” in 2006. In December 2008, GMAC Bank converted into a Utah-chartered commercial nonmember bank and in May 2009 further changed its name to “Ally Bank.” Ally Bank is subject to regulation primarily by the Federal Deposit Insurance Corporation (“FDIC”) and the Utah Department of Financial Institutions.

The sponsor is a wholly owned indirect subsidiary of Ally Financial. On December 24, 2008, and in connection with the conversion of GMAC Bank into a Utah-chartered commercial nonmember bank now known as Ally Bank, Ally Financial and IB Finance Holding Company, LLC (“IB Finance”) were each approved by the Board of Governors of the Federal Reserve System (“FRB”) as bank holding companies under the Bank Holding Company Act of 1956, as amended. IB Finance is the direct holding company for Ally Bank and is a subsidiary of Ally Financial. As a result, Ally Financial and IB Finance are now subject to the supervision and examination of the FRB.

Ally Bank has its principal office at 6985 Union Park Center, Suite 435, Midvale, Utah 84047, Tel. No. (801) 790-5000, and administrative offices at 1100 Virginia Drive, Ft. Washington, Pennsylvania 19034.

Ally Bank provides a wide variety of automotive financial services to and through dealerships and to the customers of those dealerships. In these lines of business, Ally Bank principally finances the acquisition and resale by dealerships of various new and used automotive and non-automotive products and acquires from those dealers installment obligations covering retail sales [directly] and, through its subsidiary ABLT, leases of new and used vehicles. Ally Bank also provides dealer equipment facilities financing, residential mortgage financing and wholesale and retail financing.

Ally Bank’s financing operations are organized into two segments—automotive and mortgage products. The products and services offered by Ally Bank’s automotive financing operations include the funding of retail installment sale contracts, direct purchase money loans and leases, extension of term loans, dealer floorplan financing and other lines of credit.

In the retail market, Ally Bank provides vehicle financing to consumers through automotive dealerships, under the Ally Bank brand name. In most cases, Ally Bank purchases retail instalment sale contracts and, through a subsidiary, lease contracts for new and used vehicles and other products from dealers.

In the wholesale market, Ally Bank finances the acquisition and resale by dealerships of various new automotive and nonautomotive products.

Ally Bank has been actively acquiring or originating assets, including retail installment sale contracts, direct purchase money loans and leases[, directly and through a subsidiary,] and loans to dealers for the financing of dealer inventory, since its incorporation in 2004. Ally Bank began securitizing its retail assets in 2009, wholesale assets in 2010 and lease assets in 2011. Beginning in July 2014, all acquisitions of lease assets have been effected through Ally Bank’s subsidiary ABLT.

When Ally Bank securitizes automotive retail installment sale contracts, lease assets and wholesale finance receivables, it may retain an interest in the sold assets. These interests may take the form of asset-backed securities, including senior and subordinated interests in the form of investment grade, non-investment grade or unrated securities. Any notes or interests retained in the issuing entity by Ally Financial or its affiliates are described under “Credit Risk Retention” in this prospectus.

ABLT will select the lease assets from its U.S. portfolio of new and used retail car and light duty truck lease assets using the methodology described in under “The Lease Assets and the Secured Notes—Criteria Applicable to the Selection of [Initial] Lease Assets” [and “The Lease Assets and the Secured Notes—Criteria Applicable to the Selection of Additional Lease Assets During the Revolving Period”] in this prospectus.

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None of Ally Bank, Ally Financial or any of their respective affiliates other than the issuing entity will be obligated to make, or otherwise guarantee, any principal, interest or other payment on the notes or the certificates.

Ally Bank is the sponsor of the transaction set forth in this prospectus. Ally Bank has securitized its lease assets in one registered offering in 2012, one registered offering is 2013, two registered offerings in 2014 and one registered offering in 2015. Ally Bank has securitized its retail auto receivables in five registered offerings in 2010, five registered offerings in 2011, five registered offerings in 2012, two registered offerings in 2013, three registered offerings in 2014, two registered offerings in 2015 and one registered offering in 2016. Ally Bank completed two private placement retail auto transactions in 2009, one private placement retail auto transaction in 2012, one private placement lease transaction in 2011 and one private placement retail auto transaction in 2014. In those retail and lease securitizations, Ally Bank sponsored trusts and issuing entities have issued securities with an aggregate initial principal balance of approximately $36.6 billion. Ally Bank has securitized its wholesale receivables in one registered offering and four private placement transactions in 2010, four registered offerings and one private placement transaction in 2011, five registered offerings in 2012, three registered offerings in 2013, five registered offerings in 2014 and three registered offerings in 2015, with the publicly offered and privately placed notes having an aggregate initial principal balance of approximately $17.1 billion. As of December 31, 2015, none of the prior securitizations sponsored by Ally Bank have defaulted or experienced an early amortization or similar triggering event.

For further details with respect to Ally Bank’s prior public securitizations over the last [four] [five] years, see “Appendix A—Static Pool Data” in this prospectus.

DESCRIPTION OF AUTO LEASE BUSINESS

Acquisition and Underwriting of Motor Vehicle Leases

Ally Bank directly and through its subsidiary ABLT leases automobiles and light duty trucks to retail customers and acquires such leases and the related leased vehicles through agreements with automobile and light duty truck dealerships and affiliated leasing companies. See “The Sponsor” in this prospectus. Dealers are not responsible for the customer’s performance during the lease period nor for the value of the vehicle at the scheduled lease end date. Manufacturers may elect to sponsor retail leasing programs to increase vehicle sales, including establishing below-market lease rates and/ or establishing residual values in excess of those values published in residual guide books that have been used by Ally Bank and its affiliates, including ABLT.

Since July 2014, Ally Bank has acted as acquisition agent on behalf of ABLT. As acquisition agent, Ally Bank is responsible for negotiating purchases of lease assets from dealers on ABLT’s behalf, reviewing leases for conformance with acquisition standards, arranging for issuance and delivery of related documentation, arranging and facilitating payment by ABLT of amounts paid to purchase the leases and instructing dealers to take necessary actions to cause the certificates of title to be issued in the name of VAULT as nominee for ABLT. Ally Bank is paid reasonable compensation for its services as acquisition agent.

The process of acquiring leases begins, in general, with the application by a customer for a lease of a motor vehicle at a participating dealer. Applications are initiated through websites established and maintained by the sponsor or its affiliates or third parties. Prior to December 31, 2014, applications could also have been initiated by fax.

[With respect to leases acquired by Ally Bank before July 2014, Ally Bank and Ally Financial used an underwriting process in which applications are reviewed solely by Ally Financial credit underwriters. These credit underwriters used Ally Bank’s underwriting standards when evaluating applications on behalf of Ally Bank].

Ally Financial acts as underwriting agent for ABLT. As underwriting agent, Ally Financial is responsible for reviewing leases for conformance with acquisition standards, maintaining records of ABLT’s lease asset acquisition activities, processing lease contracts and implementing quality control on behalf of ABLT. Customer applications are reviewed by Ally Financial credit underwriters implementing ABLT’s underwriting standards. Ally Financial is paid reasonable compensation for its services as underwriting agent. As the underwriting is done on behalf of ABLT, we generally refer in this prospectus to ABLT rather than Ally Financial when describing the underwriting process.

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The application evaluation process begins with the placement of each application into one of several analytical categories or “segments,” based on specified aspects of the applicant’s credit profile and of the related vehicle. Ally Financial on behalf of ABLT [or Ally Bank for leases acquired prior to July 2014] then evaluates each application by applying a proprietary credit scoring algorithm. Ally Financial designed the credit scoring algorithm with assistance from a third party credit scoring company. The credit scoring algorithm is reviewed and updated on a periodic basis in order to account for changes in the perceived impact of specific inputs on applicant creditworthiness. The most recent credit scoring algorithm redevelopment was implemented in May 2015.

The output of the credit scoring algorithm is referred to as the “odds.” The odds predict the statistical likelihood that a loss will occur with respect to that lease asset, but do not predict the performance of any lease asset with certainty. Ally Bank uses the odds to sort applicants into several different credit tiers. Concurrently with this process, Ally Bank as acquisition agent for ABLT takes other steps to gather information regarding the applicant, such as checking lists maintained by the Office of Foreign Assets Control and performing fraud and duplicate application checks.

Once the information is gathered, Ally Bank, [on its own behalf or] as agent for ABLT, analyzes the application to determine whether to approve it. These determinations are made judgmentally on the basis of all of the information available to ABLT and [its agents] [Ally Bank], including the following:

[Ally Bank’s and] ABLT’s standards also require physical damage insurance to be maintained on each leased vehicle.

Applications are first evaluated through an automated process. Applications are approved or declined and credit decisions are made either entirely through the automated process or through the automated process followed by manual review by a credit underwriter. An automated process was developed in order to expedite the review of applications. The automated process uses an algorithm to approve applications with various combinations of credit factors that have been observed over time to receive credit underwriter approval. As a result, there are many clusters of credit factors that will lead to an automated approval, rather than one or a few sets of benchmark characteristics. Final approval based solely on automated approval, without manual review, is limited to the higher quality credit tiers. However, even in the highest quality credit tier, a significant portion of approved applications are approved by credit underwriters rather than by the automated process.

The sponsor may use programs developed and maintained by the sponsor or third parties that would allow it to complete the entire leasing process electronically. The resulting leases will be electronically signed by the related obligors and maintained by the sponsor or third parties in electronic form only.

Leases that are acquired under incentive programs sponsored by vehicle manufacturers, typically have implied lease rates that, upon lease origination, are below current market rates or Stated Residual Values that are higher than the ALG Residual (as defined below).

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Once the lease agreement, title application, insurance form, odometer statement and various other forms have been completed by the dealer, Ally Bank or its affiliate on behalf of ABLT directs the dealer to title the vehicle in the name of VAULT, as nominee, and to record a lien in favor of Ally Bank, ABLT or Ally Financial, as its agent, on the vehicle’s certificate of title. The dealer sends the appropriate paperwork to Ally Bank or its affiliate on behalf of ABLT. Ally Bank or its affiliate then enters essential information into the centralized database after which billing statements are automatically generated and mailed monthly to the lessee. Several processing centers are responsible for the processing of monthly payments, while Ally Bank’s or its affiliates’ branches take charge of all collection efforts against delinquent lessees.

Prior to transferring possession of a vehicle to a lessee, the dealer must:

Fees and taxes are included in the lessee’s monthly payment, including acquisition fees and documentation expenses. The dealer is responsible for titling and registering the vehicle, unless the applicable state’s motor vehicle department permits or requires the lessee to submit the title and registration documentation.

Underwriting Exceptions

[Each of Ally Bank and] ABLT has established a series of policies, or “underwriting criteria,” that apply to the review of a credit application. The underwriting criteria contain guidelines for many attributes of an application, such as a maximum payment-to-income ratio and minimum credit score and, for lower credit quality applicants, maximum debt-to-income ratio. Some, but not all, of these guidelines will vary according to the credit tier of the applicant or the term of the proposed lease, with a higher credit tier or a shorter lease term generally having a more permissive guideline.

Credit underwriters have a limited ability to approve exceptions to the guidelines contained in the underwriting criteria. Exceptions to the credit policies must be approved by credit underwriters with appropriate credit authority. Approved applicants that do not comply with all credit guidelines typically have strong compensating factors that indicate a high ability of the applicant to make lease payments, such as a co-lessee or a shorter lease term. Examples of underwriting exceptions may include allowing a longer term or a greater ratio of payment to income or debt to income than the standard allowances for such criteria. [Each of Ally Bank and] ABLT monitors exceptions to the guidelines, with the goals of limiting exceptions to a small portion of approved applications and rarely permitting more than a single exception for any lease. Information regarding lease assets in the 20    -SN pool that constituted exceptions to the guidelines is disclosed in this prospectus under “The Lease Assets and Secured Notes—Exceptions to Underwriting Guidelines.”

Determination of Residual Value

Historically, Ally Bank and its affiliates used residual values from the Automotive Lease Guide to set residual values on vehicles at the time of lease acquisition. The Automotive Lease Guide is an independent publication of vehicle residual values and is frequently used for comparison purposes by the vehicle leasing industry. We refer to the expected value of a vehicle at the scheduled lease end date of the related lease as determined by the Automotive Lease Guide, as adjusted as set forth in the paragraph below, at the date specified in this prospectus as the “ALG Residual.” Prior to August 2009, Ally Bank and its affiliates calculated the residual value stated in each lease, which we refer to as the “Stated Residual Value,” by adding a percentage of the manufacturer’s suggested retail price or “MSRP” to the ALG Residual of that vehicle. The percentage of MSRP added to the ALG Residual varied according to the level of lease payments desired by the applicable manufacturer and Ally Bank and its affiliates as well as other factors, such as the vehicle model being leased and the mileage level per year specified in the lease. The maximum allowable residual value with respect to a new leased vehicle is the MSRP for the base vehicle plus options. We use the concept “Lease Residual,” which is the lesser of the Stated Residual Value and the ALG Residual (in each case, set at lease inception and discounted at the Discount Rate), to establish the ABS Value of the lease assets.

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Beginning in August 2009, to mitigate residual exposure at lease termination, Ally Bank and its affiliates elected to risk adjust the ALG Residual to set residual values of leased vehicles. Risk adjustments to ALG Residual were determined at lease inception and were based on past residual performance of Ally Bank’s portfolio. Except in very limited circumstances, such adjustments generally result in a reduction of the ALG Residual. In early 2012, Ally Bank adopted a new model to set residual values using multiple variables based on its historical experience.

[In 2008, due to the economic downturn, Ally Bank experienced residual value losses as used car values declined, which continued into the early part of 2009. As the used car market recovered in the second half of 2009, Ally Bank once again experienced marginal residual gains. This favorable trend continued in 2010 through 20[15] as Ally Bank reported residual gains in both scheduled and early terminations. We cannot assure you that this trend towards declining residual value losses and increasing residual value gains will continue or that residual value losses experienced in future periods will be greater or less than residual value losses experienced in previous periods.]

Currently, Ally Bank and its affiliates have dedicated internal teams that focus on residual setting. The teams utilize proprietary internal models as well as product evaluation in determining the appropriate residual value for a given vehicle. Ally Bank and its affiliates also consult third party residual forecasts as part of the residual setting process. Automotive Lease Guide is currently one of three external vendors that supply residual value forecasts.

Ally Bank distributes residual value tables to its affiliates and franchised dealers bi-monthly. The tables provide residual value percentages for each new vehicle available for lease terms of 12, 24, [27,] 30, 36, [39,] 42, 48 and 60 months. If a term and corresponding residual value percentage are not published, the dealer will interpolate the number by averaging the nearest published data above and below the desired term.

Terms of Motor Vehicle Leases

Each lease and related leased vehicle is or was purchased from the dealer by Ally Bank or ABLT for its “capitalized cost,” which may exceed the MSRP. The capitalized cost represents the present value (as of the acquisition date) of the monthly payments due on a lease and the Stated Residual Value discounted at an implied lease rate. Each lease provides for level monthly payments except for the first and last monthly payments, and the monthly payments on a lease are generally due on the same day of each month.

A lease may terminate before its scheduled termination date—which we call an early termination—in one of the following ways: a voluntary early termination by the lessee under a Pull Ahead Program or otherwise, or a liquidation due to a default under the lease or a casualty loss of the leased vehicle.

Each lease agreement provides that the lessor may terminate the lease and retake the vehicle if the lessee defaults. Events of default under the lease agreement include, but are not limited to, the occurrence of the following:

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Upon default, the lessor or assignee may terminate the lease agreement and the lessee is responsible for any payments otherwise required upon early termination of the lease.

Each lease agreement may be terminated by the lessee at any time before its scheduled lease end date. If a lease agreement is terminated early, the lessee must return the vehicle to Ally Bank or its affiliate or to any reasonable address Ally Bank or its affiliate designates and complete an odometer disclosure statement. Except for leases terminated under a Pull Ahead Program, upon early termination the lessee will owe an amount equal to the total unpaid monthly payments, less unearned lease charges, plus any unpaid fees and taxes and charges for excess mileage and excess wear, to the extent not offset by the excess of the vehicle’s sales price over the Stated Residual Value of the vehicle, all as stated in the lease agreement. For leases terminated early under a Pull Ahead Program, lessees are only responsible for any accrued but unpaid monthly lease payments and payment of the excess wear and excess mileage charges as described below under “—Pull Ahead Programs and Other Early Termination Marketing Programs” in this prospectus. Each lease agreement provides that the lessee may, at its own expense, obtain from an independent third party acceptable to Ally Bank or its affiliate a professional appraisal of the vehicle’s wholesale value that could be realized at sale. The appraised value will be binding and used as the sales price when determining whether or not there is any surplus.

All of the leases are closed-end leases. Under a closed-end lease, at the end of its term, if the lessee does not elect to purchase the vehicle by exercise of the purchase option contained in the lease agreement, the lessee is required to return the vehicle to Ally Bank or its affiliate or any reasonable address Ally Bank or its affiliate designates. After the vehicle is returned, an inspection will be completed by either the dealer or a third party inspection company. As with an early termination by the lessee, the lessee must complete an odometer disclosure statement and pay for excess mileage and excess wear charges and other items that may be due under the lease. The lessee is not required to pay the deficiency, if any, between the vehicle’s sale price and its residual value.

The lessee may exercise the purchase option under the lease agreement at the scheduled lease end date by paying the purchase price stated in the lease agreement. The purchase price is established by the dealer at lease inception and is described in the “Purchase Option at End of Lease Term” section of the lease agreement. Beginning in 2009, originated leases included a $2,500 premium in the purchase option over the contract residual value, however, this practice was discontinued in July 2012 with respect to leases related to vehicles manufactured by General Motors and in January 2013 with respect to leases related to vehicles manufactured by Chrysler Group LLC and Fiat S.p.A.

Vehicle Maintenance; Excess Wear and Excess Mileage

Each lease provides that the lessee is responsible for all maintenance, repair, service and operating expenses of the leased vehicle. In addition, the lessee is responsible under the related lease for all excess damage to the leased vehicle and for its loss, seizure or theft. At the scheduled lease end date of the lease, if the lessee does not purchase the leased vehicle, the lease requires the lessee to pay Ally Bank or its affiliate the estimated cost to repair any damage to the vehicle that is deemed to be “excess wear.” Excess wear generally includes such items as inoperative mechanical and electrical parts, damage to the body, lights, trim or paint, missing equipment, parts and accessories, and similar items.

Each lease also specifies a selected mileage level per year, which is one of the factors taken into account by Ally Bank or ABLT in establishing the residual value for a leased vehicle. For more information on the determination of residual values, see “—Determination of Residual Value” above. If the lessee does not purchase the leased vehicle at the end of the lease term, the lease requires the lessee to pay Ally Bank an excess mileage charge for each mile the vehicle has been driven in excess of the selected mileage level.

If the lessee fails to maintain the vehicle as required under the lease or to pay excess wear or excess mileage charges, the vehicle sale price could be reduced, in turn reducing amounts available to pay the secured notes and the notes.

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Pull Ahead Programs and other Early Termination Marketing Programs

Pull Ahead Programs are employed to promote customer loyalty by offering attractive early termination options for leases and to provide lessees with an incentive to purchase or lease new vehicles. These programs are also employed in an attempt to shift vehicles out of peak termination months and to increase the number of off-lease vehicles that are sold or auctioned during those months in which the purchase price for off-lease vehicles tends to be higher. Ally Financial acts as pull ahead agent for the vehicle manufacturers (in such capacity, the “Pull Ahead Agent”) in administering a Pull Ahead Program. Although the vehicle manufacturer or the Pull Ahead Agent, on behalf of the vehicle manufacturers, may commence a Pull Ahead Program, under the servicing agreement only Ally Financial as servicer (or any successor servicer) is permitted to waive, extend or modify the leases subject to the Pull Ahead Program. The terms of the leases do not give any lessee the right to instigate or participate in a Pull Ahead Program.

Under a Pull Ahead Program, the Pull Ahead Agent may elect to permit qualified lessees to terminate their leases prior to their respective scheduled lease end dates without having to make all or a portion of their remaining Monthly Lease Payments. In order to qualify for this program, the lessee must return its leased vehicle to a dealer or the applicable manufacturer’s dealer and purchase or lease a new vehicle from the same manufacturer. The lessee remains obligated to pay all accrued and unpaid monthly lease payments (other than Monthly Lease Payments waived in connection with the Pull Ahead Program) and any applicable excess mileage and excess wear charges based on the original lease terms. Under the pull ahead funding agreement, a lease becomes a Pull Ahead Lease Asset as of the end of the monthly period during which the servicer has received actual notice that the lessee elected to terminate the lease prior to its scheduled lease end date by delivery of the leased vehicle to a dealer in connection with the Pull Ahead Program and the related lessee has made payment of all required Monthly Lease Payments and any other required amount pursuant to the Pull Ahead Program. Under the servicing agreement, the servicer permits a lessee to participate in a Pull Ahead Program and accepts the Pull Ahead Payment from the Pull Ahead Agent in lieu of receiving all or a portion of the remaining monthly payments from the lessee as described below. On the first business day of each monthly period, the servicer (if the servicer is not Ally Financial) will notify the Pull Ahead Agent of the identity of all lease assets that have become Pull Ahead Lease Assets during the immediately preceding monthly period and the aggregate amount of Pull Ahead Payments paid and remaining to be paid for the preceding monthly period.

The pull ahead funding agreement will require the Pull Ahead Agent to pay an amount equal to the aggregate amount of the Pull Ahead Payments to the servicer (whether Ally Financial or any successor servicer) for deposit into the ABLT collection account. Pull Ahead Payments will be due on the second business day of the monthly period following any monthly period in which a lease asset is deemed to have become a Pull Ahead Lease Asset or, if the Monthly Remittance Condition is satisfied, on the third business day preceding the related distribution date. The servicer, whether Ally Financial or any successor servicer, will be required to deposit the Pull Ahead Payments into the ABLT collection account on the same day that it is received. The servicer may also direct the Pull Ahead Agent to deposit Pull Ahead Payments directly into the ABLT collection account. Any failure by Ally Financial, as servicer, to obtain and deposit the Pull Ahead Payments would be a servicer default under the servicing agreement. For a successor servicer, the failure to obtain a Pull Ahead Payment from the Pull Ahead Agent will not be a servicer default, but the failure to deposit any Pull Ahead Payment it receives will be a servicer default. If a servicer default has occurred and remains unremedied, the ABLT indenture trustee may terminate the servicer. See “The Transfer Agreements and Servicing Agreements—Servicer Default” in this prospectus. No lessee under a lease asset will be permitted to participate in any Pull Ahead Program unless: (1) the lessee has paid all amounts due and payable by the lessee under the lease on or before the date of the lessee’s election to terminate the lease (other than (A) excess wear and excess mileage charges, which will be charged to the lessee to the extent applicable in accordance with the lease and customary servicing practices, and (B) any remaining Monthly Lease Payments that have been waived pursuant to the Pull Ahead Program); and (2) the Pull Ahead Agent has made all Pull Ahead Payments that were due and payable as described above for all previous Pull Ahead Lease Assets on or prior to the date that is five business days before the date that the lease asset is deemed to have become a Pull Ahead Lease Asset. If the Pull Ahead Agent does not pay all Pull Ahead Payments to or at the direction of the servicer in a timely manner for deposit into the ABLT collection account, the servicer, whether Ally Financial or any successor servicer, will be required to use commercially reasonable efforts to collect any such unpaid Pull Ahead Payments and deposit them into the ABLT collection account.

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In addition to Pull Ahead Programs, other early termination marketing programs are utilized by vehicle manufacturers to encourage voluntarily early terminations by lessees, including offering incentives in connection with the purchase or lease of a new vehicle to lessees where the manufacturer believes that a vehicle’s sales price is likely to exceed the Stated Residual Value of such vehicle. In connection with early termination marketing programs that are not Pull Ahead Programs, lessees remain obligated to pay all accrued and unpaid monthly lease payments less unearned lease charges, plus any unpaid fees and taxes and any applicable excess mileage and excess wear charges based on the original lease terms to the extent not offset by the excess of the vehicle’s sales price over the Stated Residual Value of the vehicle, as described in this prospectus under “Description of Auto Lease Business—Terms of Motor Vehicle Leases.”

THE SERVICER AND THE ADMINISTRATOR

Ally Financial, directly and through its subsidiaries, most notably Ally Servicing LLC, services non-prime and prime automobile retail instalment sale contracts and leases acquired or originated by it and others on behalf of banks, credit unions, finance companies and securitized trusts. As of December 31, 2015, Ally Financial has originated over [75] securitizations of retail vehicle instalment sale contracts and leases through a combination of registered offerings and privately placed transactions. In those securitizations, Ally Financial has issued securities with an aggregate initial principal balance of over $[130] billion.

On the [initial] closing date, Ally Financial Inc., a Delaware corporation, will be appointed under the servicing agreement as servicer of the lease assets that are allocated to the 20    -SN pool under the allocation agreement. Ally Financial will be appointed as administrator of the secured notes to be owned by the issuing entity under the administration agreement. Ally Financial will also have serviced the lease assets on behalf of ABLT prior to their allocation to the 20    -SN pool. Ally Financial also acts as titling agent as described in “Vehicle Asset Universal Leasing Trust.” The depositor will transfer and assign to the issuing entity, without recourse, its entire interest in the secured notes, including its rights under the pooling agreement and under the trust sale agreement between the depositor and the issuing entity.

General Motors Acceptance Corporation, the predecessor of Ally Financial, was incorporated in 1919 under the New York Banking Law relating to investment companies. General Motors Acceptance Corporation relinquished that status and became a Delaware corporation on January 1, 1998. Ally Financial has its principal executive offices at 200 Renaissance Center, Detroit, Michigan 48265. It provides services from multiple locations throughout the United States. In July 2006, General Motors Acceptance Corporation converted to a Delaware limited liability company and changed its name to GMAC LLC. In June 2009, GMAC LLC converted to a Delaware corporation and changed its name to GMAC Inc. On May 10, 2010, GMAC Inc. changed its name to Ally Financial Inc.

On November 30, 2006, General Motors sold 51% of the common equity interests of Ally Financial to a consortium of investors, led by an affiliate of Cerberus Capital Management, L.P. We refer to that transaction as the “Acquisition.”

On December 24, 2008, and in connection with the conversion of GMAC Bank into a Utah-chartered commercial nonmember bank, Ally Financial and IB Finance were each approved by the FRB as bank holding companies under the Bank Holding Company Act of 1956, as amended, or the “BHCA.” IB Finance is a subsidiary of Ally Financial and the direct holding company for Ally Financial’s bank depository institution, GMAC Bank, which is now known as Ally Bank. On December 23, 2013, Ally Financial was approved by the FRB as a financial holding company under the BHCA.

Since becoming a bank holding company, Ally Financial received various investments from the U.S. Department of the Treasury, the “Treasury,” in connection with the Treasury’s Supervisory Capital Assessment Program. On November 20, 2013, Ally Financial repurchased all of the Treasury’s then outstanding mandatorily convertible preferred stock. On April 15, 2014, Ally Financial closed an initial public offering of 95,000,000 shares of its common stock. The Treasury announced on December 19, 2014 that it had sold its remaining Ally Financial common stock.

Ally Financial, directly and through its subsidiaries, most notably Ally Servicing LLC, or “Ally Servicing,” formerly known as Semperian LLC, services prime and non-prime automobile retail instalment sale

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contracts and retail motor vehicle leases acquired or originated by it and others on behalf of banks, credit unions, finance companies and issuers of asset-backed securities. Ally Financial and Ally Servicing have entered into a subservicing agreement with Ally Servicing and Ally Bank under which Ally Financial has engaged Ally Servicing’s services with respect to certain retail and lease assets. In the event of any removal of Ally Financial as the servicer, Ally Servicing will no longer be involved in the servicing of the lease assets.

Ally Servicing is a wholly-owned subsidiary of Ally Financial. Ally Servicing, a Delaware limited liability company, was originally incorporated as AccuTel, Inc. on April 8, 1999. On July 21, 2005, AccuTel changed its name to Semperian, Inc. Semperian, Inc. subsequently converted to a limited liability company. Semperian LLC changed its name to Ally Servicing LLC in August 2010.

Ally Servicing has its principal office at 2000 Town Center, Suite 2200, Southfield, Michigan 48075, Tel. No. 248-948-7702.

Since 1999, Ally Servicing has acted as a sub-servicer for Ally Financial, and has assumed increased servicing responsibilities over time. Currently, Ally Servicing acts as a sub-servicer for the entire U.S. portfolio of retail instalment sale contracts and retail motor vehicle leases serviced by Ally Financial. Ally Servicing performs its sub-servicing operations from centers located in Jacksonville, Florida; Shoreview, Minnesota; Lewisville, Texas and Little Rock, Arkansas.

A table under “The Sponsor’s Portfolio Data—Delinquency, Repossession and Credit and Residual Loss Data on Ally Bank Lease Assets” sets forth the size and composition of the total portfolio of retail motor vehicle leases of Ally Bank and its subsidiaries for which Ally Financial has provided servicing in each of the last five years.

SERVICING AND ADMINISTRATION PROCEDURES

Servicer. As part of its efforts to collect payments due on the lease assets and to dispose of leased vehicles, the servicer is allowed, for example, without the prior consent of the depositor, the issuing entity, the AART or ABLT indenture trustee, the AART or ABLT owner trustee, or any other person, to establish the means and timing for contacting lessees in respect of overdue payments, repossess the vehicles securing the leases, deliver notices, demands, claims, complaints, responses or other documents in connection with any proceedings, execute any instruments of satisfaction or cancellation, or of partial or full release or discharge of underlying lessees, grant extensions, rebates or adjustments on a lease, and waive any prepayment, late payment, or any other fees or charges that may be collected in the ordinary course of servicing such leases. The servicer is not liable for the exercise of discretion made in good faith and in accordance with its established servicing procedures.

The servicer maintains the account information with respect to each serviced account. That information resides on a centralized accounts receivable system that is currently maintained by HP Enterprise Services and for which Ally Financial has a right of use under a perpetual license. The servicer is also responsible for maintaining title records with respect to vehicles securing serviced contracts together with the related contract. As of the date of this prospectus, those documents are maintained for the servicer by PDP Group, Inc. at a facility in Hunt Valley, Maryland. Images of those documents are maintained on systems maintained at and accessible from locations different from the locations of the physical documents. Each contract included in the pool is marked on the applicable computer files to indicate its transfer to the applicable entity.

The servicer will make reasonable efforts to collect all payments due on the leases held by the issuing entity and will, consistent with the servicing agreement, follow the collection procedures it follows for comparable automotive leases that it services for itself or others. See “Legal Aspects of the Secured Notes and the Lease Assets” in this prospectus.

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The servicer produces and mails a monthly statement of account, or electronically delivers notification of statement availability through its website, to lessees prior to the due date of the related payment. Payments may be made either by check or through an automated clearing house (ACH) debit of the lessee’s account.

If the payment remains outstanding, the servicer mails an initial notice of overdue payment to the lessee on or about the eighth day following the due date.

Lessees whose payment remains delinquent for a specified period following the payment due date are assigned to collections groups based on their risk profile, which is formulated from an algorithm tied to the lessee’s payment history. Most lessees initially receive an automated voice message notifying them of the delinquency. If a payment remains outstanding, most accounts are subsequently assigned to the low risk collections group, which contacts lessees using an automated dialing system. Low risk collections are outsourced to third parties with which Ally Servicing contracts for the provision of collection related services. These third parties act under the direct supervision of Ally Servicing and are required to follow the servicer’s servicing policies. Genpact has been providing this service to Ally Servicing since July 2008. In February 2010, Sykes Enterprises, Incorporated, or “Sykes,” acquired ICT Group, which had been providing this service to Ally Servicing since April 2007. Alliance One, a Teleperformance company, provided collection services to Ally Servicing from December 2009 to July 2015.

Based on the algorithm, responsibility for calls progresses to the early high risk collections group at differing times but generally at no later than 31 days past due. The early high risk collection teams attempt to establish contact with the lessee by telephone and continue to attempt to obtain payment. Early high risk collections are outsourced to Genpact or Sykes. If an account has a higher risk score, it will be transferred to an Ally Servicing collection group.

Depending on the risk profile, delinquent accounts typically progress from the early high risk collections group to the high risk collections group at 60 days past due. The high risk collection teams attempt to establish contact with the lessee by telephone and continue to attempt to obtain payment. High risk collection activity is performed by Ally Servicing.

Administrator. The administrator will make reasonable efforts to collect all payments due on the secured notes and will, consistent with the Transfer Agreements and Servicing Agreements, follow the collection procedures it follows for comparable property that it services for itself and others. See “Legal Aspects of the Secured Notes and the Lease Assets” in this prospectus.

If the administrator determines that eventual payment in full of a secured note is unlikely, the administrator will follow its normal practices and procedures to realize upon the secured note, including the taking of any action permitted by applicable law.

Insurance Required to be Maintained by Lessees

Each lease requires the lessee to maintain automobile bodily injury and property damage liability insurance that names Ally Financial as an additional insured. Each lease further requires the lessee to maintain (all risks) comprehensive and collision insurance covering damage to the leased vehicle and naming Ally Financial as loss payee.

Waivers, Modifications and Extensions

Subject to its customary standards, policies and procedures comparable to practices followed by the servicer in servicing automotive leases for itself and for third parties, and to its obligation under the transaction documents to make reasonable efforts to collect payments on the leases, the servicer has discretion to grant waivers, extensions or other modifications on leases. In the case of extensions, occasionally, a lessee requests an extension of a lease contract for one or more months during the period of time between the original specified maturity of the lease and the time at which the lessee negotiates a new lease for a different vehicle. Currently, Ally Financial may extend the performance of the lessee’s obligations on a monthly basis up to a maximum of four months if the lessee is not in default on any of its obligations under the lease and if the lessee agrees to continue to make monthly payments. If Ally Financial, as servicer, extends performance on the lease and determines to make a Residual Advance on the Extended Lease, the Residual Advance will be made at the same time as it would have been made if Ally Financial had not extended the lease. See “The Transfer Agreements and Servicing Agreements—Advances by the Servicer.”

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If the servicer grants any waiver, modification or extension on any lease in violation of the prohibitions described in “The Transfer Agreements and Servicing Agreements—Allocation of Lease Assets and Sale and Assignment of Secured Notes—Allocation of Lease Assets,” it will be obligated to purchase that lease from ABLT.

Collection and Repossession Procedures

If the servicer determines that eventual payment in full of a lease is unlikely, the servicer will follow its normal practices and procedures to realize upon the lease, including the repossession and disposition of the leased vehicle at a public or private sale, or the taking of any other action permitted by applicable law. The servicer will be entitled to receive its liquidation expenses as specified in the servicing agreement as an allowance for amounts charged to the account of the lessee, in keeping with the servicer’s customary procedures, for refurbishing and disposition of the leased vehicle and other out-of-pocket costs incurred in the liquidation. See “Certain Fees and Expenses” in this prospectus.

Accounts for which the servicer has made a determination to repossess the vehicle are referred to an outside repossession company located in the area of the lessee or in some cases, to a national provider. Those repossession companies are generally small local operations whose sole function is to repossess the related motor vehicle. In some areas, accounts issued for repossession are assigned to a service provider who oversees the repossession activity of its subcontractor. The service provider is responsible for the activity of the subcontractor. Typically, once the car is repossessed, a letter is sent to the lessee to inform the lessee of the repossession, an affidavit of repossession is produced and title is obtained. Generally, the vehicle is then sold at auction (traditional auction or SmartAuction), although, at Ally Financial’s discretion, to maximize net proceeds, limited repairs and or refurbishing may be performed prior to sale. See “—Vehicle Disposition Process” below for more information.

The net sale proceeds are applied to reduce the balance owing by the lessee inclusive of excess mileage or wear pursuant to the contractual terms of the lease agreement. Excess proceeds, if any, are remitted to Ally Financial, as servicer on behalf of ABLT, the owner of the beneficial interest in the vehicle. Deficiency balances along with excess mileage and wear charges, if any, are charged off. Following charge off, the account is assigned to the asset recovery center, located in Lewisville, Texas, for evaluation and possible further attempts to collect amounts owing by the lessee. There is an exception to that process for lessees in bankruptcy.

In some situations a lessee may become delinquent and is willing but unable to bring his/her account current. In this situation, at the discretion of Ally Financial, but subject to specific guidelines, one or more payments under the relevant lease may be deferred, provided that the lessee pays a deferral fee. If Ally Financial agrees to defer lease payments, it must make Advances on the deferred lease.

Vehicle Disposition Process

Leased vehicles may be returned to an authorized dealer or purchased directly by the dealer or lessee at maturity or upon early termination, or may be repossessed upon default.

Ally Bank and ABLT, through their affiliate Ally Financial, use three remarketing channels to dispose of vehicles: direct sales to dealers or lessees, SmartAuction (Ally Financial’s proprietary wholesale internet auction) and physical auctions. The primary objectives of the vehicle disposition process are to maximize sales proceeds while minimizing expense.

Each lessee has the option to purchase the leased vehicle upon scheduled termination of the lease at the price stated in the applicable lease. If the lessee does not exercise this option, the vehicle is offered for sale to the dealer to which the leased vehicle was returned. These sales are priced using an estimation of market value with minimal remarketing expense associated with this channel as vehicles are not moved or reconditioned by Ally Financial prior to sale. Vehicles not bought directly by the lessee or dealer are remarketed via SmartAuction and physical auctions. These sales involve interactive bidding based on a floor price. Off-lease vehicles are generally sold via SmartAuction within 25 days of the date the lessee returns the leased vehicle to the dealer and via physical auction within 55 days of the return date. The entire vehicle disposition process generally takes an average of 26 days from the return of the vehicle.

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Off-lease vehicles are returned to an authorized dealer who is responsible for reporting the return to Ally Financial and providing a completed vehicle odometer statement and deciding whether to purchase the vehicle. If the vehicle is not purchased under the direct to dealer/lessee channel, a vehicle condition/inspection report is completed by a third-party vendor hired by Ally Financial. Lessees are responsible for excess wear and/or mileage based on the condition/inspection report. Once a vehicle inspection has been completed, most vehicles are offered for sale via SmartAuction. If the vehicle is sold, Ally Financial electronically collects proceeds from the purchasing dealer. The purchasing dealer is responsible for picking up the vehicle from the storing location, which is typically another dealership. Generally, the proceeds from the sale of the vehicle via SmartAuction result in greater sales proceeds than via a physical auction. As of the date of this prospectus, a majority of off-lease vehicles not bought directly by the dealer/lessee are sold via SmartAuction. The remaining vehicles are shipped to physical auction locations and either sold in a “closed” auction (open to General Motors dealers only) or an “open” auction (open to all licensed dealers).

At the physical auction location, Ally Financial will recondition the vehicle and make repairs to the vehicle only if an employee of Ally Financial at the auction reasonably expects this work would increase the net proceeds on the sale of the vehicle. Generally, this practice results in only a limited amount of basic repairs, such as glass replacement and the repair of other safety-related damage.

An employee of Ally Financial at the auction site is responsible for handling Ally Bank’s and ABLT’s decisions with respect to the vehicles sold at the auction, including approving repair orders, setting auction dates and determining whether bids received at auction should be accepted. When the vehicle is sold, Ally Financial electronically collects proceeds from the auction. The purchasing dealer is responsible for all transportation costs.

Collections

The servicer will deposit collections into the ABLT collection account and the AART collection account within two business days of receipt. However, the servicer may retain these amounts until the distribution date at any time that:

Pending deposit into the ABLT collection account and the AART collection account, collections may be employed by the servicer at its own risk and for its own benefit and will not be segregated from its own funds. In such case, all gains and losses resulting from the investment of those funds will be for the account of the servicer and will not alter in any respect the amount that the servicer is obligated to remit to the ABLT collection account or the AART collection account in respect of collections on the following distribution date. See also “Insolvency Aspects of the Offering” in this prospectus.

Collections on any lease assets, other than those with respect to which Administrative Purchase Payments or Warranty Payments are required to be or have been paid by ACOL LLC, Ally Bank or the servicer, that are not (1) late fees, prepayment charges or other similar fees or charges, (2) amounts received by the servicer with respect to any administrative fees, parking tickets or fines, (3) rebates on insurance premiums or other amounts required by applicable law to be paid or refunded to lessees or (4) fees and sales, use or other taxes or payments due under that lease, will be applied first to any Outstanding Advances made by the servicer on that lease and then to the Monthly Lease Payment. The servicer will apply funds in the Payment Ahead Servicing Account for any lease asset to any shortfall in the Monthly Lease Payment for that lease asset. Any Excess Payment will be held by the servicer or, if the servicer has not satisfied the Monthly Remittance Condition, will be deposited into the Payment Ahead Servicing Account and will be treated as a Payment Ahead.

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Collections on lease assets for which Administrative Purchase Payments or Warranty Payments have been made will generally be applied in the manner described in the preceding paragraph, except that unapplied payments on these lease assets will be made to the servicer or the depositor, as applicable.

If the Monthly Remittance Condition is satisfied, the servicer will retain any partial prepayment on a lease that it receives prior to its scheduled distribution date other than a prepayment in full received in connection with early termination of a lease. If the Monthly Remittance Condition is not satisfied, the servicer will deposit partial prepayments into the Payment Ahead Servicing Account within two business days of receipt of the prepayments. The servicer will include the partial prepayment in distributions to the secured notes on the distribution date after the scheduled payment date for the lease for which the partial payment was made.

Servicing and Administration Compensation and Payment of Expenses

Servicing of Underlying Leases and Leased Vehicles. In addition to acting as administrator of the secured notes, Ally Financial also acts as servicer for the leases and leased vehicles under the servicing agreement with ABLT.

Under the servicing agreement, Ally Financial will receive for the servicing of the 20     -SN pool:

Servicing fees will be paid out of funds available for that purpose. The relative priority of basic servicing fees and any other servicing fees are set forth in “The Notes—Distributions on the Notes.” The basic servicing fee for each Monthly Period and any portion of the basic servicing fee that remains unpaid from prior distribution dates will be paid at the beginning of that monthly period out of collections for that monthly period. In addition, the servicer will retain any late fees, prepayment charges or similar fees and charges collected during a monthly period and any investment earnings on ABLT accounts during a monthly period[, subject to any limitations set forth with respect to any particular account].

The lease asset servicing fees described above are intended to compensate the servicer for performing the function of a servicer of leases and leased vehicles, including:

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These amounts will also compensate the servicer for its services as servicer of the pool of lease assets, including making Advances, accounting for collections, furnishing monthly and annual statements to the ABLT owner trustee and the ABLT indenture trustee and generating federal income tax information for ABLT and the holders of the secured notes. These amounts will also reimburse the servicer for its expenses incurred in connection with its responsibilities under the servicing agreement for taxes, the fees of the ABLT owner trustee and the ABLT indenture trustee, accounting fees, outside auditor fees, data processing costs and other costs incurred in connection with administering the leases and the leased vehicles.

Administering the Secured Notes. On each distribution date, the administrator of the secured notes will receive an administration fee for the related Monthly Period equal to one-twelfth of the administration fee rate multiplied by the aggregate principal balance of all secured notes held by the issuing entity as of the first day of that month, subject to any limitations set forth in this prospectus. On each distribution date, the administrator will be paid the administration fee and any unpaid administration fees from all prior distribution dates to the extent funds are available. All administration fees for each month, together with any portion of administration fees that remains unpaid from prior distribution dates, may be paid monthly out of money in a collection account at the issuing entity.

The secured note administration fee described above is intended to compensate the administrator for performing the functions of a third party servicer of secured notes as an agent for their beneficial owner, including:

These amounts also will reimburse the administrator for taxes, the fees of the AART owner trustee and the AART indenture trustee, accounting fees, outside auditor fees, data processing costs and other costs incurred in connection with administering the secured notes.

Compensation for Administering the Secured Notes. Ally Financial will act as the administrator for the issuing entity. In that capacity, Ally Financial will handle all payments, administer defaults and delinquencies and perform other duties relating to the issuing entity. On each distribution date, the issuing entity will pay Ally Financial, as the administrator, the administration fee for providing the services. The amount payable on a distribution date with respect to administration fees consists of the administration fee for the previous monthly period and unpaid administration fees from prior distribution dates. The monthly “administration fee” is equal to one-twelfth of [0.01]% of the aggregate Secured Note Principal Balance at the opening of business on the first day of the monthly period. See “Servicing and Administration Procedures—Servicing and Administration Compensation and Payment of Expenses—Administering the Secured Notes” in this prospectus.

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THE ISSUING ENTITY

The issuing entity, Ally Auto Receivables Trust 20    -SN, is a statutory trust formed under the laws of the State of Delaware with a fiscal year end of December 31. The issuing entity will be established and operated pursuant to a trust agreement dated on or before the anticipated [initial] closing date of             , 20    , which is the date the issuing entity will initially issue the notes and certificates.

The issuing entity will engage in only the following activities:

The issuing entity’s principal offices are in [                    ], Delaware, in care of [                    ], as AART owner trustee, at the address listed in “The AART Owner Trustee and the ABLT Owner Trustee” below.

The primary assets of the issuing entity will be:

The AART reserve account will be held by the AART indenture trustee for the benefit of the holders of the issuing entity’s securities. The AART reserve account will [not] be included in the property of the issuing entity [but will instead a segregated trust account held by [the AART indenture trustee] [other applicable party] for the benefit of the holders of the issuing entity’s securities]. See “The Transfer Agreements and Servicing Agreements—Credit Enhancement” in this prospectus.

The administrator will administer the secured notes held by the issuing entity and will receive fees for its administrative services. See “Servicing and Administration Procedures—Servicing and Administration Compensation and Payment of Expenses” in this prospectus.

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Capitalization of the Issuing Entity

The following table illustrates the capitalization of the issuing entity as of [            ], 20[    ], the [initial] cutoff date, as if the issuance of the notes and the certificates had taken place on that date:

None of the [Class A-1 Notes] [the Class B Notes, the Class C Notes, the Class D Notes] and the certificates are being offered by this prospectus. The [Class A-1 Notes] [the Class B Notes, the Class C Notes and the Class D Notes] will be sold in one or more private placements or retained initially by the depositor or its affiliate. The certificates represent the equity of the issuing entity and will be issued under the trust agreement. [The certificates will be retained by the depositor or its affiliate initially.] [The depositor or its affiliate will not sell the Class RR Notes until it is permitted to do so as described in “Credit Risk Retention.”] [The depositor or its affiliate will retain the right to sell all or a portion of the [Class A-1 Notes,][the Class B Notes, the Class C Notes, the Class D Notes] and the certificates in one or more private placements at any time.]

THE LEASE ASSETS AND THE SECURED NOTES

General

Ally Bank or its affiliates purchase new leases and related vehicles from dealers under a supplemental dealer agreement. ABLT has selected [and will select] the lease assets to be included in the pool of leases securing the secured notes from among the lease assets originated in the states in which VAULT operates, based on the eligibility criteria set forth in “The Lease Assets and the Secured Note—Criteria Applicable to the Selection of [Initial] Lease Assets”[ and “The Lease Assets and the Secured Notes—Criteria Applicable to the Selection of Additional Lease Assets During the Revolving Period”] in this prospectus. [No SmartLease Plus Accounts, Paid in Full Leases or agreements constituting electronic chattel paper will be included in the pool.]

Representations, Warranties and Covenants

Pursuant to the allocation agreement by which ABLT allocates the lease assets that secure the secured notes to the 20    -SN pool, ABLT will make representations and warranties as to the lease assets on which Ally Bank will rely in accepting the secured notes, including representations that each of the lease assets satisfies the eligibility criteria described in “The Lease Assets and the Secured Notes—Criteria Applicable to the Selection of [Initial] Lease Assets” [and “The Lease Assets and the Secured Notes—Criteria Applicable to the Selection of Additional Lease Assets During the Revolving Period”] below. In addition ABLT will make the following representations and warranties, among others:

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Criteria Applicable to the Selection of [Initial] Lease Assets

ABLT acquires leases and the related leased vehicles from dealers under a supplemental dealer agreement. Each [initial] lease and the related leased vehicle included by ABLT as collateral for the [initial] secured notes was selected by ABLT from ABLT’s portfolio of leases originated in the states in which VAULT operates based on several criteria, including that it must meet the following eligibility criteria as of the [initial] closing date (except as otherwise noted):

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The [initial] pool of lease assets was selected from ABLT’s portfolio of lease assets that meet the criteria described above and other administrative criteria utilized by ABLT from time to time. We believe that no selection procedures adverse to the [ABLT indenture trustee, the ABLT owner trustee, the holder of the secured notes, the holder of the equity certificates of the ABLT series and the AART indenture trustee] [noteholders] were utilized in selecting the [initial] pool of lease assets from those lease assets of ABLT that meet the above criteria. Ally Bank, as sponsor and agent of ABLT, incurred [minimal] [internal] expenses in selecting the [initial] pool of lease assets. [Ally Bank did not incur any third party expenses in connection with the selection of the [initial] pool of lease assets.]

[Additional lease assets allocated to the 20    -SN pool during the revolving period must meet substantially similar criteria. See “Criteria Applicable to the Selection of Additional Lease Assets During the Revolving Period” below. However, these criteria will not ensure that each subsequent pool of additional lease assets will share the exact characteristics as the initial pool of lease assets. As a result, the composition of the aggregate lease assets will change as additional lease assets are allocated by ABLT to the 20 -SN pool on each additional closing date during the revolving period.]

Characteristics of the [Initial] Lease Assets

Except as otherwise noted, each of the percentages and averages in the following tables is computed on the basis of the ABS Value of each lease asset as of the [initial] cutoff date. The following tables describe the [initial] lease assets as of the [initial] cutoff date. The Aggregate ABS Value in the tables may not add up to the total capitalization of the issuing entity due to rounding. In the following tables and elsewhere in this prospectus, “Lease Residual” is the lesser of ALG Residual, as adjusted as set forth under “Description of Auto Lease Business—Determination of Residual Value” in this prospectus, and the Stated Residual Value, in each case, set at lease inception; and “Adjusted MSRP” is the manufacturer’s suggested retail price or “MSRP” of the leased vehicle plus the value, at lease inception, of any dealer installed options minus the value of any equipment removed from the leased vehicle. With respect to the pool of lease assets, none of the ALG Residuals have been adjusted above the ALG Residual. As used in the following tables and elsewhere in this prospectus, “Discounted Lease Residual” is the net present value of the Lease Residual, discounted at the Discount Rate, consistent with the definition of ABS Value. A “FICO Score” is a measurement, as of lease inception, designed by Fair, Isaac & Company and calculated by the major credit bureaus using collected information to assess credit risk. The amount in the column for “average” in the calculation of “Original FICO Score” is based on a weighting by ABS Value of each lease asset as of the [initial] cutoff date [and excludes lease assets for which no FICO Score is available or for which the obligor is a business account. Of the [                    ] FICO Scores excluded from the weighted average FICO Score, [                    ], or [    ]%, are business accounts and the remaining [                    ], or [    ]%, are for accounts for which FICO Scores are unavailable. In the table, “Distribution of the [Initial] Lease Assets by Original FICO Score,” those excluded accounts make up the “Business Accounts and Unavailable” category].

[To the extent material, insert data regarding the number of lease assets included in the [initial] lease asset pool that have been subject to a waiver, modification or extension, including a description of the type of waiver, modification and extension.]

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As used in the following table, the average “Remaining Term (In Months),” average “Seasoning (In Months)” and average “Original Term (In Months)” are the weighted averages of such terms weighted by ABS Value of each lease asset as of the cutoff date. The following tables describe the pool of lease assets as of the cutoff date. [Percentages may not equal 100.00% due to rounding.]

Composition of the [Initial] Lease Asset Pool

The net present value of the Lease Residual of the lease assets securing the secured notes will constitute less than 65% of the securitized Aggregate ABS Value of those lease assets as of the [applicable initial] cutoff date [or subsequent cutoff date].

Distribution of the [Initial] Lease Assets by Original Term

Distribution of the [Initial] Lease Assets by Scheduled Lease End Date

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Distribution of the [Initial] Lease Assets by State

The [initial] pool of lease assets includes lease assets originated in [                    ] states [and the District of Columbia]. The following table sets forth the percentage of the Initial ABS Value and total number of lease assets in the states with the largest concentration of lease assets. No other state accounts for more than [    ]% and [    ]% of the total number of lease assets and Initial ABS Value, respectively. [Management believes that there are no factors unique to any state or region in which 10% or more of the lease assets are located that may materially impact the issuing entity’s ability to pay principal and interest on the notes.] [Note: In accordance with Item 1111(b)(14), economic or other factors specific to any state or region in which obligors in respect of 10% or more of the pool of assets are located will be described to the extent that they may materially impact pool cash flows. This determination will be made based on the specific geographic distributions with respect to, and economic and other circumstances existing at the time of formation of, each pool.] The distribution of the [initial] lease assets as of the [initial] cutoff date, based on the billing address of the lessee on the lease, was as follows: