Ford Options vs Financing if you might sell your Mach e

[Vulnox]

You can refinance the balloon for up to 3 years at the original Options rate.

For me, Options was a no-brainer at 2.24% with $2500 cash back since the total interest was less than $2500. I realize that’s not necessarily the case for everyone.

yeah, I mentioned that in my original post. A lot of people got the $2500 and if I had that option, I would probably roll with it. I don’t think anyone still waiting on their Mach-e would get that $2500 anymore. Ours was ordered in November and we get $1000. Seems mainly earlier in 2021 that they were doing $2500, but it varies by market too of course.

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[generaltso]

yeah, I mentioned that in my original post. A lot of people got the $2500 and if I had that option, I would probably roll with it. I don’t think anyone still waiting on their Mach-e would get that $2500 anymore. Ours was ordered in November and we get $1000. Seems mainly earlier in 2021 that they were doing $2500, but it varies by market too of course.

The markets that were $2500 are now $2000. The markets that were $1000 are now $500.

 

[RMoore]

It might be worth more than the balloon payment. You don't know that, and I don't either. What the market looks like in three years is a total mystery and to claim otherwise is frankly a bit foolish, not even counting what the used car market has looked like lately, but the somewhat unknowns of EVs with how many are entering the market and the rate of tech advancement that may make a Mach-e look like a bad choice compared to 400+ mile versions in three or so years. Three years ago nobody knew that the used car market was going to explode with vehicles selling used for near or more than their MSRP. Heck, I bought our Focus Electric July of last year, and its value has gone up $4k even though we put over 14k miles on it, I didn't know that would happen and in 2019 the idea of that being the case would have gotten an eye roll from anyone that has seen the auto market for the past 100 years.

That is largely unheard of and the market is already starting to cool on that front. In three years from now we could be flooded with used cars, or just a more "normal" market again, who knows?

All that aside, your argument doesn't change that paying 2.7% for 36 months isn't better than 1.9% for 36 months (if you took the 60 month finance but decided to sell at 3 years) if you were selling either way. My point was that unless you are eligible for a significant rebate with options, it just doesn't make much sense anymore. You can't even refinance for low rates, and no guarantee you will be able to refinance that balloon payment to a better rate than 1.9% in 3 years.

So the best bet is to work with the information you do have, and keep your actual options open without overpaying. If you decide that means Options, go for it.

I chose Options with a 2.7% rate and a $2500 incentive. I figured I'm fine however the market turns out. If, as @generaltso predicts, the car is worth more than the balloon then it would be foolish to turn it in. But Options protects you from the other side of the coin--if for some reason the car's value is much less (say the whole HVBJB issue doesn't get sorted out and no one wants to buy a car with a faulty one) then you can just turn the car in. I liked that measure of protection so went with Options. I might have been able to get a better interest rate and save a few dollars in the long term by financing, and I suppose I could have refinanced after the fact too, but just didn't want to deal with it anymore.

 

[ChuckA]

Options is a loan with a balloon payment, which makes the monthly payments smaller. Then you can payoff the balloon, refinance it, or hand Ford the keys.

My Ford car loan, 48 months, 0.9%, has $1,200 payments.

My Option loan, same MME trim as yours, is 35 months at 2.25%, and $803 payments, then $23k final payment. It’s all about cash flow

 

[Aggie PT]

Are there early payoff penalties with Ford options? I was thinking about paying cash when mine comes in but wasn't sure on that versus financing it. If there wasn't a penalty, it would make sense to do Ford options and then pay it off the next month to get the incentive, right?

 

[Triggerhappy007]

Are there early payoff penalties with Ford options? I was thinking about paying cash when mine comes in but wasn't sure on that versus financing it. If there wasn't a penalty, it would make sense to do Ford options and then pay it off the next month to get the incentive, right?

There isn't. If you were treated kindly by your salesperson or dealer, keep the loan for 3 months, then pay off.

 

[ChuckA]

There isn't. If you were treated kindly by your salesperson or dealer, keep the loan for 3 months, then pay off.

Your dealer doesn’t give a ____ if you pay off a loan or not. He got paid when you signed. Cash-flow wise, it makes little sense to pay off an Options loan. Keep your cash invested.

 

[Triggerhappy007]

Your dealer doesn’t give a ____ if you pay off a loan or not. He got paid when you signed. Cash-flow wise, it makes little sense to pay off an Options loan. Keep your cash invested.

It's a kickback. He'll only keep it if you don't pay it off or refinance within a certain amount of time.

 

[Aggie PT]

Are you sure about that?

 

[RickMachE]

Ford Credit pays an incentive to the dealer after 90 days.

They have no early payoff restrictions.

 

[RickMachE]

My Option loan, same MME trim as yours, is 35 months at 2.25%, and $803 payments, then $23k final payment. It’s all about cash flow

And total interest paid.

 

[ChuckA]

And total interest paid.

Of course I haven’t paid all the interest yet since I’m still paying the loan. Total interest on the contract was $2,492. I received a $2,500 rebate for choosing Options.

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