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Registration No. 333-99199

SECURITIES AND EXCHANGE COMMISSION

AMENDMENT NO. 2 TO

VOLKSWAGEN AUTO LEASE TRUST 2002-A

VOLKSWAGEN AUTO LEASE UNDERWRITTEN FUNDING, LLC

VW CREDIT LEASING, LTD.

3800 Hamlin Road

Allen Strang, Esq.

Copies to:

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      Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.

      If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. o

      If this Form 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. o

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

      If this Form is a post-effective amendment pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number if the earlier effective registration statement for the same offering. o

      If the delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. o

(1) Estimated solely for the purpose of calculating the 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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SUBJECT TO COMPLETION

$1,500,000,000

Volkswagen Auto Lease Trust 2002-A

Volkswagen Auto Lease Underwritten Funding, LLC

VW Credit, Inc.

     The sources for payment of the notes are a selected portfolio of retail automobile leases and the related Volkswagen and Audi leased vehicles, payments due on the lease contracts, proceeds from the sale of the leased vehicles and funds on deposit in the reserve account. Interest and principal on the notes are scheduled to be paid monthly on the 20th day of the month (or, if the 20th is not a business day, the next business day). The first scheduled payment date is December 20, 2002.

     Before you purchase any notes, you should review carefully the risk factors beginning on page 7 of this prospectus.

     The notes will represent obligations of a trust and are not interests in or obligations of Volkswagen Auto Lease Underwritten Funding, LLC, VW Credit, Inc., VW Credit Leasing, Ltd. or any of their affiliates.

     The issuer will issue the following classes of notes for sale:

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

Joint Bookrunners

Co-Managers

The date of this prospectus is [                      ], 2002.

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Content of Prospectus

      You should rely only on the information contained in this prospectus. We and the underwriters have not authorized anyone to provide you with different information. If you receive any other information, you should not rely on it. You should not assume that the information in this prospectus is accurate as of any date other than the date at the bottom of the front cover page.

      We include cross-references in this prospectus to the captions herein under which you can find additional related information. The table of contents lists the pages on which these captions are located.

      You can find a listing of the pages where the principal terms are defined under “Index of Principal Terms” beginning on page 95.

Limitations on Offers or Solicitations

      We do not intend this document to be an offer or solicitation:

      (1) if used in a jurisdiction where the offer or solicitation is not authorized;

      (2) if the person making the offer or solicitation is not qualified to do so; or

      (3) if the offer or solicitation is made to anyone to whom it is unlawful to make the offer or solicitation.

Dealer Prospectus Delivery Requirements

      Until 90 days after the date of this prospectus, all dealers that effect transactions in the notes, whether or not participating in this offering, may be required to deliver a prospectus. This requirement is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters with respect to their unsold allotments or subscriptions.

      The transferor, VW Credit, Inc., VW Credit Leasing, Ltd. and the issuer have filed with the Securities and Exchange Commission (the “Commission”) a Registration Statement under the Securities Act of 1933, as amended, with respect to the notes being offered in this prospectus. This prospectus does not contain all of the information in the Registration Statement. The Registration Statement is available for inspection and copying at the public reference facilities of the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission maintains a Web site that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Commission at http://www.sec.gov. VW Credit, Inc., on behalf of the issuer, will also file or cause to be filed with the Commission periodic reports required under the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder.

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

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      Please refer to page iii for a diagram providing an overview of the transaction described in this prospectus. You can find a listing of the pages where the principal terms are defined under “Index of Principal Terms” beginning on page 95.

      All of the motor vehicle dealers in the VW Credit, Inc. (“VW Credit”) network of dealers have entered into agreements pursuant to which they have assigned and will assign retail closed-end motor vehicle lease contracts to VW Credit Leasing, Ltd., a Delaware statutory trust (the “origination trust”). The origination trust was created in June 1999 to avoid the administrative difficulty and expense associated with retitling leased vehicles for the securitization of motor vehicle leases. The origination trust issued to VW Credit the undivided trust interest representing the entire beneficial interest in the unallocated assets of the origination trust. In this prospectus, we refer to the undivided trust interest in the origination trust as the “UTI.” See “The Origination Trust— Property of the Origination Trust.” In connection with this transaction, VW Credit will instruct the trustees of the origination trust:

The Transaction SUBI will represent the entire beneficial interest in the Included Units. The origination trust will issue a certificate evidencing the Transaction SUBI (the “Transaction SUBI Certificate”) to or upon the order of VW Credit, as beneficiary of the UTI. Upon the creation of the Transaction SUBI, the Included Units will no longer constitute assets of the origination trust represented by the UTI and VW Credit’s interest in the origination trust assets represented by the UTI will be reduced accordingly. The Transaction SUBI will evidence an indirect beneficial interest, rather than a direct legal interest, in the Included Units. The Transaction SUBI will not represent a beneficial interest in any origination trust assets other than the Included Units. Payments made on or in respect of any origination trust assets other than the Included Units will not be available to make payments on the notes. VW Credit, as beneficiary of the UTI, may from time to time cause special units of beneficial interest similar to the Transaction SUBI (each, an “Other SUBI”) to be created. The issuer (and, accordingly, the noteholders) will have no interest in the UTI, any Other SUBI or any assets of the origination trust evidenced by the UTI or any Other SUBI. See “The Origination Trust” and “The Transaction SUBI.”

      On the closing date, which is the date of initial issuance of the notes, VW Credit will sell, transfer and assign the Transaction SUBI Certificate to Volkswagen Auto Lease Underwritten Funding, LLC (the “transferor”). The transferor will in turn transfer and assign the Transaction SUBI Certificate to Volkswagen Auto Lease Trust 2002-A (the “issuer”). The issuer will issue four classes of notes in an aggregate principal amount of $1,500,000,000 (the “initial note balance”), and will pledge the Transaction SUBI Certificate to the indenture trustee as security therefor. Each note will represent an obligation of the issuer.

      The issuer will not issue the notes unless Fitch, Moody’s and Standard & Poor’s rate (i) the Class A-1 notes in their highest respective short-term rating category and (ii) the remaining classes of the notes in their highest respective long-term rating category. See “Ratings of the Notes” and “Risk Factors— A change or withdrawal by the rating agencies of their initial ratings may reduce the market value of the notes” for further information concerning the ratings assigned to the notes, including the limitations of those ratings.

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Formation

      The issuer is a common law trust formed under the laws of Delaware solely for the purposes of the transactions described in this prospectus. The issuer will be governed by the issuer’s trust agreement, to be dated as of the closing date (the “issuer’s trust agreement”), between the transferor and U.S. Bank Trust National Association, as owner trustee.

      On the closing date, the owner trustee, on behalf of the issuer, will issue the notes pursuant to an indenture between the owner trustee, on behalf of the issuer, and The Bank of New York, as indenture trustee.

      Neither the issuer nor the owner trustee (on behalf of the issuer) will engage in any activity other than as duly authorized in accordance with the terms of the issuer’s trust agreement or the other transaction documents. On the closing date, the authorized purposes of the issuer will be limited to:

The issuer will not engage in any additional activities or purposes without (1) giving at least ten days’ prior written notice to each rating agency rating the notes and not receiving notice from any rating agency of its intention to downgrade or withdraw its outstanding rating on any class of notes as a result of that proposed additional activity or purpose and (2) receiving approval by noteholders representing in the aggregate more than 66 2/3% of the outstanding principal balance of the notes, voting together as a single class.

      The issuer’s principal offices will be in Wilmington, Delaware, in care of the owner trustee, at the address listed below under “—The Owner Trustee.”

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Capitalization of the Issuer

      On the closing date, in exchange for the transfer of the Transaction SUBI Certificate, the issuer will pay to the transferor the net proceeds from the sale of the notes and will issue to the transferor the certificates. The following table illustrates the capitalization of the issuer as of the closing date, as if the issuance and sale of the notes had taken place on that date:

The Owner Trustee

      U.S. Bank Trust National Association will be the owner trustee under the issuer’s trust agreement. The owner trustee is a national banking association, and its corporate trust office is located at 300 Delaware Avenue, Wilmington, Delaware 19899. The owner trustee in its individual or any other capacity may become the owner or pledgee of the issuer’s certificates or notes. VW Credit, the transferor, the indenture trustee and their respective affiliates may maintain normal commercial banking relationships with the owner trustee and its affiliates. The owner trustee is affiliated with the Transaction SUBI trustee, the administrative trustee and the UTI trustee. The fees and expenses of the owner trustee will be paid by the administrator.

Property of the Issuer

      On the closing date, the transferor will transfer the Transaction SUBI Certificate to the issuer pursuant to the SUBI Transfer Agreement. The issuer will then pledge its interest in the Transaction SUBI Certificate to the indenture trustee under the indenture. See “The Transaction SUBI— Transfers of the Transaction SUBI Certificate.”

      After giving effect to the transactions described in this prospectus, the property designated to the issuer which we refer to as the “trust estate” will include:

The issuer will pledge the trust estate to the indenture trustee under the indenture.

      Because the Transaction SUBI will represent a beneficial interest in the Included Units, noteholders will be dependent on payments made on the leases and proceeds received in

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      The net proceeds from the sale of the notes (the proceeds of the sale of the notes minus the sum of the expenses relating to the issuance and sale of the notes) will be applied by the issuer to acquire the Transaction SUBI Certificate from the transferor.

General

      The origination trust is a Delaware statutory trust and is governed by the trust agreement, dated as of June 2, 1999 (the “origination trust agreement”), among VW Credit, as settlor and initial beneficiary, U.S. Bank National Association (f/k/a U.S. Bank Trust National Association), as UTI trustee and administrative trustee, and Wilmington Trust Company, as Delaware trustee. To provide for the servicing of the origination trust assets, the origination trust and VW Credit, as servicer, have entered into an Amended and Restated Servicing Agreement (the “Base Servicing Agreement”), dated as of December 21, 2000. The primary business purpose of the origination trust is to take assignments of, and serve as record holder of title to, the Units in order to facilitate sale or financing transactions involving Units, including the securitization of Units in connection with the issuance of asset backed securities.

      Except as otherwise described under “Additional Document Provisions— The Origination Trust Agreement and the Transaction SUBI Supplement,” under the origination trust agreement, the origination trust has not and may not:

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For further information regarding the origination trust and the servicing of the leases and leased vehicles, you should refer to “Additional Document Provisions— The Origination Trust Agreement and the Transaction SUBI Supplement” and “—The Servicing Agreement; Servicing of the Transaction SUBI Assets.”

The Transaction SUBI Trustee

      U.S. Bank National Association, a national banking association, is the Transaction SUBI trustee for the Transaction SUBI. The Transaction SUBI trustee is not affiliated with VW Credit or any of its affiliates.

Property of the Origination Trust

      The assets of the origination trust generally consist of:

      From time to time after the date of this prospectus, additional leases will be originated by or assigned to the origination trust and, as described below, title to the related leased vehicles will be in the name of the origination trust (or a nominee or trustee thereof on behalf of the origination trust).

Lease Origination and the Titling of Vehicles

      Under each lease, the origination trust (or a nominee or trustee of the origination trust) will be listed as the owner of the related leased vehicle on its certificate of title. Liens will not

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      All Units owned by the origination trust will be held for the benefit of entities that from time to time hold beneficial interests in the origination trust. Those interests will be evidenced with respect to:

Entities holding beneficial interests in the origination trust will not have a direct ownership in the related leases or a direct ownership or perfected security interest in the related leased vehicles.

      The issuer has no direct interest in the Included Units. Therefore, the issuer does not have a perfected lien in the leases or the leased vehicles, but will have a perfected security interest in the Transaction SUBI Certificate.

General

      The Transaction SUBI will be issued by the origination trust under a supplement to the origination trust agreement to be dated as of the closing date (the “Transaction SUBI Supplement” and, together with the origination trust agreement, the “Transaction SUBI Trust Agreement”). To provide for the servicing of the Included Units, the origination trust, the servicer and the Transaction SUBI trustee will enter into a supplement to the Base Servicing Agreement to be dated as of the closing date (the “Transaction SUBI Servicing Supplement,” and together with the Base Servicing Agreement, the “Servicing Agreement”). The Transaction SUBI will represent a beneficial interest, not a direct interest, in the Included Units. The Transaction SUBI will not represent an interest in any origination trust assets other than those Included Units. The issuer and the noteholders will have no interest in the UTI, any Other SUBI or any assets of the origination trust evidenced by the UTI or any Other SUBI. Payments made on or in respect of origination trust assets not represented by the Transaction SUBI will not be available to make payments on the notes. For further information regarding the origination trust, you should refer to “The Origination Trust.”

      The Transaction SUBI Certificate will evidence a beneficial interest in the origination trust assets allocated to the Transaction SUBI, which will generally consist of the Included Units and all proceeds of or payments on or in respect of the leases or leased vehicles received after the cutoff date.

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      On the closing date, the origination trust will issue the Transaction SUBI Certificate to or upon the order of VW Credit, as UTI beneficiary.

Transfers of the Transaction SUBI Certificate

      Simultaneously with the issuance of the Transaction SUBI Certificate to VW Credit, VW Credit will convey the Transaction SUBI Certificate to the transferor pursuant to a transfer agreement, to be dated as of the closing date, called the “SUBI Sale Agreement.” VW Credit will covenant to treat the conveyance of the Transaction SUBI Certificate to the transferor as an absolute sale, transfer and assignment for all purposes.

      Immediately after the transfer of the Transaction SUBI Certificate to the transferor, the transferor will:

In exchange, the issuer will pay to the transferor the net proceeds from the sale of the notes to third party investors and will issue to the transferor the certificates.

      Immediately following the transfer of the Transaction SUBI Certificate to the issuer, the issuer will pledge its interest in the trust estate, which includes the Transaction SUBI Certificate, to the indenture trustee as security for the notes.

      After the transfer of the Transaction SUBI Certificate to the issuer, VW Credit will be obligated to cause the repurchase of the beneficial interest in any Units which do not comply with representations and warranties about the Units made by VW Credit in the SUBI Sale Agreement if the interests of noteholders are materially and adversely affected thereby. Those representations and warranties relate primarily to the origination of the Units and do not typically relate to the creditworthiness of the related Lessees, the collectibility of the leases or the resale value of the related leased vehicles at termination or expiration of the leases. See “The Leases— Representations, Warranties and Covenants.” In addition, VW Credit, as servicer, will be required to cause the repurchase of any Units which include leases as to which the servicer grants a Postmaturity Term Extension. See “VW Credit, Inc.— Extensions.” The repurchase price of a Unit will be the securitization value of that Unit.

      The transferor is a special purpose limited liability company that was formed under the laws of Delaware on August 9, 2002. The sole equity member of the transferor is VW Credit. The principal office of the transferor is located at c/o VW Credit, Inc., 3800 Hamlin Road, Auburn Hills, Michigan 48326 and its telephone number is (248) 754-5000.

      The transferor was organized solely for the purpose of acquiring interests in the origination trust, causing securities such as the notes and the certificates of beneficial interest in the issuer to be issued, and engaging in related and similar transactions. The limited liability company agreement of the transferor limits its activities to the foregoing purposes and to any activities incidental or necessary thereto.

      Because the transferor will have no employees, the transferor will hire VW Credit to perform administrative and ministerial tasks on its behalf.

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General

      VW Credit, was incorporated in Delaware on April 2, 1981 and is a wholly-owned subsidiary of Volkswagen of America, Inc. (“Volkswagen of America”). Volkswagen of America is an indirect wholly-owned subsidiary of Volkswagen Aktiengesellschaft (“Volkswagen AG”). The principal activity of VW Credit is acting as a finance subsidiary of Volkswagen of America, including purchasing retail installment sales contracts and leases from Volkswagen and Audi dealers. VW Credit offers a wide range of automobile-related financial products, including wholesale floor plan financing, retail auto loan and lease financing.

      The principal offices of VW Credit are located at 3800 Hamlin Road, Auburn Hills, Michigan, 48326. Its telephone number is (248) 754-5000.

Lease Underwriting Procedures

      Both auto loan and auto lease applications are generally subject to the same credit policies and procedures at VW Credit. Contracts that are purchased must comply with VW Credit’s underwriting standards and other requirements, as described below, under existing agreements between VW Credit and dealers. VW Credit’s underwriting standards emphasize the prospective lessee’s ability to pay and creditworthiness, as well as the asset value of the motor vehicle to be leased. VW Credit’s underwriting, servicing and collection activities are conducted principally at processing centers located in Libertyville, Illinois and Portland, Oregon.

      Lease applications submitted to VW Credit for a new motor vehicle must list sufficient information to process the application, including the applicant’s:

      VW Credit’s credit decision is influenced by, among other things, the applicant’s custom credit score as obtained from a statistically derived empirical credit scoring process and a credit bureau score. VW Credit uses a two-dimensional credit score matrix based on the custom score and the credit bureau score for loan and lease originations. The custom scorecards were developed for VW Credit by Fair, Isaac and Company, Inc. based on VW Credit’s specific application, origination and loan and lease performance information. The credit scoring process takes into account information about the applicant, including various debt ratios and other personal information. VW Credit makes its final credit decision based upon the degree of credit risk perceived and the amount of credit requested. To improve overall underwriting efficiency, a portion of VW Credit’s applications are automatically approved or rejected based on an algorithm which takes into consideration the applicant’s credit scores, time in credit bureau, loan to value, prior bankruptcies and other related information.

      VW Credit’s underwriting standards are reviewed by its Retail Credit Committee. Any change in VW Credit’s underwriting standards requires prior approval from the Retail Credit Committee.

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Determination of Residual Values

      The value of the notes being offered under this prospectus is based on the aggregate Securitization Value of the Included Units. As used in this prospectus, “Securitization Value” means, for each Included Unit, (a) as of the cutoff date, the closing date or any date other than the maturity date of the related lease, the sum of (1) the present value (discounted at the Securitization Rate) of the aggregate monthly payments remaining on the lease (including monthly payments due and not yet paid for which the servicer has never made an advance) and (2) the present value (discounted at the Securitization Rate) of the Base Residual of the related vehicle and (b) as of the maturity date of the related lease, the Base Residual of the related vehicle. The “Base Residual” means the lesser of the Stated Residual Value and the ALG Residual.

      Each lease sets forth a residual value, which we refer to in this prospectus as the “Stated Residual Value” established at the time of lease origination. The Stated Residual Value as provided in the lease agreement is the value of the vehicle at the end of the lease and is the amount used to calculate the base monthly lease payments under the lease, assuming that the lease amortizes like a loan. If we assume that the original capitalized cost of the lease is the initial principal amount of the loan, that the lease rate is the interest rate, that the lease term is the term of the loan and that all monthly payments are timely made, the Stated Residual Value is the amount to which the outstanding balance would decline at the scheduled expiration of the lease term. When a vehicle is sold after being returned by the lessee at the end of the related lease, there will be a residual loss if the net sales proceeds of the vehicle are less than the Stated Residual Value.

      In establishing the Stated Residual Value of Volkswagen leased vehicles, VW Credit uses an internally developed proprietary model. The model uses, among other things, key factors such as manufacturer’s suggested retail price (commonly referred to as “MSRP”), wholesale price, brand image, model image, month of lease origination, lease term, product life cycle, and any current or planned sales incentives in its calculation of residual values. The model is reviewed regularly by VW Credit’s Residual Value Committee. The Stated Residual Values set by the model are compared to VW Credit’s historical off-lease vehicle sales performance, various independent industry guides, such as Automotive Lease Guide (“ALG”) and the National Auto Research Official Used Car Market Guide Monthly (“Black Book”), for reasonableness. ALG and Black Book are independent publications of residual value percentages which are widely used throughout the automotive finance industry for estimating vehicle market values at lease termination. These values serve as a projection of a vehicle’s future resale value by expressing the future value as a percentage of a vehicle’s original manufacturer’s suggested retail price. As used in this Prospectus, “ALG Residual” means, with respect to the Leases, the expected value of the leased vehicle at the scheduled end of the lease term as determined at the time of the origination of the Lease, which value is calculated using the residual factors in the most recent ALG. Stated Residual Values for Audi vehicles are established to project the value of the vehicle at maturity. Stated Residual Values for Audi vehicles are set generally at a level of 1 to 5 percent of the MSRP (depending on model) above the residual value determined by ALG with the average spread over ALG of approximately 3 percent of MSRP.

      The estimated future value of a leased vehicle is a major component of the leasing business. Specifically, any excess of the Stated Residual Value of a vehicle over its actual future market value represents a residual loss at lease termination. VW Credit believes that the difference between the Stated Residual Values and the actual value at maturity may affect consumer behavior concerning purchasing or returning a vehicle to the lessor at lease termination. Furthermore, VW Credit believes that return rates may decline as the difference between Stated Residual Value and actual value declines.

      All of the leases and leased vehicles that have been allocated to the Transaction SUBI have been originated under the residual value policies described above. Notwithstanding the

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      VW Credit believes that the historical residual value loss experience is partially attributable to new car pricing policies of all manufacturers. Many manufacturers have recently endeavored to keep new car pricing flat and, in some cases, less than the prices for models from prior years. New car models frequently have more standard equipment that were included as optional equipment in models from prior years. Additionally, VW Credit believes that the increased popularity of leasing and increased levels of new car sales over the last five years has resulted in a higher supply of late model used vehicles. These factors have exerted additional downward pressure on the value of used vehicles when compared to the price for new vehicles.

Remarketing Program

      VW Credit handles all remarketing processes related to leased vehicles, including customer service, collections, accounting and titling. The remarketing department is managed in Auburn Hills, Michigan. The remarketing department begins a direct mail campaign to all lessees 180 days prior to lease maturity to ascertain whether lessees intend to purchase or return their leased vehicles. The 180 day letter provides each lessee with information regarding the lessee’s lease obligations, including the vehicle inspection and turn-in process and the required documentation. VW Credit continues to attempt to contact each lessee through additional direct mail at approximately 75 days and 35 days prior to lease maturity. If the lessee indicates an intention to purchase the leased vehicle, the lessee is provided with all necessary documents to complete the purchase. Lessees that do not respond to any mailings are contacted using phone calls by VW Credit to determine their intentions and to apprise them of their end-of-term obligations.

      A vehicle inspection normally occurs approximately 25 days prior to lease maturity and may occur at the lessee’s residence, place of business or a dealership. The lessee is provided an estimate for excess wear and tear and excess mileage charges and is encouraged to file insurance claims and make repairs prior to returning the vehicle.

      From time to time, VW Credit has offered lessees special lease programs on selected models to help mitigate residual value losses. These programs may offer the lessee waiver of lease payments, an extended service contract or reduced APR financing. There can be no assurance that VW Credit will offer any programs in the future.

Lease Vehicle Maintenance

      Each VW Credit lease contract provides that the lessee is responsible for all maintenance, repair, service and operating expenses of the leased vehicle. In addition, the lessee is responsible for all damage to the leased vehicle and for its loss, seizure or theft. At the scheduled maturity date of a VW Credit lease contract, if the lessee does not purchase the leased vehicle, the VW Credit lease contract requires the lessee to pay VW Credit the estimated cost to repair any damages to the vehicle resulting from unreasonable or “excessive” wear and use. Unreasonable or excess wear and use generally includes, but is not limited to, the following: (1) inoperative mechanical and electrical parts including power accessories, (2) any and all dents, dings, scratches, chips or rusted areas on any body or trim part, (3) gouges or tears through bumper covers, broken or dented grilles, (4) mismatched paint or any mark left by special identification, (5) seats, seat belts, headlining, door panels or carpeting which is torn, worn, stained, burned or damaged, (6) cracks, scratches, pits or chips to windshields, windows,

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Methods of Vehicle Disposal

      VW Credit’s vehicle remarketing department handles the disposition of all motor vehicles for VW Credit including repossessions and end of term leases. Each lease provides that upon maturity, the lessee has the option to purchase the related motor vehicle for an amount equal to the Stated Residual Value. If the lessee does not exercise this option, the originating dealer has the option to purchase the vehicle at Stated Residual Value for Volkswagen vehicles and at a price based on the Manheim Market Report Price (adjusted for mileage) for Audi vehicles. The “Manheim Market Report Price” of a vehicle is a price quoted in the Manheim Market Report, a publication that monitors and reports the pricing of all cars sold at Manheim Auctions, a large wholesale automobile auction company. Vehicles that are not purchased by the lessee or the dealer are turned over to VW Credit for sale through auction. VW Credit uses a system of auto auctions throughout the United States. VW Credit views speed and efficiency of operations as the most critical aspects of managing off-lease vehicle inventory. VW Credit has an internal target of 45 days from the time a leased vehicle is turned in until it is sold. Credit repossessions are handled in accordance with various state requirements.

      Remarketing decisions related to auction assignment and logistics are primarily electronic. This allows VW Credit to control inventory management, flow of vehicles to the auction and placement of the vehicles to auction locations that it believes will yield the highest net recovery value.

      VW Credit has regular sales at 13 major auction locations throughout the United States. VW Credit’s highest lease volume is in the northeastern region. From time to time, auction capacity and demand for pre-owned vehicles in the northeastern markets may be insufficient to absorb the volume. Therefore, VW Credit may transport vehicles to different regions where it perceives a greater demand in order to maximize the vehicles’ recovery values.

      The Certified Pre-Owned Vehicle Program was established by Volkswagen of America to create customer and dealer demand for off-lease used Volkswagen and Audi vehicles and to enhance the value of off-lease vehicles. To qualify for the Certified Pre-Owned Vehicle Program, a vehicle must pass an inspection conducted by either the auction or the related dealer based on standards set by Volkswagen of America. For Certified Pre-Owned vehicles, Volkswagen of America provides a limited warranty which covers the vehicle for a selected period of time and mileage. Each Certified Pre-Owned vehicle is covered by a roadside assistance program which is similar to that offered on new vehicles. The Certified Pre-Owned Vehicle Program is actively marketed by Volkswagen of America using both broadcast and print media.

      Occasionally, VW Credit offers incentives to lease new vehicles to lessees whose lease contracts are nearing expiration. These incentives may include waiver of one or more monthly payments otherwise payable under the related lease for leases allocated to the Transaction SUBI. VW Credit will pay to the issuer the amount of any monthly payments so waived. These incentives may increase the turn-in rates for the related vehicles and increase the exposure of noteholders to residual risks.

Insurance

      Each lease contract requires the lessee to obtain and maintain vehicle liability and physical damage insurance on the leased vehicle. VW Credit’s dealer agreements include a requirement

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      VW Credit does not require lessees to carry credit disability, credit life, credit health or other similar insurance coverage which provides for payments to be made on the leases on behalf of lessees in the event of disability or death. To the extent that the lessee obtains any of these insurance coverages, payments received on that coverage may, if permitted by applicable law, be applied to payments on the related lease to the extent that the lessee’s beneficiary chooses to do so.

Collection and Repossession Procedures

      There are two methods for lessees to make monthly lease payments. Most lessees mail payments, along with a statement, to one of three lockboxes. A small percentage of lessees use VW Credit’s automated payment option.

      VW Credit measures delinquency by the number of days elapsed from the date a payment is due under the lease contract. VW Credit considers a payment to be past due or delinquent when a lessee fails to make at least 75% of a scheduled payment by the related due date. If a lease is between 5 and 20 days delinquent, VW Credit mails a notice to the lessee and initiates telephone contact requesting payment. VW Credit gains collection efficiency through the use of technology such as automated dialing, predictive dialing and behavioral scoring of all lease accounts. If the delinquent lease cannot be brought current or completely collected within 60 to 90 days, VW Credit generally assigns the vehicle to a repossession agent and attempts to repossess the related leased vehicle. VW Credit holds repossessed vehicles in inventory to comply with any applicable statutory requirements for reinstatement or redemption and then sells or otherwise disposes of the vehicles. VW Credit’s current policy is to generally charge off a lease contract on the earlier of (1) the date on which the proceeds of sale of the leased vehicle are applied to the lease contract and (2) the month in which the lease contract reaches its 120th day of delinquency if assigned to a repossession agent for 60 days. Any deficiencies remaining after repossession and sale of the vehicle or after the full charge-off of the lease generally are pursued by or on behalf of VW Credit to the extent practicable and legally permitted. See “Additional Legal Aspects of the leases and the Leased Vehicles— Deficiency Judgments.”

Extensions

      On occasion, VW Credit may extend the term of a lease if (1) the lessee requests an extension (2) the lessee is not in default on any of its obligations under the lease and (3) the lessee agrees to continue to make monthly payments. Lessees at the end of a lease who intend to lease another Volkswagen or Audi automobile but cannot do so at lease maturity, for reasons such as awaiting delivery of a new vehicle, preference for the next model year or other timing circumstances, may qualify for a lease term extension of up to a maximum of six months. If a term extension is granted for any Included Unit beyond the collection period preceding the Final Scheduled Payment Date for the Class A-4 notes (a “Postmaturity Term Extension”), VW Credit, as servicer, will be required to deposit into the collection account an

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Delinquency, Repossession and Loss Data

      Set forth below is information concerning VW Credit’s experience with respect to its portfolio of new and used Volkswagen and Audi motor vehicle leases, which includes leases owned by VW Credit or the origination trust and leases that have been sold but are still being serviced by VW Credit. The dollar amounts of the leases outstanding is VW Credit’s book value. Credit losses are an expected cost in the business of extending credit and are considered in VW Credit’s rate-setting process. VW Credit’s strategy is to minimize credit losses while providing financing support for the sale of the motor vehicles.

      For credit loss terminations, VW Credit charges off the account balance of a lease upon the related vehicle’s sale date.

      Gains or losses associated with the sale of off-lease inventory also are recorded upon the vehicle sale date. Collections of end-of-term charges such as excess wear and tear and excess mileage charges are credited when proceeds are received.

      Delinquency, repossession and loss experience may be influenced by a variety of economic, social and geographic conditions and other factors beyond VW Credit’s control. There is no assurance that VW Credit’s delinquency, repossession and loss experience with respect to its leases and the related leased vehicles in the future, or the experience of the issuer with respect to the leases and the leased vehicles, will be similar to that set forth below.

Lease Delinquency Experience(1)(2)(4)

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Net Credit Loss and Repossession Experience(1)(2)(7)

Residual Value Loss Experience

      Set forth below is information concerning residual value loss experience and return rates for Volkswagen and Audi vehicles at termination. The residual value loss rates are indicated as

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Residual Value Loss Experience(1)(2)(6)(7)

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General

      The leases allocated to the Transaction SUBI consist of motor vehicle retail closed-end leases for new Volkswagen and Audi motor vehicles. Each of the leases was originated by a dealer in the ordinary course of that dealer’s business and assigned to the origination trust.

      Each lease in this transaction is a closed-end lease. Over the term of the lease, the lessee is required to make substantially equal monthly payments intended to cover the cost of financing the related leased vehicle, scheduled depreciation of the leased vehicle and certain sales, use or lease taxes. From each payment billed with respect to a leased vehicle, the monthly payment amount that represents the financing cost and depreciation of the leased vehicle (including any capitalized amounts, such as service contract premiums) will be available to the issuer to make payments in respect of the notes. At the scheduled end of the lease term, the lessee has two options:

      An amount equal to the sales proceeds from sales of leased vehicles to the lessees, dealers or at auction and all amounts assessed and collected by the servicer in connection with excessive wear and tear and excess mileage charges upon return of the leased vehicles will be available to the issuer to make payments in respect of the notes. Because the leases are closed-end leases, the lessees will not be responsible for any amount by which the Stated Residual Value of the leased vehicle exceeds the sales proceeds received for the leased vehicle at expiration of the lease.

Early Termination

      Each lease provides that the lessee or the lessor may terminate the lease before the scheduled end of the lease term (an “early termination”) in the circumstances discussed below. A lessee has the right to request an early termination provided that the lessee is not in default under the lease. The lessee may purchase the leased vehicle for an amount equal to (x) the maturity date purchase option amount, plus (y) the monthly payment amount times the number of monthly payments not yet due with respect to related lease, minus (z) unearned rent charges calculated under the scheduled actuarial method under the lease.

      In addition to purchasing the leased vehicle, a lessee has the right to cause an early termination by returning the leased vehicle to the lessor and pay an amount (an “early termination amount”) equal to (i) the turn-in fee, if any, specified in the lease, plus (ii) any due and unpaid payments under the lease, plus (iii) the costs of retaking, storing and selling the leased vehicle, plus (iv) any fees and taxes related to the early termination, plus (v) the monthly payment amount times the number of monthly payments not yet due with respect to related lease, minus (vi) unearned rent charges calculated under the scheduled actuarial method under the lease, minus (vii) the amount the leased vehicle sale price exceeds the

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      The “leased vehicle sale price” of a leased vehicle is determined under the related lease pursuant to the following methods: