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

[First Edition]

The Ford Options video states the following regarding the $7500 tax credit.

“You can choose to keep the tax credit or apply it to your account”

How would one apply the tax credit to your account? What is the mechanism for that?

Sponsored

 

[RyZt]

The Ford Options video states the following regarding the $7500 tax credit.

“You can choose to keep the tax credit or apply it to your account”

How would one apply the tax credit to your account? What is the mechanism for that?

I suppose it's like additional principal payment in loans/mortgages, followed by a recast/re-amortization of the rest of the payments.

 

[RyZt]

Buyer can get the credit from IRS and then apply the money it received from IRS to the account. I have always interpreted "apply the tax credit to your account" this way.

 

[jhalkias]

The Ford Options video states the following regarding the $7500 tax credit.

“You can choose to keep the tax credit or apply it to your account”

How would one apply the tax credit to your account? What is the mechanism for that?

Perhaps Ford Credit can come up with some kind of mechanism to allow you to apply the credit in the future when you receive it, but have it count in some way toward what your current payment is? I don't know if such a thing is possible, but it sure would help with the angst of not getting the car before 12/31.

 

[hybrid2bev]

The Ford Options video states the following regarding the $7500 tax credit.

“You can choose to keep the tax credit or apply it to your account”

How would one apply the tax credit to your account? What is the mechanism for that?

Here is what you could do. You would start the Options contract without the tax credit factored in. After you file your Federal taxes and receive the money from the IRS you can choose to apply it towards your financing at that point or just keep it. Ford Credit can re-calculate your remaining monthly payments if you choose to send in your tax refund amount. Just call Ford Credit when you are ready, we’ll walk you through the process.

There’s no way for you to apply the tax credits money as a down payment until after you file your taxes. Ford Credit has no way to know how much of the tax credits you would qualify for, so we can’t apply a credit upfront at contract inception.

 

[timbop]

Here is what you could do. You would start the Options contract without the tax credit factored in. After you file your Federal taxes and receive the money from the IRS you can choose to apply it towards your financing at that point or just keep it. Ford Credit can re-calculate your remaining monthly payments if you choose to send in your tax refund amount. Just call Ford Credit when you are ready, we’ll walk you through the process.

There’s no way for you to apply the tax credits money as a down payment until after you file your taxes. Ford Credit has no way to know how much of the tax credits you would qualify for, so we can’t apply a credit upfront at contract inception.

OK, but how does that work with the 25% downpayment cap? Say I trade my current car valued at $11k in on a route 1, which has a $12500 cap on downpayment. If next year I try to apply $7500 to the balance, doesn't that put me well over the cap? If not, then what's the point of the cap? If I want to lower my payments I could just plunk down an additional lump sum 3 months after I get the car, couldn't I?

 

[hybrid2bev]

OK, but how does that work with the 25% downpayment cap? Say I trade my current car valued at $11k in on a route 1, which has a $12500 cap on downpayment. If next year I try to apply $7500 to the balance, doesn't that put me well over the cap? If not, then what's the point of the cap? If I want to lower my payments I could just plunk down an additional lump sum 3 months after I get the car, couldn't I?

In the prior version of Options changing the monthly payment after contract inception was not possible. Before you could pay a lump sum after inception but your monthly payment remained unchanged. Just like if you made a lump sum payment on any standard financing or mortgage. The extra money would be applied to principal and you continue to have the same amount due each month. This is the ‘lease-like’ portion of Options.

The point of the down payment cap is a carryover policy to be similar to the lease policy. It is mostly designed so the amount financed for the monthly payments portion of the payment schedule is not lower than the balloon amount. No negative monthly payments. Also to keep the monthly payments up so we have a chance to recover the costs of booking the contract. Most people don’t realize that it can cost the finance source several hundred dollars upfront to process a contract. If you pay off early we can actually lose money on a deal.

Anyway back to the question. Now a new process is being established to allow customers to apply a lump sum after Options contract inception and recalculate the remaining monthly payments. This recalculation being a new thing, there’s probably a loophole in the process. To be honest I don’t know if anyone has thought about your question. We’re not expecting a high volume of Options contracts and even fewer still that will meet your scenario. Situations like you describe will probably be one offs and dealt with on a case by case basis. It’s kind of funny to wonder how our green screen legacy portfolio system will handle this new process.

The plan is for Options to be temporary anyways and have most people do normal retail or leasing. We’ll see what the take rate is for Options and what becomes of the tax credits in the future.

 

[timbop]

In the prior version of Options changing the monthly payment after contract inception was not possible. Before you could pay a lump sum after inception but your monthly payment remained unchanged. Just like if you made a lump sum payment on any standard financing or mortgage. The extra money would be applied to principal and you continue to have the same amount due each month. This is the ‘lease-like’ portion of Options.

The point of the down payment cap is a carryover policy to be similar to the lease policy. It is mostly designed so the amount financed for the monthly payments portion of the payment schedule is not lower than the balloon amount. No negative monthly payments. Also to keep the monthly payments up so we have a chance to recover the costs of booking the contract. Most people don’t realize that it can cost the finance source several hundred dollars upfront to process a contract. If you pay off early we can actually lose money on a deal.

Anyway back to the question. Now a new process is being established to allow customers to apply a lump sum after Options contract inception and recalculate the remaining monthly payments. This recalculation being a new thing, there’s probably a loophole in the process. To be honest I don’t know if anyone has thought about your question. We’re not expecting a high volume of Options contracts and even fewer still that will meet your scenario. Situations like you describe will probably be one offs and dealt with on a case by case basis. It’s kind of funny to wonder how our green screen legacy portfolio system will handle this new process.

The plan is for Options to be temporary anyways and have most people do normal retail or leasing. We’ll see what the take rate is for Options and what becomes of the tax credits in the future.

Hmm, interesting. I am actually asking because the options plan in my area currently has $2500 incentive - which I hope they keep beyond Jan 4th since my car will likely arrive mid to late january. But, because of that and my trade-in value I will actually exceed the cap by $1000, although I am hoping I can pay the D&D fees with the extra cash. I don't want the dealer to play games with my trade value because they don't want to write me a check for the excess. I also made a deal with my wife to keep the payments under a certain threshold, as she gets really nervous with our expenses.

Now, before anyone says "it sounds like you can't afford the car" I absolutely can; my wife gets nervous about money for reasons I won't go into.

 

[First Edition]

In the prior version of Options changing the monthly payment after contract inception was not possible. Before you could pay a lump sum after inception but your monthly payment remained unchanged. Just like if you made a lump sum payment on any standard financing or mortgage. The extra money would be applied to principal and you continue to have the same amount due each month. This is the ‘lease-like’ portion of Options.

The point of the down payment cap is a carryover policy to be similar to the lease policy. It is mostly designed so the amount financed for the monthly payments portion of the payment schedule is not lower than the balloon amount. No negative monthly payments. Also to keep the monthly payments up so we have a chance to recover the costs of booking the contract. Most people don’t realize that it can cost the finance source several hundred dollars upfront to process a contract. If you pay off early we can actually lose money on a deal.

Anyway back to the question. Now a new process is being established to allow customers to apply a lump sum after Options contract inception and recalculate the remaining monthly payments. This recalculation being a new thing, there’s probably a loophole in the process. To be honest I don’t know if anyone has thought about your question. We’re not expecting a high volume of Options contracts and even fewer still that will meet your scenario. Situations like you describe will probably be one offs and dealt with on a case by case basis. It’s kind of funny to wonder how our green screen legacy portfolio system will handle this new process.

The plan is for Options to be temporary anyways and have most people do normal retail or leasing. We’ll see what the take rate is for Options and what becomes of the tax credits in the future.

Do you know when regular leasing might be available? Especially a 2/24 lease.

Given the 25% cap on down payments for Options, I guess there won’t be the option of a one time single payment, like Ford offers on their leases?

 

[hybrid2bev]

Do you know when regular leasing might be available? Especially a 2/24 lease.

Given the 25% cap on down payments for Options, I guess there won’t be the option of a one time single payment, like Ford offers on their leases?

Yes I know the plan for that.

You could pay all of your Options monthly payments, then just chill until the end of the contract term and then exercise your options. Options isn’t set up to mimic a one pay lease at inception but once your first payment is due you could pay all 35 or 47 of them depending on your contract. Options is only offered as 36 or 48 months not 24.

 

[First Edition]

Yes I know the plan for that.

You could pay all of your Options monthly payments, then just chill until the end of the contract term and then exercise your options. Options isn’t set up to mimic a one pay lease at inception but once your first payment is due you could pay all 35 or 47 of them depending on your contract. Options is only offered as 36 or 48 months not 24.

Great, thank you.

 

[GoGoGadgetMachE]

Now, before anyone says "it sounds like you can't afford the car" I absolutely can; my wife gets nervous about money for reasons I won't go into.

As I've said on here before, anyone confusing "caring about money" with "can't afford the car" is being silly. Those are two unrelated things.

Sponsored