I see, thanks. But that also means no much benefit if I decide to return the car at the end, which sound like I am paying more out of the pocket actually, unless I pay the final balloon payment to pay it off.
Yup, that's how I understand it, too.
This is good info, since I was under the impression it went against the balloon as well. Could help appease my wife if I throw another $9500 down now to lower the payment, since she didn't love the $700+ a month lol. And wasn't enthused when I explained that when you take into account the $7500 tax credit and $2k California Rebate we'll EVENTUALLY get that it's actually $197 cheaper over the 4 years ??
Today, June 7, 2021, I found out that you cannot make principal-only payments to reduce the interest cost on a Ford Options loan. This is very disappointing because on May 18, 2021, I was told by a Ford Credit representative that I could make a principal-only payment and that Ford Credit would "rewrite" the loan to reduce my monthly payments while leaving the balloon payment intact. So I made an online $19K principal-only payment on May 18, 2021. When I called today to have my monthly payment reduced to reflect my principal-only payment while leaving the balloon payment alone, I was informed by another Ford Credit representative that it is not possible for Ford Credit to do that. The Ford Credit representative stated that the $19K that they received could be applied to future payment (which would include principal and interest). The Ford Credit representative agreed with me that making payments before they are due would only benefit Ford Credit, not me. The only way I could reduce the interest expense on my Ford Options loan is to pay the whole loan (including the balloon amount) in full. In my opinion, the Ford Options is NOT a simple interest loan with a balloon, it is a pre-computed interest loan with a balloon. In other words, the interest amount you pay cannot be reduced if you want to keep the balloon payment intact. Maybe Ford Credit will make a change in the future but for now, there is no benefit for paying more than what is due each month on a Ford Options loan. At least Ford Credit will refund my principal-only payment. However, it will take at least 10 days for me to receive a check, which gives Ford Credit even more time with my money.
@hybrid2bev, I know you're the resident expert. Is something not being communicated correctly to Ford Motor Credit for the onetime change?
As has been stated in this thread (and others), the option to modify the loan in the way you desire:
I attempted to follow this guidance and was unsuccessful. I even gave the Ford Credit representative the name of the person who earlier informed me that Ford Credit would modify (rewrite was her word) if I made a large principal-only payment. She even instructed me on how to make the principal-only payment on the Ford Credit website. Today the Ford Credit representative told me that I was given incorrect information by the previous Ford Credit representative. So my experience leads me to believe that Ford's systems are not currently able to handle a Ford Options loan modification, even manually. If you attempt to request a loan modification before next tax season and someone at Ford Credit says you can, then ask them for their employee ID and request that they put a record of your conversation in their customer service system.
This is true. Ford Options is a simple interest loan and this is a new process to allow a re-write.
Hmmm, I've been hanging out here a lot and this is a detail that I've certainly missed.
Why bother? Put the cash in the bank and use it towards the higher payments. Interest saved isn’t worth the aggravation. Most MME purchasers need a calm period after the long order-to-delivery process. Enjoy the car.
Yes, interest is calculated on the whole amount financed.
But I got a $2500 incentive that in effect covered the total interest.
