Lease Program Details For Mach-E Leasing

[ejss]

I think my 2021 taxes are the first time I'll upgrade my TurboTax or go to a legitimate place to get them done, lol.

 

[stringtheory]

All this is definitely something to consider. Something that hasn't been addressed is the cost of recharging. Nationally, the average recharge cost for a vehicle charging at home is a 10-12% increase in the monthly utility bill. What are the charging fees associated with the current charging stations. What is the recharge time for the Mach-E?

 

[JB.]

Sounds like the company does not want to hold the bag when and if the residuals at lease end are much lower than planned which has been the case for every ev other than the tesla where elon artifically held up the residuals and controlled the resale market early on.

Fords not willing to gamble like Musk on holding up lease residuals and that understandable as the ev field expands with greater competition and past residual history on other older evs from any company other than tesla.

The residuals crater on preowned evs’s.

 

[hybrid2bev]

As someone with experience with Ford Options here is how the prior program worked. It may be updated for the Mach-E, so treat this as a guide not gospel. Since we have about a year before vehicle delivery I would advise everyone to save up and plan on making a sizable down payment of 20% to 25% of your sales price.

The program was basically a retail balloon note contract, where you make X number of monthly payments and then have a final larger payment due at the end with 'options' on what to do next.

For example, let's take a 48 month Ford Options contract under the prior program. You would have 47 monthly payments and 1 balloon note amount. Let's say for example your sales price/MSRP is $60,000. Your balloon note is going to be a percentage of the vehicle MSRP, an educated guess would be from 30% to 40% of MSRP. So for our example a $60k MSRP would have about $21k balloon note at 35%.

$60,000 sales price (including tax, dealer fees, delivery)
35% of $60,000 MSRP = balloon note of $21,000
$60,000 sales price minus $21,000 balloon = $39,000 balance to pay monthly

$39,000 balance x 47 monthly payments x 3% APR (guess) = about $880 for each of the 47 monthly payments

OR with a 25% of sales price down payment:
$39,000 balance - $15,000 down payment = $24,000 x 47 payments x 3% APR (guess) = about $545 monthly payment

At the end of the 47 payments you would have 3 'options' to deal with the balloon note.

1. Turn the vehicle in
   • Like a lease you are responsible for excess mileage, excess wear and maybe a disposal fee
2. Refinance the balloon note
   • You could refinance the balloon note with the captive lender
3. Pay off the balloon note balance in full
   • Pay cash
   • Refinance with your preferred lender

 

[benboy12]

As someone with experience with Ford Options here is how the prior program worked. It may be updated for the Mach-E, so treat this as a guide not gospel. Since we have about a year before vehicle delivery I would advise everyone to save up and plan on making a sizable down payment of 20% to 25% of your sales price.

The program was basically a retail balloon note contract, where you make X number of monthly payments and then have a final larger payment due at the end with 'options' on what to do next.

For example, let's take a 48 month Ford Options contract under the prior program. You would have 47 monthly payments and 1 balloon note amount. Let's say for example your sales price/MSRP is $60,000. Your balloon note is going to be a percentage of the vehicle MSRP, an educated guess would be from 30% to 40% of MSRP. So for our example a $60k MSRP would have about $21k balloon note at 35%.

$60,000 sales price (including tax, dealer fees, delivery)
35% of $60,000 MSRP = balloon note of $21,000
$60,000 sales price minus $21,000 balloon = $39,000 balance to pay monthly

$39,000 balance x 47 monthly payments x 3% APR (guess) = about $880 for each of the 47 monthly payments

OR with a 25% of sales price down payment:
$39,000 balance - $15,000 down payment = $24,000 x 47 payments x 3% APR (guess) = about $545 monthly payment

At the end of the 47 payments you would have 3 'options' to deal with the balloon note.

1. Turn the vehicle in
   • Like a lease you are responsible for excess mileage, excess wear and maybe a disposal fee
2. Refinance the balloon note
   • You could refinance the balloon note with the captive lender
3. Pay off the balloon note balance in full
   • Pay cash
   • Refinance with your preferred lender

Would’t a down payment only be advisable if you planned on keeping the vehicle after the lease period?

And I would think the balloon payment would probably be calculated similar to a residual on a lease, right?

 

[hybrid2bev]

Would’t a down payment only be advisable if you planned on keeping the vehicle after the lease period?

And I would think the balloon payment would probably be calculated similar to a residual on a lease, right?

I would recommend a down payment if you plan on keeping it or not. You should think of this as a loan, not a lease. This product was a loan with the option of returning the vehicle.

You would end up paying less overall if you make a down payment upfront because you will pay less interest on a lower balance. If you don't make a down payment then you will end up with a higher monthly payment. In my example if you make a $15k down payment your monthly payment would drop from around $880 to $545 = about $335 x 47 months = $15,745. So you would save about $740 over the 4 years.

The balloon note would be similar to a lease residual. Because this is a new product I would guess that the residual will be set a bit low. Typical residuals for SUVs and 2 door sports cars for 48 months would be in the 30% to 40% range if you guess low. If when the new options program comes out and the balloon percentage is set higher then I'm guessing that would be great for lowering the monthly payments, but risky for Ford if a lot of customers end up returning the vehicles.

 

[benboy12]

I would recommend a down payment if you plan on keeping it or not. You should think of this as a loan, not a lease. This product was a loan with the option of returning the vehicle.

You would end up paying less overall if you make a down payment upfront because you will pay less interest on a lower balance. If you don't make a down payment then you will end up with a higher monthly payment. In my example if you make a $15k down payment your monthly payment would drop from around $880 to $545 = about $335 x 47 months = $15,745. So you would save about $740 over the 4 years.

The balloon note would be similar to a lease residual. Because this is a new product I would guess that the residual will be set a bit low. Typical residuals for SUVs and 2 door sports cars for 48 months would be in the 30% to 40% range if you guess low. If when the new options program comes out and the balloon percentage is set higher then I'm guessing that would be great for lowering the monthly payments, but risky for Ford if a lot of customers end up returning the vehicles.

Gotcha. I wasn’t thinking about down payment reducing your monthly payment but rather reducing your balloon payment (not enough sleep last night).

Probably better to know the interest factor first. You might be better served putting that money to use elsewhere (if your rate of return is greater than your interest factor).

 

[Brianbarn]

I would recommend a down payment if you plan on keeping it or not. You should think of this as a loan, not a lease. This product was a loan with the option of returning the vehicle.

You would end up paying less overall if you make a down payment upfront because you will pay less interest on a lower balance. If you don't make a down payment then you will end up with a higher monthly payment. In my example if you make a $15k down payment your monthly payment would drop from around $880 to $545 = about $335 x 47 months = $15,745. So you would save about $740 over the 4 years.

The balloon note would be similar to a lease residual. Because this is a new product I would guess that the residual will be set a bit low. Typical residuals for SUVs and 2 door sports cars for 48 months would be in the 30% to 40% range if you guess low. If when the new options program comes out and the balloon percentage is set higher then I'm guessing that would be great for lowering the monthly payments, but risky for Ford if a lot of customers end up returning the vehicles.

"Balloon payment" is a phrase that makes me nervous. If that's truly a feature of the note, and not a residual like in a closed-end lease, then one could be in trouble when the balloon comes due. If the balloon is $20,000, but the trade-in value or resale value of the vehicle is only $15,000, you're going to be eating $5000. I'd rather lease and know I could truly return the car and walk away. It'll be interesting to see the details of the plan when it's eventually released.

 

[benboy12]

"Balloon payment" is a phrase that makes me nervous. If that's truly a feature of the note, and not a residual like in a closed-end lease, then one could be in trouble when the balloon comes due. If the balloon is $20,000, but the trade-in value or resale value of the vehicle is only $15,000, you're going to be eating $5000. I'd rather lease and know I could truly return the car and walk away. It'll be interesting to see the details of the plan when it's eventually released.

well I believe the OP mentioned that one of the options was to return the vehicle, so trade in value you shouldn’t impact you.

 

[1pt21Gigawatts]

So I leased my Bolt EV, as it was my first EV and I wasn't sure how it'd handle. In that vehicles case, I'm going to make out like a bandit. The Bolt has tanked in value. My residual is in the 22k range, but right now I could buy a used 2017 same model with <10K miles for less than that from a dealer and that's considered a 'fair to good' deal by car gurus. The best I'm seeing for the Premire trim level which I have is 23k today. in a year when that lease is up, it's going to be even worse.

The problem with this tax credit is it tanks the car value by 7500 immediately. So if you as the first owner don't get it, yer screwed. So this model lets you get the immediate depreciation hit of that tax credit.

The Fiat 500E we have I bought used. Used, 36k miles, and loaded with features it was a $7999 car. New three years earlier it was $32000. I get that cars drop in value, but no car I've owned dropped *that* much. it's over 50% in three years? these cars are supposed to last longer too because of so little maintenance needs compared to an ICE (oil, wear/tear things) design. I don't get it.

So when you say you made out like a bandit, you mean you're intending to buy out the lease for a really low price? Would that mean that leasing the Mach-E is going to lead to a lower overall cost than buying because you don't pay as much for the depreciation?

 

[JolleyRoger]

All this is definitely something to consider. Something that hasn't been addressed is the cost of recharging. Nationally, the average recharge cost for a vehicle charging at home is a 10-12% increase in the monthly utility bill. What are the charging fees associated with the current charging stations. What is the recharge time for the Mach-E?

You also need to add the cost of buying and installing the charging station - a level 1 charger take too long. We had a 500E that we leased and at the time in included the charger, just had to pay to install, at the time the total cost was $1500, but they have came down in price. It was about $60 a month to charge the car which was the biggest cost on our electric bill at that time, about half of what gas would have been.

 

[Redundant]

Will the fact that this is ev increase the number of miles per year available in a lease?

 

[PSYOP Wing Man]

Will the fact that this is ev increase the number of miles per year available in a lease?

I read the conversation on 12/4 posting. That was very confusing. I have leased 5 Lincoln’s the last 10 years. For a example only. Last Lincoln 2 year lease 3000.00 down and all the extra cost tax etc. my payment is 550.00 months for 2 years. Options at the end of lease. Purchase the car or give the car back to the dealer. Lease a new Lincoln. That’s with my A Plan. It has been like that the last 10 year. From what ford credit told me it will be the same way. Except they put the mustang in your name so you can get the 7.500 tax credit. End lease will stay the same. Like my last lease.

 

[hybrid2bev]

I read the conversation on 12/4 posting. That was very confusing. I have leased 5 Lincoln’s the last 10 years. For a example only. Last Lincoln 2 year lease 3000.00 down and all the extra cost tax etc. my payment is 550.00 months for 2 years. Options at the end of lease. Purchase the car or give the car back to the dealer. Lease a new Lincoln. That’s with my A Plan. It has been like that the last 10 year. From what ford credit told me it will be the same way. Except they put the mustang in your name so you can get the 7.500 tax credit. End lease will stay the same. Like my last lease.

Ford Options is the same but different. It’s a retail ballon note contract, not a lease. That’s so the vehicle title is in your name and you can claim the tax credits.

Your Lincoln payments were lower because the residual value is very high on such a short 24 month term and on a vehicle that we at Ford Credit have a good idea of what the auction values are. Ford Options at 48 or maybe 36 months won’t be a short term lease and it’s unknown what the auction prices would be if you return the vehicle. As such, the residual of the Mach-E will be set low to protect Ford from huge residual losses at auction if customers return the vehicle at the end of the contract. The payments for the Mach-E will be higher than a normal lease that you have had in the past as I laid out in my prior post. Start saving now to make a larger down payment.

Now, after the tax incentives run out then Ford may start to offer a “normal” lease. By that time we should see some Mach-E’s go through the auction and give a good barometer as to how to set the future residuals.

 

[PSYOP Wing Man]

Ford Options is the same but different. It’s a retail ballon note contract, not a lease. That’s so the vehicle title is in your name and you can claim the tax credits.

Your Lincoln payments were lower because the residual value is very high on such a short 24 month term and on a vehicle that we at Ford Credit have a good idea of what the auction values are. Ford Options at 48 or maybe 36 months won’t be a short term lease and it’s unknown what the auction prices would be if you return the vehicle. As such, the residual of the Mach-E will be set low to protect Ford from huge residual losses at auction if customers return the vehicle at the end of the contract. The payments for the Mach-E will be higher than a normal lease that you have had in the past as I laid out in my prior post. Start saving now to make a larger down payment.

Now, after the tax incentives run out then Ford may start to offer a “normal” lease. By that time we should see some Mach-E’s go through the auction and give a good barometer as to how to set the future residuals.
[ I assume you work for Ford Credit. I will put this good information in my next article
Thank You.