Poll: Ford Options vs Finance

[Woeo]

That's a good point. However, as the OP mentioned, the value of the incentive is reduced by getting a higher interest rate, which could more than make up for incentive.

That's why I said the dollar difference between the two is minimal.

Borrowing 50k at 2.25% for four years costs roughly $2330 in interest
For three years....roughly $1750

If one can borrow 50k at .9% for four years, roughly $925 in interest
For three years....roughly $700

So both 36 month programs 'cost' essentially the same after the $1000 Options incentive, although to exercise jumping ship a $475 disposal fee would be charged.

Sponsored

 

[shutterbug]

The interest rate difference isn't much unless you go with a very short loan. 60 months is 1.9% and Options is 2.25%. Even if you were paying interest for the full 5 years (which you wouldn't necessarily with Options), the difference in interest is only around $500. I'd much rather take the $2500 incentive.

I did a comparison of 48 Mo Options and 48 Mo financing with a very large down payment. Came out that Options would only cost about $1,000 over 4 years.

 

[Woeo]

I did a comparison of 48 Mo Options and 48 Mo financing with a very large down payment. Came out that Options would only cost about $1,000 over 4 years.

Be aware that Options program limits your down payment to 30% of the cars value.

 

[MurphyDog]

Can the Ford Options plan be paid off early?

 

[generaltso]

Can the Ford Options plan be paid off early?

Yes. So even if you were planning to pay with cash, you're better off doing Options to get the incentive and then just paying it off shortly after. The dealer can sometimes get penalized if you pay things off too soon, but even that's not usually more than a few months.

 

[shutterbug]

Be aware that Options program limits your down payment to 30% of the cars value.

The site let me configure the down payment @ $24,000, but even using $16,000 created a difference of about $1,400.

 

[Daraiders76]

If you use Xplan don't you get the $2500 incentive as well? I thought it reads- "Must use Ford Financial".

 

[Woeo]

The site let me configure the down payment @ $24,000, but even using $16,000 created a difference of about $1,400.

@hybrid2bev said that the down payment limit might be even lower in a post earlier this month. https://www.macheforum.com/site/threads/a-z-x-plan-discount-pricing-for-mach-e.501/post-80866

Ford Finance page show the down payment limit at 30%.

 

[generaltso]

If you use Xplan don't you get the $2500 incentive as well? I thought it reads- "Must use Ford Financial".

Only if you do Options.

 

[hybrid2bev]

If you use Xplan don't you get the $2500 incentive as well? I thought it reads- "Must use Ford Financial".

Plan pricing (AXZ) is completely independent of financing and does not require you to go through Ford Credit.

The $2500/$1000 incentive is only for Ford Options contracts which is only available via Ford Credit.

You can combine AXZ Plan pricing and Ford Options.

 

[hybrid2bev]

@hybrid2bev said that the down payment limit might be even lower in a post earlier this month. https://www.macheforum.com/site/threads/a-z-x-plan-discount-pricing-for-mach-e.501/post-80866

Ford Finance page show the down payment limit at 30%.

Yes, the down payment limit was previously 25% it has since been updated to 30%.

 

[buffasnow]

The $2500/$1000 incentive is only for Ford Options contracts which is only available via Ford Credit.

You can combine AXZ Plan pricing and Ford Options.

Credit union rate is .26 higher than Ford Credit for 60 months, so I need to do a more complex calculation on Ford Finance at 1.9% vs Options at 2.25% with incentive.
If I do Options, I would probably bank the difference between finance & options each month, as well as the federal $7500 so I can pay off the residual after 48 months.
If I do financing, I may be interested in paying off some principal after the federal $7500 comes in, and maybe again a year or two later should I find something buried in the yard.
I know my credit union will work with me to pay off principal at any time and lower the remaining monthly payments for the rest of the loan term, multiple times.
I think you mentioned earlier that Options would allow a recalculation once to accommodate the federal $7500, for example, but my question is whether Ford Credit is going to be similarly flexible to my credit union regarding partial principal payments. Does Ford Credit retain my loan throughout or will they offload it to another entity at some point?

 

[hybrid2bev]

Credit union rate is .26 higher than Ford Credit for 60 months, so I need to do a more complex calculation on Ford Finance at 1.9% vs Options at 2.25% with incentive.
If I do Options, I would probably bank the difference between finance & options each month, as well as the federal $7500 so I can pay off the residual after 48 months.
If I do financing, I may be interested in paying off some principal after the federal $7500 comes in, and maybe again a year or two later should I find something buried in the yard.
I know my credit union will work with me to pay off principal at any time and lower the remaining monthly payments for the rest of the loan term, multiple times.
I think you mentioned earlier that Options would allow a recalculation once to accommodate the federal $7500, for example, but my question is whether Ford Credit is going to be similarly flexible to my credit union regarding partial principal payments. Does Ford Credit retain my loan throughout or will they offload it to another entity at some point?

Options is a simple interest loan so you can pay more than your normal monthly payments. You'll want to call in to Ford Credit to ensure the amounts are applied to the account as you intended if you are going to make larger principal payments.

That said we're only planning on doing one re-calculation of the monthly payments during the term of the loan (expecting it to be when you get the tax credits). That is different than sending in principal payments where we won't re-calculate your monthly payments.

Ford Credit will service the loan throughout.

 

[DBC]

The interest rate difference isn't much unless you go with a very short loan. 60 months is 1.9% and Options is 2.25%. Even if you were paying interest for the full 5 years (which you wouldn't necessarily with Options), the difference in interest is only around $500. I'd much rather take the $2500 incentive.

The conceptual issue is that you don't get the 2.25% for 60 months. You get that for 36 months. After that you pay a higher rate when financing the residual. So you have to compare the 2.25% rate for 3 years plus a 4% rate for one year to the 0.09% rate you get for the same period by financing. Since the difference between 2.25% and 0.09% for 36 month financing is $500 a year, when you put it all together the net result is a wash from a strictly dollars and cents perspective.

You can have one or the other be better by changing a few assumptions but overall one isn't obviously better than the other, and even when they aren't it's not by very much. The only exception to this -- the one case in which Options would be better -- is that rather than buying outright you're better off using Options and then paying the loan off after a year or so. But in this case you're not really financing which is the predicate for the question.

 

[mburtsvt]

That's a good point. However, as the OP mentioned, the value of the incentive is reduced by getting a higher interest rate, which could more than make up for incentive.

That's why I said the dollar difference between the two is minimal.

So just hold the ford option contract for 6 months and then pay it off or refinance. I did not see anywhere that a minimum length of contract was nessacary.You get the $2500 credit against the sell price.

Sponsored