Ford financing rates this winter/next spring?

[timbop]

I am by no means a finance guy, but I was anticipating all the cheap financing available now to continue to some extent through until next spring - not 0% for 84 months cheap but at least lower than the February 2020 rates. However, there is apparently a pending glut of used cars between those coming off lease, rental car fleet sales, and just used car auction lots backing up with inventory until the economy picks up again. I know Ford and GM are both apparently taking steps right now to let people extend their leases. but clearly used and new car prices will take a nosedive for some time to come - affecting sales in general and leasing rates in particular.

Thoughts on the net effect? Will we see Ford credit continue offering cheap loan rates to move new cars, or will they be in a tough position and tighten credit? Will the residual value on their 4 year lease be so low that leasing of the Mach E will be virtually nonexistent?

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[hybrid2bev]

Thoughts on the net effect? Will we see Ford credit continue offering cheap loan rates to move new cars, or will they be in a tough position and tighten credit? Will the residual value on their 4 year lease be so low that leasing of the Mach E will be virtually nonexistent?

That’s a lot to unpack. I can only speak towards US financing not Europe and Great Britain or United Kingdom or England or whatever the preferred name is.

Rates and programs are driven by market forces around the time of launch. Rating agency downgrades of Ford and by extension Ford Credits causes borrowing costs to increase, which can lead to higher customer rates. If sales are slow then Ford Motor may offer special programs to boost sales (the current 84 month programs for example). So there is a balancing act at play (number of sales vs profit margins on rates). It’s hard to say at this point where the market will be at the end of 2020 / early 2021. Because the market demand for the Mach-E is expected to be high (large number of reservations) I would expect that there would not be any special APR programs at the time of launch, at least for the first few months or more. By mid-2021 is when I would speculate that the first special APR rate programs would come out on the non-GT versions as the GT launches.

As I’ve stated before my educated guess is that the Ford Option residual percentages will be in the low to mid-30s for 48 months and low to mid 40s, maybe high 30s for 36 months. That’s looking at the current Mustang and other SUV residuals as a guide. I’m guessing residual percentages for the Mach-E will be on the low side because this is a brand new vehicle and what the vehicle will really draw at auction is just a pure guess.

I’m speculating that only 1/4 to 1/3 of customers will go with the not-a-lease, lease via Ford Options. The rest will be cash buyers and normal financing. I’m hoping that Ford will offer special rates for Ford Options to help keep our payments down, but I really think Ford Options will be standard rates to start out as I said above.

Fingers crossed that I’m wrong and we get some special programs!


Appendix:
Ford Options program description.

https://www.macheforum.com/site/threads/lease-program-details-for-mach-e-leasing.130/post-2302

 

[timbop]

That’s a lot to unpack. I can only speak towards US financing not Europe and Great Britain or United Kingdom or England or whatever the preferred name is.

Rates and programs are driven by market forces around the time of launch. Rating agency downgrades of Ford and by extension Ford Credits causes borrowing costs to increase, which can lead to higher customer rates. If sales are slow then Ford Motor may offer special programs to boost sales (the current 84 month programs for example). So there is a balancing act at play (number of sales vs profit margins on rates). It’s hard to say at this point where the market will be at the end of 2020 / early 2021. Because the market demand for the Mach-E is expected to be high (large number of reservations) I would expect that there would not be any special APR programs at the time of launch, at least for the first few months or more. By mid-2021 is when I would speculate that the first special APR rate programs would come out on the non-GT versions as the GT launches.

As I’ve stated before my educated guess is that the Ford Option residual percentages will be in the low to mid-30s for 48 months and low to mid 40s, maybe high 30s for 36 months. That’s looking at the current Mustang and other SUV residuals as a guide. I’m guessing residual percentages for the Mach-E will be on the low side because this is a brand new vehicle and what the vehicle will really draw at auction is just a pure guess.

I’m speculating that only 1/4 to 1/3 of customers will go with the not-a-lease, lease via Ford Options. The rest will be cash buyers and normal financing. I’m hoping that Ford will offer special rates for Ford Options to help keep our payments down, but I really think Ford Options will be standard rates to start out as I said above.

Fingers crossed that I’m wrong and we get some special programs!


Appendix:
Ford Options program description.

https://www.macheforum.com/site/threads/lease-program-details-for-mach-e-leasing.130/post-2302

Thanks, I was hoping you'd chime in
I'm personally likely to just finance rather than go the options program, but either way I hope the cheap credit to stimulate the economy is available by the time my Mach E comes in.

 

[cjljr41]

My wife leases an Escape that ends in June. We're looking to replace it with an Escape PHEV, but they're not yet available. We did receive a $1,000 coupon from Ford last week on the purchase/lease of another vehicle. Unfortunately, the small print says that it excludes the Mach-E.

 

[silverelan]

Yahoo Finance just had an interesting article on the used car pricing issue.

https://finance.yahoo.com/news/fear-impending-car-price-collapse-110000556.html

This is bad news if it continues to the end of the year or into 2021 since I'm planning on using it he value of my trade-in to gain some equity in my Mach-E.

 

[timbop]

Yahoo Finance just had an interesting article on the used car pricing issue.

https://finance.yahoo.com/news/fear-impending-car-price-collapse-110000556.html

This is bad news if it continues to the end of the year or into 2021 since I'm planning on using it he value of my trade-in to gain some equity in my Mach-E.

That's the article that prompted me to post this question; I had read it earlier yesterday but by the time I posted this question I forgot where I read it. Thanks for fixing my laziness!

 

[pbojanoski]

Yahoo Finance just had an interesting article on the used car pricing issue.

https://finance.yahoo.com/news/fear-impending-car-price-collapse-110000556.html

This is bad news if it continues to the end of the year or into 2021 since I'm planning on using it he value of my trade-in to gain some equity in my Mach-E.

I'm also planning to sell my Mazda RX-8 and use proceeds to help with cost of Mach E. You raise some good points to consider. Economy looking more and more of an issue each day. Hoping not, but I may be delaying my purchase if this potential "perfect storm" of economic issues comes true.

There are a lot of mines being laid in this economic minefield currently under construction. Will take a lot of savvy to navigate the waters coming soon.

 

[Ken7]

Yahoo Finance just had an interesting article on the used car pricing issue.

https://finance.yahoo.com/news/fear-impending-car-price-collapse-110000556.html

This is bad news if it continues to the end of the year or into 2021 since I'm planning on using it he value of my trade-in to gain some equity in my Mach-E.

It's interesting, intuitively I would think used car prices would be stronger in times like this because people don't want to shell out the $$$ for a new car.

 

[silverelan]

There's been the idea floated about of Cash for Clunkers II to help juice car sales. If that happened, that would probably help but also, I don't have a gas guzzler of a car to trade-in.

Right now what we're seeing is a complete paralysis in the market as nobody wants to spend money because either they don't have any or don't want to. Strange times.

 

[ChasingCoral]

I think C4C2 would be great but I guess my Leaf wouldn't fit the C4C2 criteria and I can't give up my 2003 Tacoma until the new E-trucks come out.

 

[timbop]

It's interesting, intuitively I would think used car prices would be stronger in times like this because people don't want to shell out the $$$ for a new car.

That's exactly what I was expecting, too - like what happened in 2009-2010.

 

[ChasingCoral]

That's exactly what I was expecting, too - like what happened in 2009-2010.

It might be if you didn’t have all the leases thrown into the equation.

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