Anyway to convert a lease to get tax credit?

[superstang28]

So my sad story is ordered a '23 premium back in September with the hope of getting it delivered before end of '22 (lol).

Got an update Jan 15th that they still had no timetable on production due to supply issues.

Started surfing local dealers to see if anyone cancelled any orders because of not qualifying for tax credit and found exactly what i ordered with no ADM! Originally my plan was to use Ford options to qualify for tax credit, but a few things swayed me to a lease:
1. Interest rate on Ford Options was 7.5% vs 2% on lease
2. Since the MSRP was over $55k, I wasn't qualifying for the credit so i could save a few hundred per month.

Less than a week later, double whammy of lowered MSRP below $55k threshold and IRS recategorization. Obviously, either of those before my lease would have pushed me towards financing instead.

I am still expecting some credit for the MSRP reduction, but I wonder if Ford is going to do anything for anyone in my situation to be able to qualify for the tax credit?

Wishful thinking or am I screwed?

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[generaltso]

Wishful thinking or am I screwed?

Yes to both of those. Ford Credit is now the first registered owner, and the only entity that can claim the tax credit. I do believe they passed some of it to you in the form of a propped up residual value though, so your monthly payments are likely a little less than they would be otherwise. Sounds like that dealer didn't want you to do Options with a quoted interest rate like that. I know rates have gone up, but I haven't seen reports of the Options rate being quite that high.

Also, in case you weren't aware, Ford doesn't allow buy-outs with their EV leases. So you will have to return the vehicle at the end of your lease.

 

[Monke]

I think Ford is passing the tax credit to buyers. A rep. at an auto show also told me the same thing.

Today is February 4th 2023. You should try to negotiate for a lower than MSRP selling price. There are many lot rot Mach E. If a good dealer in IA can price a car at $7,500 lower than MSRP, it should be possible to get a Mach E at much lower than MSRP from other dealers.

 

[superstang28]

Yes to both of those. Ford Credit is now the first registered owner, and the only entity that can claim the tax credit. I do believe they passed some of it to you in the form of a propped up residual value though, so your monthly payments are likely a little less than they would be otherwise. Sounds like that dealer didn't want you to do Options with a quoted interest rate like that. I know rates have gone up, but I haven't seen reports of the Options rate being quite that high.

Also, in case you weren't aware, Ford doesn't allow buy-outs with their EV leases. So you will have to return the vehicle at the end of your lease.

Damn. I think Ford Options might be that high (or maybe it's my location in CA) because in the price cut announcement they mentioned special rate of 5.something % on Ford Options.

I'll have to see if they are willing to do anything else for me since I can't get the tax credit.

 

[4sallypat]

Damn. I think Ford Options might be that high (or maybe it's my location in CA) because in the price cut announcement they mentioned special rate of 5.something % on Ford Options.

I'll have to see if they are willing to do anything else for me since I can't get the tax credit.

If you had kept your original ordered vehicle, the Options rate would have been around 4.49% and gotten $2000 incentive under price protection.

By leasing you did get a subvented money factor (MF) or interest rate on your lease which lowers the payment.
Plus you don't pay sales tax for the entire vehicle - by leasing you pay only on the monthly rent.

If you have a small business, you can write off the lease - I used to do that with my BMWs.

My ordered MME from April is still sitting in Mexico and hoping it arrives before IRS rules on the battery.

Sort of stuck waiting for it since it has $6500 PCO attached to it.

 

[generaltso]

I'll have to see if they are willing to do anything else for me since I can't get the tax credit.

Like what?

 

[macchiaz-o]

Like what?

Well they could sell him a second vehicle for instance. He could then enjoy both financing models and have two new vehicles. Win win.

 

[hybrid2bev]

Like what?

Free oil changes!!

 

[RedStallion]

$7500 tax rebate doesn't apply to leases, or more precisely the lessor gets the credit and it's upto them to pass any savings on lessee. But since the agreement is already signed, there is no reason for lessor to change anything.
Check your lease agreement if it has early termination option. Alternatively, some people just walk away from their leases, the car will be repossessed and your credit ruined.

 

[superstang28]

Like what?

Good question...I mean if they are going to contact me about MSRP adjustment on the vehicle, I am going to argue they should and can go beyond the MSRP adjustment since they now directly benefit from it with tax credit. Maybe go halfsies??

Other thoughts:

A crap ton of EA credits and/or other charging credits?
A crap ton of ford pass points (usefulness TBD)
Most likely: they tell me to go pound sand

 

[generaltso]

Good question...I mean if they are going to contact me about MSRP adjustment on the vehicle, I am going to argue they should and can go beyond the MSRP adjustment since they now directly benefit from it with tax credit. Maybe go halfsies??

But they already gave you more than half the credit if it’s built into the residual, right? Your monthly payment would be higher without it.

 

[superstang28]

But they already gave you more than half the credit if it’s built into the residual, right? Your monthly payment would be higher without it.

No. Because when I made the purchase, the MSRP was over the $55k limit. So the car didn't qualify for anything. Now with the MSRP reduction being retroactive and the IRS cap going up, it WOULD qualify.

So I'm really curious how this is going to play out when they do MSRP adjustment because my argument is that in addition to the reduction, they would need to compensate for loss of ability to get tax credit.

I'm sure it's probably a low number of leases that got executed between 1/1 and 1/30 so wondering if we are going to get squeezed or they are going to try and make us whole ?

 

[MachKet]

No. Because when I made the purchase, the MSRP was over the $55k limit. So the car didn't qualify for anything. Now with the MSRP reduction being retroactive and the IRS cap going up, it WOULD qualify.

So I'm really curious how this is going to play out when they do MSRP adjustment because my argument is that in addition to the reduction, they would need to compensate for loss of ability to get tax credit.

I'm sure it's probably a low number of leases that got executed between 1/1 and 1/30 so wondering if we are going to get squeezed or they are going to try and make us whole ?

I wouldn’t be confident that you are even going to get the msrp reduction. You are not the owner of the car, ford financial is. You’re essentially renting it from them so they can choose to pocket that $$ and not pass it on to you.Will be interesting to see how they handle it

 

[generaltso]

No. Because when I made the purchase, the MSRP was over the $55k limit.

But did Ford adjust the residuals down for that? I’m honestly not sure. @hybrid2bev , do you know?

 

[Dmorton]

Wait??? If you lease do you get the 7500 tax credit?

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