Financing Balloon after Ford Options

[generaltso]

I was fortunate back in August 23. 0% for 60 months.

That‘s not Ford Options.

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[dml105]

Sure, and for many regions, it was pre-determined in the contract terms. The terms on my loan aren't as clear, so I needed to call to find out how it'll work.

I hesitated to post the info today because it's not a done deal until at least another month from now. Nothing is in writing yet. (At least, per my own loan contract here in Arizona.)

That language differs from my contract, which says the APR will be the lower of the APR agreed to and the APR permitted by law. But the refinanced payment will increase to 10% higher than the current payment.

Personally, I'm not ready to let my Mach-e go, but could be next year. I'd prefer to keep it until the new shiny comes out.

 

[hybrid2bev]

That language differs from my contract, which says the APR will be the lower of the APR agreed to and the APR permitted by law. But the refinanced payment will increase to 10% higher than the current payment.

Personally, I'm not ready to let my Mach-e go, but could be next year. I'd prefer to keep it until the new shiny comes out.

That sounds more like a FlexBuy contract than Ford Options.

FlexBuy is 66 or 75 months split into two different payment schedules (no balloon payment). Ford Options on the other hand was 36 or 48 months. Which was either 35 or 47 monthly payments and 1 balloon payment.

 

[ChuckA]

That's what I'd assumed until I called and spoke with Ford Credit. As I said, I'm holding out hope but there's no guarantee until I work through the details with them next month.

Please inform how you make out. 2.25% rate for me would be fantastic.

 

[dml105]

That language differs from my contract, which says the APR will be the lower of the APR agreed to and the APR permitted by law. But the refinanced payment will increase to 10% higher than the current payment.

That sounds more like a FlexBuy contract than Ford Options.

FlexBuy is 66 or 75 months split into two different payment schedules (no balloon payment). Ford Options on the other hand was 36 or 48 months. Which was either 35 or 47 monthly payments and 1 balloon payment.

it is a Ford Options contract. I am referring to the balloon payment term.

 

[hybrid2bev]

it is a Ford Options contract. I am referring to the balloon payment term.

Ah, OK. It was the "But the refinanced payment will increase to 10% higher than the current payment." part that was confusing. I've not seen that in the contract text before.

 

[Dancefreak]

Great to finally hear from at least someone's experience on this whole balloon payment thing. Hopefully this is how it goes for others.

 

[solarmoo900]

This person on reddit () is claiming they got offered 2.5% which would be great. Not as good as the 1.9% I'm currently on but much better than anything I've found on the market

 

[hybrid2bev]

Yeah, next year when my Options contract is up I'll refi for 2.25%. Don't need to do anything with the dealer. Just call Ford Credit immediately after your final monthly payment has posted (last monthly payment before the balloon is due).

 

[Neil4Real]

Yeah, next year when my Options contract is up I'll refi for 2.25%. Don't need to do anything with the dealer. Just call Ford Credit immediately after your final monthly payment has posted (last monthly payment before the balloon is due).

Is that the guaranteed rate or are they honoring everyone’s existing rate? If I can get my .9% or 1.9% (can’t remember which) GT’s qualified for, that would be amazing.

Aren’t we kind of paying way more than that in interest though? During this “before the balloon” period, aren’t we paying interest on the full amount? For ease, if the purchase price was $50k and options worked out to $25k principal for the first 3 years, $25k balloon, wasn’t interest applied to the full $50k, than added to the principal and then divided over 36 months? And now we pay interest again on the final $25k?

 

[macchiaz-o]

Is that the guaranteed rate or are they honoring everyone’s existing rate? If I can get my .9% or 1.9% (can’t remember which) GT’s qualified for, that would be amazing.

Aren’t we kind of paying way more than that in interest though? During this “before the balloon” period, aren’t we paying interest on the full amount? For ease, if the purchase price was $50k and options worked out to $25k principal for the first 3 years, $25k balloon, wasn’t interest applied to the full $50k, than added to the principal and then divided over 36 months? And now we pay interest again on the final $25k?

Yes, that's more or less right. Put a little more concise: Ford Options is a simple interest loan with just one twist: the final month's payment is enormous.

So it's sort of what you said except that your principal balance is $50k on day 1, not $25k. Interest is always accrued against your entire remaining principal balance (which always includes the last month's balloon amount).

The reason you pay more interest overall for a balloon loan, compared to an equivalent rate, equivalent duration, regular loan where all payments are roughly equal, is that you're delaying payment of a huge portion of principal until the very last month instead of distributing it more evenly.

Anyways... If you ask Ford Credit to "reschedule" the last payment the way I intend to do for mine, then yes, you will be paying interest againon that balloon amount, for however many additional months you keep the loan going.

I look at it as a good, easy opportunity. Since the loan rate is low, I'll be paying less in interest than I'll be earning in my long term market investments.

 

[hybrid2bev]

Is that the guaranteed rate or are they honoring everyone’s existing rate? If I can get my .9% or 1.9% (can’t remember which) GT’s qualified for, that would be amazing.

Aren’t we kind of paying way more than that in interest though?

On my Ford contract, if I refinance the rate will be the lessor of my contract rate or the state maximum rate. So I’ll get the same rate again.

As explained above Ford Options is a simple interest loan. The daily interest rate is calculated based on the entire outstanding balance including the balloon.

 

[NJ_MachE]

Curious whether 'rescheduling' the balloon payment with Ford Finance (and maintaining the same loan interest rate) means that this does not require a new loan contract/credit check? If all it entails is just a phone call and less than $1,000 in additional interest over the remaining life of the loan, it does seem like a no brainer not to just keep the car with the same payment. Unless resale values plummet a lot further (I still have over a year left before my balloon).

 

[Anders31]

Curious whether 'rescheduling' the balloon payment with Ford Finance (and maintaining the same loan interest rate) means that this does not require a new loan contract/credit check? If all it entails is just a phone call and less than $1,000 in additional interest over the remaining life of the loan, it does seem like a no brainer not to just keep the car with the same payment. Unless resale values plummet a lot further (I still have over a year left before my balloon).

The weird thing is here

I also used the Ford Options, but with only 2 years for now, because I wanted the monthly payment to be low (going for 3 years would increase the monthly payment significantly)
However ... In the terms of contract, I can too, extend it for 12 months at the same monthly rate ...
So If I don't want to finance the balloon after the 2 years, I can keep it one more year... I don't either understand the logic, but ... it is not that bad for this particular application

 

[hybrid2bev]

Curious whether 'rescheduling' the balloon payment with Ford Finance (and maintaining the same loan interest rate) means that this does not require a new loan contract/credit check? If all it entails is just a phone call and less than $1,000 in additional interest over the remaining life of the loan, it does seem like a no brainer not to just keep the car with the same payment. Unless resale values plummet a lot further (I still have over a year left before my balloon).

There's no new credit check.

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