Mach-E Financing and RCL Leasing Program Announced

[jdmrc93]

Leasing has always worked out in my favor, depreciation wise. I've never opted to purchase a vehicle at the end, but it always ended up being cheaper then if I was to finance from the beginning. Maybe that will work out the same here... I could definitely see a cheaper payment if they can actually apply the fed tax credit directly to the sticker price. I get A-plan on top of that... hopefully my dealer can actually start running some numbers soon.

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[JTK44]

Leasing has always worked out in my favor, depreciation wise. I've never opted to purchase a vehicle at the end, but it always ended up being cheaper then if I was to finance from the beginning. Maybe that will work out the same here... I could definitely see a cheaper payment if they can actually apply the fed tax credit directly to the sticker price. I get A-plan on top of that... hopefully my dealer can actually start running some numbers soon.

What every other manufacturer does it put the Fed Tax credit of $7,500 into the lease as a cap cost reduction.

The $7,500 credit goes to the owner of the car, the lessor.

I am waiting for the MR and residual on the Ford Red Carpet lease.

 

[jdmrc93]

What every other manufacturer does it put the Fed Tax credit of $7,500 into the lease as a cap cost reduction.

The $7,500 credit goes to the owner of the car, the lessor.

I am waiting for the MR and residual on the Ford Red Carpet lease.

That is kind of what I assumed was going to happen. Hopefully that is indeed the case here.

 

[DBC]

Finally, traditional leasing for the Mach-E has been published for the US. Your dealer can now access the lease factors and residuals.

So sorry to hear this. What will some people bitch about now? Oh wait, I forgot there is a never ending set of possibilities!

Actually this is a great option for those who, for one reason or another, can't fully use the tax credit.

What every other manufacturer does it put the Fed Tax credit of $7,500 into the lease as a cap cost reduction.

The $7,500 credit goes to the owner of the car, the lessor.

Yes the credit goes to the lessor, but there isn't any one way the credit is handled. A few have done it the way you've outlined. Many haven't. There are many possibilities, including apportioning the credit over the life of the vehicle or adding it to the residual or using some combination of several things.

 

[JTK44]

So sorry to hear this. What will some people bitch about now? Oh wait, I forgot there is a never ending set of possibilities!

Actually this is a great option for those who, for one reason or another, can't fully use the tax credit.

Yes the credit goes to the lessor, but there isn't any one way the credit is handled. A few have done it the way you've outlined. Many haven't. There are many possibilities, including apportioning the credit over the life of the vehicle or adding it to the residual or using some combination of several things.

Tesla on the original Model S did it another way: they just kept it and that was why the lease payments were so high.

Audi, Jaguar and BMW presently put the credit into the lease as a cap cost reduction.

Adding it to the residual would make the lease "super upside down": this would be an added cost to Ford as their gap insurance would have to be greater - the difference between the residual and wholesale. With being "supper upside down" at the end of the lease every car would be returned.

So there is no advantage, only a disadvantage putting the credit into the residual vs. a cap cost reduction.

Apportioning the credit over the life of the car rather than into lease will make the monthly payments non competitive.

 

[s7davis]

I am sure I am not reading these things correctly. As I do not qualify for full 7500 credit which is why i will not get the car right away. However, if on a traditional style lease (RCL), use that as a 7500 as a down payment which I doubt will happen I will get the car as I do not make the money to get full credit so why waist it on me when someone who can get full credit to make use of it.

 

[JTK44]

I am sure I am not reading these things correctly. As I do not qualify for full 7500 credit which is why i will not get the car right away. However, if on a traditional style lease (RCL), use that as a 7500 as a down payment which I doubt will happen I will get the car as I do not make the money to get full credit so why waist it on me when someone who can get full credit to make use of it.

The Federal Tax credit cannot be "wasted":

The Federal Tax credit belongs to the owner, the person or entity that registers the car. It is a credit only against that person's or entitu's tax due and/or already "paid in", for example withholding tax.

If you as an individual do not owe or have withheld $7,500 in taxes the credit is limited to the amount of taxes withheld or withheld and due. If that amount is only $5,000 then your credit is limited to $5,000. The remaining $2,500 cannot be given away or used by another person or tax paying entity.

If your tax liability is less than $7,500 and if in a lease the $7,500 is used as a cap cost reduction, you would be able to take advantage of the full $7,500 vs. buying the car where you would be limited to your tax liability.

Hope this clarifies.

.

 

[DBC]

Tesla ... just kept it and that was why the lease payments were so high.

Audi, Jaguar and BMW presently put the credit into the lease as a cap cost reduction.

Adding it to the residual would make the lease "super upside down"

Apportioning the credit over the life of the car rather than into lease will make the monthly payments non competitive.

These things are all true but they just point out there isn't a good way to handle the credit. What you left off is that marketing won't want to use the credit as cap reduction because it suggests a lower MSRP, a suggestion which creates a problem going forward.

Different manufacturers have tried each and every alternative and no manufacturer other than Tesla has found one that worked well. And in the current competitive landscape Tesla couldn't simply keep the credit like it did when it was the only game in town.

I disagree that "apportioning the credit over the life of the car ... will make the monthly payments non competitive". A 41% residual is what makes the lease non competitive. The tax credit effects this indirectly by allowing a higher MSRP, but it doesn't determine this directly.

There are many variables which effect the lease other than the tax credit, and, consequently, thinking you know how the credit is being handled is somewhat delusional. For example, the Chevy Bolt gets $8000 of lease cash. Does this have anything to do with the tax credit? If GM had tax credits you'd say "yes". But it doesn't so you say "no". Ultimately all manufacturers need a competitive lease.

Would be simpler if there was a payment to the manufacturer, but that wouldn't fly politically.

 

[Woeo]

The Federal Tax credit cannot be "wasted":

The Federal Tax credit belongs to the owner, the person or entity that registers the car. It is a credit only against that person's or entitu's tax due and/or already "paid in", for example withholding tax.

If you as an individual do not owe or have withheld $7,500 in taxes the credit is limited to the amount of taxes withheld or withheld and due. If that amount is only $5,000 then your credit is limited to $5,000. The remaining $2,500 cannot be given away or used by another person or tax paying entity.

If your tax liability is less than $7,500 and if in a lease the $7,500 is used as a cap cost reduction, you would be able to take advantage of the full $7,500 vs. buying the car where you would be limited to your tax liability.

Hope this clarifies.

.

The Fed credit can certainly be wasted. There are a limited number of credits. If someone buys the car but can not recover all of the $7,500 available, then in a sense that credit is wasted. For example if DJT purchased a MME and only owed $750 in fed tax, then $6,750 of the credit would go unused, effectively wasting the credit.

 

[hybrid2bev]

I disagree that "apportioning the credit over the life of the car ... will make the monthly payments non competitive". A 41% residual is what makes the lease non competitive. The tax credit effects this indirectly by allowing a higher MSRP, but it doesn't determine this directly.

Just a minor point FYI, the 41% residual you may have seen on here is for Ford Options not RCL. RCL residuals are higher because the tax credit is baked into them.

 

[AndyS_OSU]

Just a minor point FYI, the 41% residual you may have seen on here is for Ford Options not RCL. RCL residuals are higher because the tax credit is baked into them.

My dealer suggested a 14% difference in residual between Options and RCL. If that’s true, 55% residual is still a little disappointing.

Have financing rates for outright purchase been announced? I have always leased but if we are talking some aggressive sub 2 APR, purchasing could be in my future

 

[hybrid2bev]

My dealer suggested a 14% difference in residual between Options and RCL. If that’s true, 55% residual is still a little disappointing.

Have financing rates for outright purchase been announced? I have always leased but if we are talking some aggressive sub 2 APR, purchasing could be in my future

Published yes, announced not sure. Your dealer can access everything they need to quote normal retail (subvention rates), Options and RCL.

 

[malba2366]

My dealer suggested a 14% difference in residual between Options and RCL. If that’s true, 55% residual is still a little disappointing.

Have financing rates for outright purchase been announced? I have always leased but if we are talking some aggressive sub 2 APR, purchasing could be in my future

55% residual for 3 years isn't bad...considering EVs will drop in value quicker as battery prices drop. Are they applying the $7500 tac credit as a cap cost reduction, or is Ford credit keeping the tax credit?

 

[JTK44]

55% residual for 3 years isn't bad...considering EVs will drop in value quicker as battery prices drop. Are they applying the $7500 tac credit as a cap cost reduction, or is Ford credit keeping the tax credit?

Using a selling price of $55,000 with a 55% residual and MF of 2.5%, lease term 36 months, the monthly payment will be $776 plus tax. My sales tax is 8.625%. The tax is an additional $2,410, $66 per month which brings the monthly payment to over $800 a month.

I think for the vast majority, lease payments of over $800 a month are a "non starter".

With the Federal tax credit of $7,500 as a cap cost reduction, the monthly payments drop to $560 a month, with tax just over $600 a month.

This is far more competitive and less than the Tesla Model Y monthly payment of $633 plus tax.

 

[hybrid2bev]

55% residual for 3 years isn't bad...considering EVs will drop in value quicker as battery prices drop. Are they applying the $7500 tac credit as a cap cost reduction, or is Ford credit keeping the tax credit?

Using a selling price of $55,000 with a 55% residual and MF of 2.5%, lease term 36 months, the monthly payment will be $776 plus tax. My sales tax is 8.625%. The tax is an additional $2,410, $66 per month which brings the monthly payment to over $800 a month.

I think for the vast majority, lease payments of over $800 a month are a "non starter".

With the Federal tax credit of $7,500 as a cap cost reduction, the monthly payments drop to $560 a month, with tax just over $600 a month.

This is far more competitive and less than the Tesla Model Y monthly payment of $633 plus tax.

The tax credit is already baked into the residual percentage at 55%. Having a 55% residual and also applying as a cap cost reduction would be double dipping the tax credits.

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