Ford Options setup questions

[macchiaz-o]

Help me to make sure that I’m understanding correctly - if I purchase a 72k vehicle (this is actually on a lightning, but this site has way more experience) with 50% residual @ 36mo I’m essentially financing 36k over 36 + 36k balloon. So if I have 20k cash to put down I’d be financing 16 over 36 +36k?

Not exactly. You're financing both the $36k that will be paid off before the balloon and the $36k balloon. If you try to calculate a payment or back out the rate assuming you're just financing the one half you get a crazy finance rate.

This is correct. Also, it's a 36 or 48 month loan. The balloon payment is payment number 36 or 48. Payments 1 through 35 (or 47) are smaller than the final month's payment

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[SaulGoodman]

Right I have the interest figured on the entire financed amount, just trying to understand how the money down and first 35 payments work out to try and estimate a monthly on options vs traditional. Thanks for helping to clarify.

 

[JRSNoVa]

I can't find it right now but somewhere on here someone posted a spreadsheet that lets you compare cash/finance/options sales side-by-side

 

[hybrid2bev]

Right I have the interest figured on the entire financed amount, just trying to understand how the money down and first 35 payments work out to try and estimate a monthly on options vs traditional. Thanks for helping to clarify.

https://www.macheforum.com/site/posts/92089/

Calculator that may get you started.

 

[SaulGoodman]

https://www.macheforum.com/site/posts/92089/

Calculator that may get you started.

Thank you! That was exactly what I was looking for. I was able to sub in relevant numbers. Special thanks to @macchiaz-o for building it.

 

[DaveP]

I just went through this back and forth when I signed last Friday.

A few things to clarify:
Someone said above what current incentives are, to a point that doesn't matter, assuming you ordered the car you intend to sign for. You get incentives at time of delivery or time of order. So while incentives are pretty much nonexistent or interest rates are much higher for anyone that bought at today's price, most everyone will pick the incentives when they ordered.

So for us, incentives when we ordered in November were:
2.7% for 36 or 48 Months
$1000 rebate
or
1.9% for 60 months traditional finance

The amount of your balloon payment will depend on both your MSRP and your trim level. Just like a lease, Ford has a residual list for each trim level and it's based on 15,000 miles/year. So if you have a $50k Mach-e Select RWD, the residual on that one is pretty poor, like 39% for 36 months. So you would expect to see a $19,500 balloon payment at the end of 36 months.

Your payment will be $30,500, plus taxes, over 36 months @ 2.7%. If you put nothing down of course, and leaving off rebate and that. If you do 48 months, your residual is of course lower, but you are paying that difference over another 12 months, so you get a slightly lower payment.

One key thing to note you may have noticed, I mentioned a residual of 39% which is based on 15k miles/year. If you do fewer miles, you gain about 1% residual per level. So 13,500 would be 40%, 12,000 would be 41%, etc.

So if you are pretty confident you are going to purchase it at the end of your options term, some have said they put down 7,000 miles/year to get the best residual. This doesn't make money magically appear or anything. It lowers your monthly payment now, but you will have a larger balloon payment at the end. So if the market craters, or Ford announces the next gen Mach-e and the market for your Mach-e at least craters, and you try to give it back to Ford because it's worth less than the balloon payment, you better hope you actually drove 21k miles or less over three years.

Anyway, I know that's a lot. But I went through the same back and forth, and basically up until the night before I was set on doing finance. 1.9% is impossible to get right now, and no guarantee the interest rates will be settled back down by then. Also, 2.7% any way you slice it is more than 1.9%, but the rebate eats up most of that for 36 months.

In the end I went with Options. It brought down the monthly payment by $200 just about, and odds are decent I will find at least a good rate in three years if we really intend to keep it, or I hedged by bets and did 12k miles/year, which is reasonable, in case it's not worth it in that doomsday scenario and I give it back to Ford Credit and walk away.

Good luck!

can you clarify something about residual percentage. I take this as the percentage left to pay after term(balloon). Correct? Why does this change based on mileage driven? Its the last piece Im wrapping my head around. I go in tomorrow. As it stands I get a $2500 rebate and 2.49% for 36 or 48. I have 15k as mileage.

 

[RP_GT]

can you clarify something about residual percentage. I take this as the percentage left to pay after term(balloon). Correct? Why does this change based on mileage driven? Its the last piece Im wrapping my head around. I go in tomorrow. As it stands I get a $2500 rebate and 2.49% for 36 or 48. I have 15k as mileage.

The residual percentage (and hence the mileage) is definitely related to balloon size. Basically, the bigger the ballon, the more your car is worth at the end. If you returned it, then Ford has to pay the bigger number off. More miles you put on there, the lower the balloon and the less it is worth. I'll post my experience in just a minute.

 

[RP_GT]

I picked up my MME GT Saturday (10/22). The first time to ever drive a MME was after I had signed all the paperwork and was driving home. Coincidentally, one of the best drives I have every had going home. This was also the first new car I have ever bought for myself, though the wife does get new cars. Anyway, here's what happened:

• Ordered the car 3/24/2022; Got the head of the dealership (Maxwell in Austin) to sign my purchase order as MSRP only, though, that didn't come into play
• built 1st week of Sept; delivery set for 10/14-10/20
• Around 10/7 started texting with the Sales guy (Troy) to get my ducks lined up. I had to explain Ford Options to him and send him the Ford website link. He checked on it and got it set up. I also (because of you guys) started asking about getting the incentives and APR from when I ordered for both Options and standard financing. He 'assured me' that I would be good to go, but would never tell me a rate.
• He did have me fill out the Title registration ahead of time, send photos of my wife and I's DLs. Also, he sent us the link to get pre-approved for Ford Credit.
• Delivery got delayed till 10/21, and I went in the next day to get it.
• Sales price stayed at MSRP, Ford Options incentives for me was $1000 (autobytel said $500), and my APR was 1.4% !!!!!!!!!!!!
• So, wow, that's great. That surprised me. The only weird thing was that they acted like they couldn't give me 1.4% with standard financing if I wanted to go that way. I didn't press because I wanted the $1000 and to do Ford Options 48 month plan anyway.
• So after that everything went smoothly (discounting that my sunglasses holder was broken and needed to be replaced..fixed the following week). However, when I got home and looked more deeply at the paperwork I noticed that they had never shown me the 'Itemized' page with starting cost and fees. The starting cost(ie, final cost of the vehicle) was $701 more than it was supposed to be.
• The page I signed had the correct starting cost, but the itemized page that I never saw was wrong, then ultimately the Truth in Lending page was wrong, but sort of buried in the numbers.
• I called the next week, then finally connected on Wednesday with the finance guy who said the bank would have also kicked it back as wrong. Turns out something got confused with the Ford Options vs Lease and they had stuck my first payment and a $95 fee on top of my loan. Very weird, but he fixed it and now my payment is even lower.

So, overall I am very pleased. The Ford Options plan is pretty good deal with the incentives and APR. The only catch is you have to be able to deal with the balloon at the end. This dealership is one of the good one and even just sold a top of the line Ford Lightning that randomly showed up for only $6k ADM which is what half of the normal markup. I was super nervous about the whole thing, but thanks to you guys and having the knowledge I was able to get the car smoothly without any sort of fight. Of course, we shouldn't have to fight or worry at all. Maybe one day everything will be upfront and online. But for now, I am very happy.

Update: I have the MME GT for almost a month now and I love it so much!

 

[macchiaz-o]

can you clarify something about residual percentage. I take this as the percentage left to pay after term(balloon). Correct? Why does this change based on mileage driven? Its the last piece Im wrapping my head around. I go in tomorrow. As it stands I get a $2500 rebate and 2.49% for 36 or 48. I have 15k as mileage.

More odometer miles = less resale value = lower "residual value"

The residual value is what determines the amount of the final "balloon" payment.

A few things determine which residual value is used: 3 vs 4 year loan term, vehicle model/spec, factory MSRP, annual mileage allowance.

Edited to remove amount financed from above list. That was an error on my part.

 

[astrorob]

anyone know what the options incentives and APR were in california on 8/30? probably a lot of people ordered on that date.

in another thread someone who just received a 2022 MME said the current rate was 3.9 (though another poster said 3.99) with a cash back bonus of $2000. this appeared in his checkout screen online. it would be good to have more data points. my car has shipped but i don't know at what point the options screen in my ford account would open up.

 

[DaveP]

More odometer miles = less resale value = lower "residual value"

The residual value is what determines the amount of the final "balloon" payment.

A few things determine which residual value is used: 3 vs 4 year loan term, vehicle model/spec, factory MSRP, annual mileage allowance, amount financed.

So if I selected 15k for mileage and let's say in actually only put 10k per year then the balloon will be less than quoted for 15k?

 

[hybrid2bev]

So if I selected 15k for mileage and let's say in actually only put 10k per year then the balloon will be less than quoted for 15k?

No. The balloon amount is set at contract inception. If you drive 5k miles or 25k miles per year your balloon amount is unaffected.

Going over on mileage only matters if you return the vehicle when the balloon is due. (But could also reduce your value if trading in instead of returning.) If you’re under mileage there’s no refund. (But your vehicle may be worth more on trade in.)

 

[DaveP]

No. The balloon amount is set at contract inception. If you drive 5k miles or 25k miles per year your balloon amount is unaffected.

Going over on mileage only matters if you return the vehicle when the balloon is due. (But could also reduce your value if trading in instead of returning.) If you’re under mileage there’s no refund. (But your vehicle may be worth more on trade in.)

gotcha. The only reason to turn it back in is if you couldn't privately sell it for more than the balloon and you wanted to get something else.

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