Another Mach-E Crash Report and Repair Cost Estimate

[shutterbug]

Your numbers don't match up with any lease I've ever heard of. Please provide the documents that show a $5k residual on a 4 year old F-150

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[macchiaz-o]

Looks like a residual of roughly $24k.

 

[BMT1071]

This does not show a $5k residual. As @macchiaz-o posted, it looks like about $24k. If in fact the value at lease end was as high as you claimed in your earlier post you could buy the truck for $24k then sell it and pocket the difference.

 

[shutterbug]

This does not show a $5k residual. As @macchiaz-o posted, it looks like about $24k. If in fact the value at lease end was as high as you claimed in your earlier post you could buy the truck for $24k then sell it and pocket the difference.

And you're still paying more for the truck on a lease. How is that a plus?

 

[BMT1071]

And you're still paying more for the truck on a lease. How is that a plus?

How do you come up with that? You essentially pay for the portion of the vehicle's value that you use. Which party, if any, comes out ahead at the end can be mitigated.

 

[shutterbug]

How do you come up with that? You essentially pay for the portion of the vehicle's value that you use. Which party, if any, comes out ahead at the end can be mitigated.

I pay more to own the car on day 1,462 if I decide to own the car.

At the end of the loan, I own the vehicle free and clear. At the end of the lease, I own nothing. And actually have to pay a chunk of change to keep it. With a 4 year loan, I stop making payments. With a lease, I have to continue making payments, unless I want to upgrade to the city bus. With a purchase, I can sell the vehicle anytime. With a lease, I'm stuck for 4 years.

 

[BMT1071]

I pay more to own the car on day 1,462 if I decide to own the car.

At the end of the loan, I own the vehicle free and clear. At the end of the lease, I own nothing. And actually have to pay a chunk of change to keep it. With a 4 year loan, I stop making payments. With a lease, I have to continue making payments, unless I want to upgrade to the city bus. With a purchase, I can sell the vehicle anytime. With a lease, I'm stuck for 4 years.

Yes, you would pay more at the end of the lease if you wanted to own the vehicle. That's because you paid less over the term of the lease than you would with a loan.
The point about being somewhat stuck in a lease has some validity. They are definitely more difficult to get out of early, but not impossible.

 

[ARK]

Regarding the discussion on fair market value payout by an insurance company if a new Mach-E were to be totaled, does anyone know what insurance companies have done with other BEVs?

I’m sure a few unlucky owners of Teslas (when they had the full tax credit), Bolts (ditto), i3s, Leafs, etc. have been in this situation. Wonder if the insurance company’s fair market value calculation accounted for the tax credit.

 

[shutterbug]

Yes, you would pay more at the end of the lease if you wanted to own the vehicle. That's because you paid less over the term of the lease than you would with a loan.
The point about being somewhat stuck in a lease has some validity. They are definitely more difficult to get out of early, but not impossible.

Agreed. Not Impossible. Keeping a vehicle for no more than 2-4 years made some sense long ago. Today's vehicles are more reliable than ever and easily last well over 10 years. Except Chrysler. They are still crap from day one

 

[BMT1071]

Agreed. Not Impossible. Keeping a vehicle for no more than 2-4 years made some sense long ago. Today's vehicles are more reliable than ever and easily last well over 10 years. Except Chrysler. They are still crap from day one

Yeah now it's more a matter of personal choice. The 24-39 month leases that are typically used make the financial picture look a lot different too. I'm surprised Ford offers a 48 month lease. Most manufacturers don't.

 

[DBC]

Why are you talking about leasing? We were talking about Options. They’re not the same. Options is a loan. If you put more down, you borrow less. That’s just math.

Options is a lease by another name. It's not a loan. It was developed for those states which held the lessor vicariously liable for property damage or personal injury. The reason it's a rarity is that those states saw the light and eliminated the lessor's vicarious liability.

The issue of whether to get GAP for leases is largely irrelevant because most leases include GAP. Options has a different structure and it doesn't.

But the form of the financing changes nothing. The only relevant factor is the difference between what you owe and the FMV. And since this difference will be very large in the case of a BEV like the MME, GAP is far more valuable than when buying an ICE vehicle.

 

[DBC]

Simple. Say I buy a F150 truck for about $58K. On a 48mo Ford lease, I'd pay $43K and be left with nothing. I can get a 4 year loan, pay $65K and be left with a truck worth $30K-$40K. So, unless I can expense lease payments (which personally I can't), lease is sucker's bet. I'm assuming 1.74% rate from my credit union, and not 3.9% rate, that Ford is currently offering.

Since with an open end lease you can buy the vehicle at the end of the lease term, there isn't any real difference in total cost. (Some minor acquisition costs but nothing major).

The financial advantage of buying rather than leasing just flows from depreciation. Depreciation usually runs 20% a year, so in three years you lose about 50% of the value of the vehicle. The next three years you lose 25%. The next three years 12.5%. Etc. In the usual case this means that leasing for nine years results in 150% in lost depreciation while buying for nine years results in 87.5% depreciation. That's a big difference.

However, the subsidies change this calculus dramatically by having their benefit be spread over fewer years. If you get $15K in subsidies, over three years that's $5K per year and over six years it's $2.5K per year.

Applying some numbers, if you buy the MME for $55K and it loses 55% of its value in the first three years and an additional 25% during the next three years, at the end of the sixth year you've lost $4833/year in depreciation -- $44K minus the $15K in subsidies divided by six years. If you lease you lose $5083 in depreciation/year -- $30.25K minus the $15K in subsidies divided by three years.

No doubt buying and holding will be cheaper than leasing but the difference will not be as dramatic as it would be with an ICE vehicle. And that's not factoring in maintenance and repair.

Basically, just as the subsidies make GAP more valuable, they also narrow the difference in costs between buying and leasing.

 

[generaltso]

Options is a lease by another name. It's not a loan.

Okay, I'm done. Enjoy the rest of your weekend.

 

[sandrift]

Why? Putting more down means borrowing less. Everyone's circumstances are different, but I'm not seeing why that would be an odd choice.

Excluding the discussion of Options and GAP insurance, and agreeing that circumstances vary…

Putting more money down and borrowing less can be a net loss. If I can make 5-8% on $10,000 by investing it, it’s better to do that than to use that money to reduce the amount of a car loan that is only charging 2-3% interest. By giving the auto loan lender that $10k up front, they’re the ones who are going to make money on your cash, not you. That said, if you can reduce the loan duration as a result, maybe you can make it up, but that involves more math. ?

 

[DBC]

Okay, I'm done. Enjoy the rest of your weekend.

No reason to get mad at me because you don't understand that Options is a lease in the guise of an installment contract or why GAP is more attractive when government subsidies artificially inflates the nominal purchase price. There is Google. Maybe that will help. But yeah, nothing more I can do for you.

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