CA. Members who have car in hand and used Ford Options

macchiaz-o

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My own calculation was originally $20 higher than Ford website and dealer number as well. The cause of the difference is that we assumed monthly compounding. (I checked your spreadsheet to make sure, and that’s exactly what you did.) We divided interest rate by 12, and calculated 12 payments per year. That's wrong. That’s how mortgage payments are calculated, not how auto loans are.

Auto loan is daily compounding. The convention is to assume 365 days a year and 30.416 days per month. What You need to do is divide interest rate by 365 (instead of 12), and multiply payment number by 30.416 (365/12).

Put another way, instead of pmt(rate / 12, 12 * 3, principal), you do pmt(rate / 365, 365 * 3, principal) * 30.416. With that latter formula, my own calcalations matches Ford's.
? That explains it. Thank you!

Weird that the regular retail contract is monthly compounding while the balloon retail contract compounds daily.

I'll try to get this reflected in my spreadsheet updated soon.
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RyZt

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? That explains it. Thank you!

Weird that the regular retail contract is monthly compounding while the balloon retail contract compounds daily.

I'll try to get this reflected in my spreadsheet updated soon.
I just realized that what I said is non-sense. I tried multiple things to get the number match, and misremembered which attempt fixed the numbers.

The actual fix is not about monthly/daily compounding. That only affects cents.

The actual fix it to realize that the Ford Options is really a 35-month loan, not a 36-month one. For the first 35 payments, you pay the installment prinicipal/interest + interest of the balloon. On the 36th payment, you only pay for the balloon (and maybe also the interest on the balloon).
 

macchiaz-o

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I just realized that what I said is non-sense. I tried multiple things to get the number match, and misremembered which attempt fixed the numbers.

The actual fix is not about monthly/daily compounding. That only affects cents.

The actual fix it to realize that the Ford Options is really a 35-month loan, not a 36-month one. For the first 35 payments, you pay the installment prinicipal/interest + interest of the balloon. On the 36th payment, you only pay for the balloon (and maybe also the interest on the balloon).
OK I'm glad you said that because when I tried to change the formulas to be daily compounding, it made very little difference. So I figured I was doing something wrong and backed it out for now.

While Ford's monthly payments seem to be $15-25 too high compared to ours, my spreadsheet does already handle the balloon aspect correctly.

It will even let you project what might happen when you send a large extra payment of principal to FMC and ask them to adjust your remaining payments prior to the last balloon payment. (E.g. if you send them your tax credit or something like that)... If I did this right, it shows that yes, your monthly payments will go down, but in any realistic scenario your total finance costs will actually go up. So that was eye opening for me... It's because the monthly payment amounts are fixed so by adjusting the payment plan we're asking them to restart a payment schedule, and earlier payments are interest heavy instead of principal heavy.
 

RyZt

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While Ford's monthly payments seem to be $15-25 too high compared to ours, my spreadsheet does already handle the balloon aspect correctly.
I don't think your spreadsheet does. It uses the fourth argument of pmt to specify remaining balance after 36 payments, which is different from Ford Options, where the 36th payment is balloon only, and there's only 35 installment payments.
 

macchiaz-o

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I don't think your spreadsheet does. It uses the fourth argument of pmt to specify remaining balance after 36 payments, which is different from Ford Options, where the 36th payment is balloon only, and there's only 35 installment payments.
Oh dang!

I had it right and then.... I must have lost it somewhere. :(

Thank you very much! Now fixed.
 


mylittlepony

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Penske La Mesa did my 36 mos Ford Options without a hitch, even though I was their first ever customer using it. I was also their first ever CA fuel rebate customer and that took them an hour to figure out but in the end they got it right. I wouldn't hesitant recommending then based on their great service and earnest efforts to get it all correct and done as quickly as possible. And now they know how to do it all thanks to me ?. Finance didn't try to upsell me on a bunch of nonsense either, and used DocuSign so I never had to walk into the building. Just sat outside and signed everything from my tablet. ??
See you on the road in San Diego! 2 weeks for mine!
 

Jako607

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See you on the road in San Diego! 2 weeks for mine!
I'm excited for you! Every day I look for a reason to have to drive somewhere cuz it's so fun. But be prepared to answer questions/comments from people when you're out in most any parking lot haha.
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