Ford Options questions

macchiaz-o

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I second this recommendation. I used that spreadsheet and found it to be very helpful. It was very close (just a few dollars higher) than what the dealer calculated so I drive out satisfied the finance manager did his job correctly.

Thanks @macchiaz-o !!
Wow this is great! And congrats on your new ride. I'm going to BOLO for Mach-Es around town now. :)
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Mr. Mach-E

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Wow this is great! And congrats on your new ride. I'm going to BOLO for Mach-Es around town now. :)
Some more thoughts...
- the $1,000 is only a savings if one buys one the vehicle at the option time.
Otherwise one only saves 2.25% of the $1,000 for say 36 or 48 months. Not
much savings.

- If the Ford Options is really 35 or 47 monthly payments, when is the vehicle
relinquished? At 35 or 36? At 47 or 48? If 36 or 48 months (full term), then
what happened to the interest that would be incurred for the extra month
since the balloon payment is based on one less month.
 
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Mr. Mach-E

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Some more thoughts...
- the $1,000 is only a savings if one buys one the vehicle at the option time.
Otherwise one only saves 2.25% of the $1,000 for say 36 or 48 months. Not
much savings.

- If the Ford Options is really 35 or 47 monthly payments, when is the vehicle
relinquished? At 35 or 36? At 47 or 48? If 36 or 48 months (full term), then
what happened to the interest that would be incurred for the extra month
since the balloon payment is based on one less month.
Correction... one does not save the $1,000 if purchase option is exercised. One may save sales tax on $1,000.
 

macchiaz-o

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- the $1,000 is only a savings if one buys one the vehicle at the option time.
Otherwise one only saves 2.25% of the $1,000 for say 36 or 48 months. Not
much savings.
I don't follow your logic. I do agree it's not much savings. For me I'll actually pay about $167 more for 36-month Options than I'd pay for a 48-month 0.9% simple interest loan. So it's a tough call. I might do the 0.9% loan. But Options gives me the worst-case scenario Option where I want out of the car and for some reason it's resale value is lower than the residual minus turn-in fees.

- If the Ford Options is really 35 or 47 monthly payments, when is the vehicle
relinquished? At 35 or 36? At 47 or 48? If 36 or 48 months (full term), then
what happened to the interest that would be incurred for the extra month
since the balloon payment is based on one less month.
You either make all the payments, including either paying the balloon or financing the balloon into more payments. Or you forgo the last payment and turn in or trade-in the vehicle.

Either way, you are paying interest on the balloon amount during months 1-35 or 1-47.

I don't think you pay any interest in month 36/48, unless you extend the loan or refinance to handle that payment. There shouldn't be interest owed during that final month because you are paying at the beginning of the month not the end, so no new interest accrues as you bring the principal balance to $0.

Note: I'm not a finance guy... Take it for what it's worth. ;)
 

DBC

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Some more thoughts...
- the $1,000 is only a savings if one buys one the vehicle at the option time.
Otherwise one only saves 2.25% of the $1,000 for say 36 or 48 months. Not
much savings.
It reduces the payments by $1000 before the balloon is due. It doesn't have any effect on the buy out price. Think of it as lease cash, which is kinda what it is.
 


DBC

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For me I'll actually pay about $167 more for 36-month Options than I'd pay for a 48-month 0.9% simple interest loan. So it's a tough call. I might do the 0.9% loan. But Options gives me the worst-case scenario Option where I want out of the car and for some reason it's resale value is lower than the residual minus turn-in fees.
The total dollars are more or less identical but the situations are different. With the 48 month loan you get higher payments and a guaranteed rate. With Options you get lower payments and the ability to turn the MME back if you decide it doesn't work for you. But you have the balloon.

Given uncertainty, the most compelling case for Options is that it protects you on the downside without much of a financial penalty. It may be that a BEV won't work for you or that you want some protection against battery degradation. Or you may really like a BEV but want one with more range, etc. Options is the better alternative in these cases. But if you decide you love the MME and want to keep it, Options will let you do that without much financial penalty. So you're not giving up much to get some downside protection.
 

Mirak

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You guys have confused me again. What do you mean the $1000 isn't actually a savings? Can we just make this simple? I'm buying a car with Options. I'll probably put $15,000 down. Then I'll make monthly payments plus sum lump sum payments and have the entire loan paid off within a year. In this scenario, the $1,000 bonus cash is indeed a credit against the sale price, just like my DP, resulting in my amount financed being $16,000 lower than the purchase price. Right?

All this really is is a hybrid between lease and balloon payment financing. If you intend to keep the car and pay off the loan, then it is balloon payment financing. There's no early payoff penalty. Correct?
 

generaltso

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You guys have confused me again. What do you mean the $1000 isn't actually a savings? Can we just make this simple? I'm buying a car with Options. I'll probably put $15,000 down. Then I'll make monthly payments plus sum lump sum payments and have the entire loan paid off within a year. In this scenario, the $1,000 bonus cash is indeed a credit against the sale price, just like my DP, resulting in my amount financed being $16,000 lower than the purchase price. Right?
Right. Where it gets a little wonky is when figuring out your maximum down payment. The limit of 30% includes the $1000 (or $2500) cash back.
 
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Mr. Mach-E

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You guys have confused me again. What do you mean the $1000 isn't actually a savings? Can we just make this simple? I'm buying a car with Options. I'll probably put $15,000 down. Then I'll make monthly payments plus sum lump sum payments and have the entire loan paid off within a year. In this scenario, the $1,000 bonus cash is indeed a credit against the sale price, just like my DP, resulting in my amount financed being $16,000 lower than the purchase price. Right?

All this really is is a hybrid between lease and balloon payment financing. If you intend to keep the car and pay off the loan, then it is balloon payment financing. There's no early payoff penalty. Correct?
The way I see it the $1,000 reduces the amount you borrow and pay interest against for 36 or 48 months. When it comes down to buying the vehicle, the residual % value is applied against vehicle cost exclusive of the $1,000 reduction.
So If you walk away or buy it for the ballon amount, there is no $1,000 savings either, just the $22.50 savings per year in interest.
 

generaltso

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The way I see it the $1,000 reduces the amount you borrow and pay interest against for 36 or 48 months.
Not necessarily. If you were planning to put the max 30% down, it will decrease your cash out of pocket for the down payment, but won’t change the borrowed amount at all. But it‘s still free money.
 

macchiaz-o

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The way I see it the $1,000 reduces the amount you borrow and pay interest against for 36 or 48 months. When it comes down to buying the vehicle, the residual % value is applied against vehicle cost exclusive of the $1,000 reduction.
So If you walk away or buy it for the ballon amount, there is no $1,000 savings either, just the $22.50 savings per year in interest.
The last sentence is wrong. With the $1,000 incentive, you save $1,000 in principal, AND you save the additional amount of interest.
 

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The last sentence is wrong. With the $1,000 incentive, you save $1,000 in principal, AND you save the additional amount of interest.
Yeah, I'm not a finance guy, but I don't understand how the bonus cash isn't really money saved. It sounds like there is general agreement here, except one poster, that the bonus cash is indeed a $1,000 to $2,500 savings. The promotional APR is likewise pretty darned good.

Maybe the analysis become more complex if you actually treat this like a lease, but I'm not doing that.
 
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Mr. Mach-E

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Not necessarily. If you were planning to put the max 30% down, it will decrease your cash out of pocket for the down payment, but won’t change the borrowed amount at all. But it‘s still free money.
Where is it free money? It only reduces the amount borrowed but not what you pay if you buy the car at pop the balloon time. If u walk away, it also gone. Only save interest expense on $1,000 during 36 months or 48 months. I am putting maximum 30% down so this does not count against my 30%. This gives me the least interest cost to “purchase” the option to buy car if it’s market value is higher and walk away if a lot lower. Not a bad deal.
 

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Spreadsheet was awesome, thank you for that. I did take it to the dealer with me and they could not make it line up. All the numbers lined up until we got to the amount financed and the payment. We could not find the difference, but just a heads up to anyone using it. My Options payment was about $100 higher then the spreadsheet.
 

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Some more thoughts...
- the $1,000 is only a savings if one buys one the vehicle at the option time.
Otherwise one only saves 2.25% of the $1,000 for say 36 or 48 months. Not
much savings.

- If the Ford Options is really 35 or 47 monthly payments, when is the vehicle
relinquished? At 35 or 36? At 47 or 48? If 36 or 48 months (full term), then
what happened to the interest that would be incurred for the extra month
since the balloon payment is based on one less month.
The $1000 came right off the sale price of the car.
In my case I had X-Plan so the Selling Price on the contract is $58,722.20.
Then a line item that they listed as REBATE for -$1,100.00 which was the $1000 finance incentive and the $100 for signing the paper saying I won't sue Ford for hands free not being operational yet.

The Price of Car After Equipment Change line reads $57,622.20.
Then they taxed that amount and worked the rest of the numbers.
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