"Ford Options" payment option

hybrid2bev

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I guess we'll see what they can come up with but the "options" would seem to be limited. Basically there is the purchase price, the return price, and the interest rate. Other than playing with the tax credit not sure what you can do.

The "sticker shock" comes from the the fact that the $7500 doesn't show up in the payments. Take a page from Tesla's book and just reduce the monthly by $210 with an asterisk that says "after tax credit" and see if people are happy. ;)

Very glad to hear Ford Options will be an option. I think it's better than a lease.
Actually the ‘options’ are just about the same as you would have with traditional leasing. See the link below to the similarities and differences between Options and Leasing.

Options gives you similar choices as a lease with a 36 or 48 month term and mileage per year choices too. Options is also about giving you lease like choices at the end of the contract term while also allowing you to claim the tax credits.

After you claim your tax credits you could apply that towards your loan and recalculate your monthly payments.

https://www.macheforum.com/site/thr...ndard-lease-similarities-and-differences.883/
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macchiaz-o

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Last I heard a couple days ago is that the e-commerce team is hard at work. You IT folks on here will appreciate the implications of late requirements changes.
Understood. Where I work, it's not uncommon for us to develop software in this order:

1. Software Engineers: Create and "unit test" software. Maybe design it up front, maybe not.

2. System Engineers: Write down system requirements based on asking SW engineer for screen shots and some small questions.

3. Test Engineers: Find path that minimally covers freshly written system requirements while showcasing as few bugs as humanly possible.
 

DBC

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Actually the ‘options’ are just about the same as you would have with traditional leasing. See the link below to the similarities and differences between Options and Leasing.
...
After you claim your tax credits you could apply that towards your loan and recalculate your monthly payments.
They are quite close but there are a couple of things I like better about Ford Options. Not earth shattering but better. One is that at the end of the lease you get an appraisal which I'm assuming is not done by the dealer (the condition inspection is fine) and if the unusual happens and the note is less than FMV and you're selling to a third party my guess is that the pay off process would be easier. Two is that you can refinance the balloon with Ford Credit. That seems more seamless if you want to go that route.

The potential downside is how it gets taxed. It would be a bummer if you have to pay sales tax on the value of the whole car. Ugh.

Applying the credit and recalculating the monthly seems cumbersome. IMO it just confuses things and most people will have a hard time wrapping their heads around how the credit fits into the value proposition to begin with.

I think the fact that tax credit doesn't reduce the monthly means the monthly payment is going to give people heartburn. If it were cash back and they were getting it in a month they'd be all over it. But having to wait several months or even a year? High discount rates are at work here.
 

jhalkias

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The potential downside is how it gets taxed. It would be a bummer if you have to pay sales tax on the value of the whole car. Ugh.
THIS is an EXCELLENT question . . . so how is the car taxed on Ford Options?
 

hybrid2bev

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THIS is an EXCELLENT question . . . so how is the car taxed on Ford Options?
Ford Options would taxed the same way as if you did standard normal everyday retail financing. Ford Options is a retail installment contract with a balloon note at the end.
 


jhalkias

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Ford Options would taxed the same way as if you did standard normal everyday retail financing. Ford Options is a retail installment contract with a balloon note at the end.
So just to be clear, if anyone decides not to keep the car at the end, then they have paid the sales tax on that residual value if they are living in a state that has sales tax.
 

silverelan

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So just to be clear, if anyone decides not to keep the car at the end, then they have paid the sales tax on that residual value if they are living in a state that has sales tax.
Gotcha. So in some states like WA, sales taxes on a $60k car are like 8-10%. You end up paying the entirety of that even if you don't keep the car at the end.
 

hybrid2bev

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So just to be clear, if anyone decides not to keep the car at the end, then they have paid the sales tax on that residual value if they are living in a state that has sales tax.
I'm not a tax attorney.

I was talking about at the tax due at contract inception (that is handled like a normal retail contract, depends on your local tax rules).

If you decide not to keep the car at the end of term (turn it in) then you are only responsible for excess wear / mileage and the disposal fee (just like a normal lease). No tax on the residual value, just like a normal lease at least here in MI. Unless there is some funky state/local rules that would normally apply on a lease where you are.

If you refinance the balloon note then I don't think we charge tax again because a new credit application is not taken, so it's not considered a 'new sale' you're just refinancing the existing contract.
 

hybrid2bev

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Well that sucks for high sales tax states like California.

Thats two reasons now I don’t like options. The other being no 24 month option available like leasing.

Ford if you’re listening, why don’t you provide us real options, and allow us the option to Red Carpet Lease the Mach E?
More news is coming soon*.

*soon being a relative term for within the next few months or so
 

TheLight75

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Applying the credit and recalculating the monthly seems cumbersome. IMO it just confuses things and most people will have a hard time wrapping their heads around how the credit fits into the value proposition to begin with.
This seems like an unnecessary pain. When I leased my Kona EV last year, Hyundai just took the $7,500 right off the top before calculating the lease payment. So much easier than having to wait until tax time to apply the credit.... I hope Ford offers a classic lease with similar benefits for the MME.
 

DBC

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Ford Options would taxed the same way as if you did standard normal everyday retail financing. Ford Options is a retail installment contract with a balloon note at the end.
I don't see Ford Options as a standard retail installment contract. The difference is that in a standard retail installment contract you are legally obligated to pay all installments. For example, with a 5 year mortgage with a balloon, you are obligated to pay the balloon.

Quite different with Ford Options. With Ford Options you have the legal "option" of either paying the balloon or walking and returning the vehicle.

The tax treatment should follow the legal obligation. This is actually the path the taxing authorities have taken. Easy to understand why. If they didn't, then a buyer could pay a fee and sign a note that included the legal right to return the purchase, thereby inflating the basis used for depreciation. The seller would be responsible for declaring income when they took the option of returning the item, but this would be taxed as capital gains. In this case the buyer could depreciate based on the entire value of the vehicle rather just on the value of what they were leasing.

Realistically it should be taxed like a lease if for no other reason than, as you've said, it's really just like a lease.
 
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DBC

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This seems like an unnecessary pain. When I leased my Kona EV last year, Hyundai just took the $7,500 right off the top before calculating the lease payment.
What if Ford only gave. you part of the credit, say $5500? That is the issue it probably doesn't want to deal with.

Would be great though.
 

generaltso

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Gotcha. So in some states like WA, sales taxes on a $60k car are like 8-10%. You end up paying the entirety of that even if you don't keep the car at the end.
Yes, you pay the tax on the full purchase price when you make the purchase. But in some states, the residual value is deducted from the tax owed on your next vehicle when you trade it in or sell it within 90 days of purchasing your new vehicle.
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