"Ford Options" Mach-E Lease vs standard lease - similarities and differences

[jrstinkfish]

Happy to report the Options 2.25% APR and $1000 incentive are back

Still debating this vs a loan. The low payment is tempting, I guess for me the mileage limitation is the main barrier. I've had a Bolt for almost 3 years have only put 17k miles on it since unlike my past cars, I never use it for road trips, but that low mileage is also due to working from home since April 2020. When they bring us back into the office, it'll go back up to normal 25-mile round trip commute mileage, but then again, that is months from now, so I'll have a little overall cushion in the end.

But if I finance, I don't have to care about the odometer. Decisions!

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[hybrid2bev]

Happy to report the Options 2.25% APR and $1000 incentive are back

Still debating this vs a loan. The low payment is tempting, I guess for me the mileage limitation is the main barrier. I've had a Bolt for almost 3 years have only put 17k miles on it since unlike my past cars, I never use it for road trips, but that low mileage is also due to working from home since April 2020. When they bring us back into the office, it'll go back up to normal 25-mile round trip commute mileage, but then again, that is months from now, so I'll have a little overall cushion in the end.

But if I finance, I don't have to care about the odometer. Decisions!

Keep in mind that the mileage limit is only in effect if you turn in the vehicle. If you trade it in or if you refinance the balloon then the mileage limit is irrelevant, no mileage charges.

 

[Carmel Mach E Auto]

Still debating this vs a loan. The low payment is tempting, I guess for me the mileage limitation is the main barrier.

...

But if I finance, I don't have to care about the odometer. Decisions!

The reason you "don't have to care about the odometer" with traditional financing is that, from a financial liability perspective, you are paying for the car as if you will drive it completely into the ground by the time the loan term has elapsed. But in real life, almost no one does that, and almost every car still has some life left in it - some residual value - once the finance contract has been satisfied.

Just like with any loan, you can adjust your monthly Ford Options payment upward as desired to pay off more of the loan balance sooner. In this case the goal would be to cover any decrease in residual value you expect as the result of your heavier use of the vehicle.

Of course, the reward for choosing a traditional finance plan is that the balance on the vehicle is zero at the end of the term. If you wanted to achieve that with Ford Options, you'd have to pay enough each month to cover the entire loan amount in three of four years. That would obviously lead to a monthly obligation that is higher than the traditional five, six or seven year loan (though with at least a year's less interest paid on your part).

 

[BMT1071]

Happy to report the Options 2.25% APR and $1000 incentive are back

Still debating this vs a loan. The low payment is tempting, I guess for me the mileage limitation is the main barrier. I've had a Bolt for almost 3 years have only put 17k miles on it since unlike my past cars, I never use it for road trips, but that low mileage is also due to working from home since April 2020. When they bring us back into the office, it'll go back up to normal 25-mile round trip commute mileage, but then again, that is months from now, so I'll have a little overall cushion in the end.

But if I finance, I don't have to care about the odometer. Decisions!

In case you haven't seen it mentioned elsewhere, you are free to payoff the Options contract early. Sign the Options deal, take the incentive, refinance later through your bank/CU/etc if necessary/desired. ?

 

[hybrid2bev]

In case you haven't seen it mentioned elsewhere, you are free to payoff the Options contract early. Sign the Options deal, take the incentive, refinance later through your bank/CU/etc if necessary/desired. ?

Yes you can but if you pay it off too soon (typically within the first 90 days) then Ford may charge the dealer back for the financing incentive amount (ask the dealer to repay it back to Ford).

 

[VegStang]

My intention was to pay off the options loan at the 90 day mark, but my tax bill is coming in alot higher than expected so Ford will probably get another month or 2 in interest payments. I'm just happy the loan was exactly as expected (even if the dealer had to redo the paperwork 4 times to get it correct.)

Yes you can but if you pay it off too soon (typically within the first 90 days) then Ford may charge the dealer back for the financing incentive amount (ask the dealer to repay it back to Ford).

 

[Woeo]

.

Just like with any loan, you can adjust your monthly Ford Options payment upward as desired to pay off more of the loan balance sooner.

This will, with all other payments made on time, reduce the loan balance faster—decreasing the balloon amount. Keep in mind if your goal was to have a guaranteed “sale” back to Ford at the end of your Options payments. As the loan balance decreases, the balloon Ford would forgive is smaller.

 

[IMDIDOC]

Happy to report the Options 2.25% APR and $1000 incentive are back

Still debating this vs a loan. The low payment is tempting, I guess for me the mileage limitation is the main barrier. I've had a Bolt for almost 3 years have only put 17k miles on it since unlike my past cars, I never use it for road trips, but that low mileage is also due to working from home since April 2020. When they bring us back into the office, it'll go back up to normal 25-mile round trip commute mileage, but then again, that is months from now, so I'll have a little overall cushion in the end.

But if I finance, I don't have to care about the odometer. Decisions!

I too debated. My CU is at 2.00% and this is 2.25%. Monthly payments are not that different. With the federal tax credit, the car is titled to you and not the lease company. The credit comes to you. My FE has a residual value of $22K after 48 months. I'm thinking that that is under valued and selling it or trading it in may bring more. In the meantime I have lower payments. This is what is called a balloon loan. You can refinance the residual if you want (at the going rate).

Sorry if I repeated what was said, but going through 30 pages of comments is not my ideal of fun. Driving the MME is.

 

[Carmel Mach E Auto]

This will, with all other payments made on time, reduce the loan balance faster—decreasing the balloon amount. Keep in mind if your goal was to have a guaranteed “sale” back to Ford at the end of your Options payments. As the loan balance decreases, the balloon Ford would forgive is smaller.

I'm not sure I understand exactly what you mean, and admittedly I haven't read the fine print. But if you are saying that there is some inherent disadvantage to paying more per month than the contract stipulates, then the solution is simple: put the additional money you'd pay on the loan each month into a private account instead. Then, at the end of the contract, decide whether it makes sense to actually apply it to the remaining loan balance or not.

 

[IMDIDOC]

I'm not sure I understand exactly what you mean, and admittedly I haven't read the fine print. But if you are saying that there is some inherent disadvantage to paying more per month than the contract stipulates, then the solution is simple: put the additional money you'd pay on the loan each month into a private account instead. Then, at the end of the contract, decide whether it makes sense to actually apply it to the remaining loan balance or not.

If it is like a typical loan, if you pay more per month or even 1 extra payment per year, they would refigure the balance and apply the interest to the new balance which is now lower. Your payments would remain the same, but you would pay it off earlier. Putting it in a bank account, I doubt you could earn 2.25% interest on that money. I haven't made a payment yet nor studied the contract, but if there is no penalty for early payment and you can afford to, paying it off early is a saver. You still have to deal with the residual, which would most likely be accruing interest.

 

[hybrid2bev]

If it is like a typical loan, if you pay more per month or even 1 extra payment per year, they would refigure the balance and apply the interest to the new balance which is now lower. Your payments would remain the same, but you would pay it off earlier. Putting it in a bank account, I doubt you could earn 2.25% interest on that money. I haven't made a payment yet nor studied the contract, but if there is no penalty for early payment and you can afford to, paying it off early is a saver. You still have to deal with the residual, which would most likely be accruing interest.

Close but Options is a simple interest loan not a pre-compute. If you pay more than your normal monthly payment when you get the next months billing statement it will show a lower amount due for that month. I know because I know and because that's what is happening on my loan too, LOL .

When your monthly payment is posted it goes first towards however much daily interest has accrued since you last payment, then the remainder goes toward principal. (assuming there are no late charges due) Then it repeats next month and so on. Interest is calculated daily based on your total principal outstanding balance (which would also include the balloon of course because that's part of the amount financed).

 

[BMT1071]

If it is like a typical loan, if you pay more per month or even 1 extra payment per year, they would refigure the balance and apply the interest to the new balance which is now lower. Your payments would remain the same, but you would pay it off earlier. Putting it in a bank account, I doubt you could earn 2.25% interest on that money. I haven't made a payment yet nor studied the contract, but if there is no penalty for early payment and you can afford to, paying it off early is a saver. You still have to deal with the residual, which would most likely be accruing interest.

Yeah, a regular bank account would be a bad idea. A dividend paying stock on the other hand would be a much better idea. My plan is to use the Options contract to completion, then see what makes sense. I like the guaranteed value at the end. That's part of why I typically lease, though obviously that doesn't make sense in this situation due to the tax credit.
Off topic, I'm originally from Buffalo. Small world.

 

[Carmel Mach E Auto]

Putting it in a bank account, I doubt you could earn 2.25% interest on that money.

In a bank account (savings account), probably not. However, maybe it's regional variation, but when I build a Mach E (GT model in this case) on the Ford website, the Ford Options financing reports 1.4%. I think one could easily beat that using one of several investment account options. Even at 2.25% that should still be possible.

Close but Options is a simple interest loan not a pre-compute.

...

Interest is calculated daily based on your total principal outstanding balance (which would also include the balloon of course because that's part of the amount financed).

That's great to know.

Speaking of that, has anyone been able to come up with a simple calculator for a Ford Options loan? I've tried, but I can't get my figures to match what the Ford Options page in the Mach E build-your-own website yields - mine always came up low. I searched this forum and found a spreadsheet that claims to do it, but I haven't played with it much because it is very complex. I was trying to create something that just needs total vehicle price, desired balloon amount (in dollars, not in "miles" like the website uses), loan term (typically 36 or 48 months), and outputs total interest paid and monthly payments.

As an aside - how come I can't "get back" to the Ford Finance calculators in the Mach E configuration site from my reservation page? Or maybe I can, and I'm just missing it?

 

[hybrid2bev]

In a bank account (savings account), probably not. However, maybe it's regional variation, but when I build a Mach E (GT model in this case) on the Ford website, the Ford Options financing reports 1.4%. I think one could easily beat that using one of several investment account options. Even at 2.25% that should still be possible.



That's great to know.

Speaking of that, has anyone been able to come up with a simple calculator for a Ford Options loan? I've tried, but I can't get my figures to match what the Ford Options page in the Mach E build-your-own website yields - mine always came up low. I searched this forum and found a spreadsheet that claims to do it, but I haven't played with it much because it is very complex. I was trying to create something that just needs total vehicle price, desired balloon amount (in dollars, not in "miles" like the website uses), loan term (typically 36 or 48 months), and outputs total interest paid and monthly payments.

As an aside - how come I can't "get back" to the Ford Finance calculators in the Mach E configuration site from my reservation page? Or maybe I can, and I'm just missing it?

See the calculator here that @macchiaz-o created.

I think this is the updated version:

https://www.macheforum.com/site/threads/poll-ford-options-vs-finance.2883/post-92089

 

[macchiaz-o]

Speaking of that, has anyone been able to come up with a simple calculator for a Ford Options loan? I've tried, but I can't get my figures to match what the Ford Options page in the Mach E build-your-own website yields - mine always came up low. I searched this forum and found a spreadsheet that claims to do it, but I haven't played with it much because it is very complex.

See the calculator here that @macchiaz-o created.

https://www.macheforum.com/site/threads/poll-ford-options-vs-finance.2883/post-92089

Yes, or for simpler ones, search for auto lease or balloon loan calculators. There are lots of them online.

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