Should I care about the amount of the Ford Options balloon payment?

[RMoore]

Somewhat confusing situation that I'm faced with and my sense is that $1000 or so one way or the other isn't a big issue, but wanted to see if I'm missing something. Here's the background:

• My dealer placed my order on Oct 6, 2021.
• Price increased by $2K since then, but I am covered by Price Protection--dealer is very clear on this.
• My new window sticker reflects the higher MSRP by $2K.
• In order to calculate my Ford Options payments, my dealer is saying that they need to use the current sticker's MSRP to calculate the balloon: 47% of (MSRP + 1100 D&D).
• They will then subtract that balloon amount from the actual selling price (which includes the original MSRP that is 2K less, minus the $2K regional discount, minus the $2500 options incentive, plus fees, and also including X-plan).
• If they were to use the proper MSRP, my balloon would be less by about $1000, though I would have paid more up front. In the end the total amount I would have to pay to own the car would be very similar.
• If I wanted them to use the proper MSRP, they would need to check back with Ford which they can't do today (Saturday) and that would mean I'd have to wait until Monday which isn't great for me.

Should I care whether I pay a bit less for 3 yrs and have a higher balloon later vs the other way? I'm thinking not. In addition, today is really the best day for me to pick up the car.

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[connoisseurr]

How long do you plan on keeping the vehicle? If 3-4 years, consider doing the 4 year option with 7500 miles. Your payment will be the lowest.

And I believe they aren't doing the numbers right by calculating the residual based upon the current MSRP - but I could be wrong here... @hybrid2bev any ideas?

 

[RickMachE]

I believe that your total will be exactly the same. So, the ability to pay less over the 3 to 4 years should be welcomed.

 

[tannerk89]

I’m not sure on the balloon payment and Ford Options calculations, but it seems like you’re getting a great deal being MSRP + x-plan + price protection. I would say you’re paying significantly less than others purchasing the same vehicle either way, so good on you for doing your due diligence up front!

 

[Miav8r]

I took delivery two weeks ago. I have always leased and was planning on using the options plan. However, when discussing the choices with my dealer I elected to purchase the car. Ford Credit is offering 36 months at 0% or 48 months at 0.9%. Although the monthly payment is higher, this made more sense for me in the long run.

 

[RickMachE]

I took delivery two weeks ago. I have always leased and was planning on using the options plan. However, when discussing the choices with my dealer I elected to purchase the car. Ford Credit is offering 36 months at 0% or 48 months at 0.9%. Although the monthly payment is higher, this made more sense for me in the long run.

The ONLY reason you got offered that is those are the rates from when you ordered. Yes, it's an amazing deal as compared to current rates. Had you lived in a state that gets the $2,500 options rebate, that would have been a better deal even at 2.25/2.5% interest. But you took the best deal, as did I.

 

[RMoore]

Doing options for 3 yrs. Interest rate is 2.7%. How long I keep the car will depend on a number of factors so can’t really say at this point. The $2500 Options rebate is pretty much the same as the interest being paid so it’s a wash but affords some additional benefit of the Options program.

 

[generaltso]

I have always leased and was planning on using the options plan. However, when discussing the choices with my dealer I elected to purchase the car.

Options is also a purchase.

 

[Miav8r]

Options is also a purchase.

I get that, but it "behaves" like a lease so that purchaser is eligible for the tax credit. I wonder whether this plan will disappear once the tax credits are gone.

 

[blkadr08]

Somewhat confusing situation that I'm faced with and my sense is that $1000 or so one way or the other isn't a big issue, but wanted to see if I'm missing something. Here's the background:

• My dealer placed my order on Oct 6, 2021.
• Price increased by $2K since then, but I am covered by Price Protection--dealer is very clear on this.
• My new window sticker reflects the higher MSRP by $2K.
• In order to calculate my Ford Options payments, my dealer is saying that they need to use the current sticker's MSRP to calculate the balloon: 47% of (MSRP + 1100 D&D).
• They will then subtract that balloon amount from the actual selling price (which includes the original MSRP that is 2K less, minus the $2K regional discount, minus the $2500 options incentive, plus fees, and also including X-plan).
• If they were to use the proper MSRP, my balloon would be less by about $1000, though I would have paid more up front. In the end the total amount I would have to pay to own the car would be very similar.
• If I wanted them to use the proper MSRP, they would need to check back with Ford which they can't do today (Saturday) and that would mean I'd have to wait until Monday which isn't great for me.

Should I care whether I pay a bit less for 3 yrs and have a higher balloon later vs the other way? I'm thinking not. In addition, today is really the best day for me to pick up the car.

Keep in mind that this balloon finance scheme is essentially like a lease, without the need to establish a residual. Ford offered this because trying to guess at a residual on a brand new car was risky.

In conventional leases, Residuals are always based on MSRP, not actual selling price, because the eventual value of the vehicle does not change because of what you paid for it.

I agree that you either have a lower balloon, or lower payments, and although it’s not exactly the same, the difference is minimal over the term of the contract.

 

[generaltso]

Ford offered this because trying to guess at a residual on a brand new car was risky.

That wasn’t the reason Ford resurrected Options. It was so the purchaser could be eligible for the tax credit.

 

[MW1515]

I took delivery two weeks ago. I have always leased and was planning on using the options plan. However, when discussing the choices with my dealer I elected to purchase the car. Ford Credit is offering 36 months at 0% or 48 months at 0.9%. Although the monthly payment is higher, this made more sense for me in the long run.

This is exactly what I was going to say. I ordered right around the same time as the OP and was planning on doing options until they said we could do 0% APR for 36 months in a traditional loan. This was the best deal, although the monthly payments are high, even factoring in the $2500 credit with options. You also aren't hurt by not putting any money down.

 

[RickMachE]

Actually, if you do the 0.9% for 48 months, it's a better deal than the 0% for 3 years.

 

[RedStallion]

I took delivery two weeks ago. I have always leased and was planning on using the options plan. However, when discussing the choices with my dealer I elected to purchase the car. Ford Credit is offering 36 months at 0% or 48 months at 0.9%. Although the monthly payment is higher, this made more sense for me in the long run.

At this time of rising interest rates, having a low APR loan is valuable. You can put your excess money in risk free i-bonds and get 9.62% interest now.

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