"Ford Options" Mach-E Lease vs standard lease - similarities and differences

[BMT1071]

I may be "the guy" you're referencing. I'll point out that you missed the part where he said "in that regard". Or the fact that he said it wasn't anticipated when the product was rolled out. Why wasn't it anticipated? Duh. Because it's a lease in the form of an installment loan and leases don't have buy outs. Obviously if you're developing a lease product you don't expect people to act as if it was actually an installment loan.

Options is a lease. @hybrid2bev knows this. Since he works for Ford he may not be able to say this, legally form controls function except when it doesn't, so the fiction must be maintained, but he knows it. Options is just a lease that technically transfers title to the purchaser so they can claim the tax credit, which is more valuable to them than to Ford Credit. If the tax credit turns into a POS rebate, Options will disappear because there will no longer be a reason for it to exist, and what we'll have is a RCL lease and a purchase.

I'm amazed at how people can be so easily confused by terminology. I have always believed that a rose by any other name would smell as sweet, but apparently some people think that if you call a rose a carrion flower it stinks. ????

But if you want to think for yourself, just write down all the ways that a lease differs from a purchase and then decide which Options resembles. For example, are payments calculated on the total purchase price or are they calculated on the difference between the purchase price and the residual? (IOW if you went to a lease calculator and plugged in the Options numbers would there be any difference in lease payments and Options payments?) Can you turn the MME back in after the lease, er I mean, Options period? Or do you have to pay off the entire purchase price of the MME? Are there mileage restrictions? (Ever see a mileage restriction in a purchase?). Do you get charged extra for excessive "wear and tear"? (Ever see that in an installment sale? LOL). Can you customize your MME under the Options agreement?

Once you realize there isn't any difference between Options and a lease, the question isn't why anyone would think Options was a lease. The question is why anyone would think it was a traditional installment sale.

Amazing! I didn't even mention your name and still you appeared. I would love to know why this is so important to you.

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[macchiaz-o]

Keep in mind that things get complicated if you make extra payments and then choose not to exercise your right to make the final balloon payment.

This isn't complicated in this case.

You may prepay your debt at any time without penalty. This is a simple finance charge contract.

 

[DBC]

This isn't complicated in this case.

You may prepay your debt at any time without penalty. This is a simple finance charge contract.

Under Options the only obligation you have is to make all the payments due during the Options period. Under a lease the only obligation you have is to make all the lease payments during the lease period. In both cases you can make all the payments at any time without penalty.

Under Options you can buy the vehicle at any time by making all the payments and the balloon payment. With a lease you can buy the vehicle at any time by making all the lease payments and paying for the residual.

The one difference would be that the interest would be recalculated under Options. Not exactly a big differentiator.

Just to be clear, in a "simple finance charge contract" the calculation of payments is totally different than under Options and the calculation of payments under Options is exactly the same as in a lease. In a "simple finance charge contract" you take the purchase price, add the interest, and then divide that amount by the number of months in the installment sale. Simple and straightforward.

The calculation under Options is much more complicated. Under Options you pay for the difference between the purchase price and the buyout price, plus interest on the part of the vehicle which you haven't paid for, plus interest on the residual. At the end of the Options period you have the option to buy out the car at the agreed upon buyout price.

But this is exactly how it works in a lease. Under a lease you pay for the difference between the purchase price and the buyout price, plus interest on the part of the vehicle which you haven't paid for, plus interest on the residual. At the end of the lease you have the option to buy out the car at the agreed upon buyout price.

 

[macchiaz-o]

The one difference would be that the interest would be recalculated under Options. Not exactly a big differentiator.

This can be a difference of a few thousand dollars on a Mustang Mach-E loan, if paid off within 3 months or so. That's an important and not insignificant differentiator to me.

Just to be clear, in a "simple finance charge contract" the calculation of payments is totally different than under Options

No. In this case they are the same thing. Remember, "Ford Options" is a simple installment contract with a balloon payment and some extra options for the consumer (pay off as normal, or refinance the balloon, or transfer the vehicle to Ford Credit via a dealer).

This is the page with relevant details from my own (Ford Options) contract.

I've also seen one posted here from Michigan. It was similar.

I believe you used Options in California... Read your contract. The wording is probably different for your state, but I suspect the end result is the same.

 

[Stang68]

Can you customize your MME under the Options agreement?

THIS is actually one thing I'm interested in knowing. Can I paint my calipers and possibly the wheel arch flares if I'm on an Options plan?

 

[shutterbug]

THIS is actually one thing I'm interested in knowing. Can I paint my calipers and possibly the wheel arch flares if I'm on an Options plan?

You can, but if you decide to turn it to Ford, they will likely charge you for that. Same with any non-reversible customizations.

 

[Stang68]

You can, but if you decide to turn it to Ford, they will likely charge you for that. Same with any non-reversible customizations.

Interesting...this is where the "finance vs lease" debate comes into play.
If I was leasing the car then obviously modifications are a no-no. If I'm "financing" the car with a balloon payment but then "trade it in" to get credit for, say, a GT one day, wouldn't the mods not matter? A normal trade-in would just have the car evaluated as-is.

 

[shutterbug]

Interesting...this is where the "finance vs lease" debate comes into play.
If I was leasing the car then obviously modifications are a no-no. If I'm "financing" the car with a balloon payment but then "trade it in" to get credit for, say, a GT one day, wouldn't the mods not matter? A normal trade-in would just have the car evaluated as-is.

If you keep the car, sell it, or trade it in, the mods don't matter. You just have to pay off the loan. If you turn it in instead of paying balloon, they do.

 

[Stang68]

If you keep the car, sell it, or trade it in, the mods don't matter. You just have to pay off the loan. If you turn it in instead of paying balloon, they do.

But doesn't "turning it in" also pay off the balloon anyway? I guess that's the difference with "trading it in" vs "turning it in".
Trading in means I'm getting another Ford, I assume, and they just give me a value for the Mach E that (hopefully) covers the final balloon and maybe then some.

 

[shutterbug]

But doesn't "turning it in" also pay off the balloon anyway? I guess that's the difference with "trading it in" vs "turning it in".
Trading in means I'm getting another Ford, I assume, and they just give me a value for the Mach E that (hopefully) covers the final balloon and maybe then some.

Trading in to Ford, Chevrolet, or whatever, the value could be more than balloon amount or it could be less. The trade-in value is evaluated on its own merit. Turning it in means you don't have to pay balloon amount and you get charged if you made any mods, need repairs, or exceeded miles in contract.

 

[hybrid2bev]

I may be "the guy" you're referencing. I'll point out that you missed the part where he said "in that regard". Or the fact that he said it wasn't anticipated when the product was rolled out. Why wasn't it anticipated? Duh. Because it's a lease in the form of an installment loan and leases don't have buy outs. Obviously if you're developing a lease product you don't expect people to act as if it was actually an installment loan.

Options is a lease. @hybrid2bev knows this. Since he works for Ford he may not be able to say this, legally form controls function except when it doesn't, so the fiction must be maintained, but he knows it. Options is just a lease that technically transfers title to the purchaser so they can claim the tax credit, which is more valuable to them than to Ford Credit. If the tax credit turns into a POS rebate, Options will disappear because there will no longer be a reason for it to exist, and what we'll have is a RCL lease and a purchase.

I'm amazed at how people can be so easily confused by terminology. I have always believed that a rose by any other name would smell as sweet, but apparently some people think that if you call a rose a carrion flower it stinks. ????

But if you want to think for yourself, just write down all the ways that a lease differs from a purchase and then decide which Options resembles. For example, are payments calculated on the total purchase price or are they calculated on the difference between the purchase price and the residual? (IOW if you went to a lease calculator and plugged in the Options numbers would there be any difference in lease payments and Options payments?) Can you turn the MME back in after the lease, er I mean, Options period? Or do you have to pay off the entire purchase price of the MME? Are there mileage restrictions? (Ever see a mileage restriction in a purchase?). Do you get charged extra for excessive "wear and tear"? (Ever see that in an installment sale? LOL). Can you customize your MME under the Options agreement?

Once you realize there isn't any difference between Options and a lease, the question isn't why anyone would think Options was a lease. The question is why anyone would think it was a traditional installment sale.

I agree that Options is “lease-like”. It’s written on a retail installment contract form. With Options the “lease-like” attributes are only effective if you turn in the vehicle. If you exercise your other options to refinance or trade in the vehicle there are no mileage/wear/disposal charges.

Options interest is calculated using simple interest where a lease is pre-computed interest, there’s no opportunity to save interest on a traditional lease. Options does not have an acquisition fee like a lease does. A lease does not offer the opportunity to refinance at the same interest rate. Taxes are handled like a retail contract with Options.

You can customize the vehicle with Options because you own it. Again excessive wear is only a factor if you turn it in. If you trade or refinance then it’s not an issue.

 

[Stang68]

You can customize the vehicle with Options because you own it. Again excessive wear is only a factor if you turn it in. If you trade or refinance then it’s not an issue.

Great, can't wait to install the supercharger ?

On a separate note (at risk of derailing the thread)...what do you like driving more, your Explorer ST or the Mach E?

 

[hybrid2bev]

Great, can't wait to install the supercharger ?

On a separate note (at risk of derailing the thread)...what do you like driving more, your Explorer ST or the Mach E?

For daily driving the Mach-E hands down! They are about equal on acceleration speed but the Mach-E feels faster.

The Explorer still does have its use cases. We just went to the greenhouse with the Explorer because we couldn’t fit everything we wanted in the Mach-E. We took the Explorer on our trip to Arkansas and Tennessee, it has the adaptive cruise control and lane centering system too so it’s just as capable as the Mach-E as a highway cruiser. My one complaint with the Explorer ST is that I cannot turn off the fake engine noise.

But we did take the Mach-E on our weekend trip from Detroit to Cleveland Ohio (400 miles round trip) and it performed great with an avg. of 2.8 to 3.3 miles per kWh., no range anxiety at all!!

 

[Stang68]

For daily driving the Mach-E hands down! They are about equal on acceleration speed but the Mach-E feels faster.

The Explorer still does have its use cases. We just went to the greenhouse with the Explorer because we couldn’t fit everything we wanted in the Mach-E. We took the Explorer on our trip to Arkansas and Tennessee, it has the adaptive cruise control and lane centering system too so it’s just as capable as the Mach-E as a highway cruiser. My one complaint with the Explorer ST is that I cannot turn off the fake engine noise.

But we did take the Mach-E on our weekend trip from Detroit to Cleveland Ohio (400 miles round trip) and it performed great with an avg. of 2.8 to 3.3 miles per kWh., no range anxiety at all!!

Awesome to hear! We'll have a very similar setup with a Mach E and larger ICE SUV soon (for hauling all our crap lol).

 

[SoriceConsulting]

One thing that has me a bit confused (and apologies if it has been clarified before), but my dealer said that at the end of my Options contract I can trade in for a new Mach E and the trade in value could be more or less(?) than the balloon. Is this correct? Or am I guaranteed the ballon amount as a minimum trade in value and the trade in amount could be higher if the Mach E holds its value better than anticipated?

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