Poll: Ford Options vs Finance

[generaltso]

Thanks makes sense, and that entire sales tax would be due as part of your down payment then?

The tax isn’t due separately upfront. It just gets added to the total purchase price and can be rolled into the financing.

Sponsored

 

[MurphyDog]

Yes how silly to invest short term to lose 30%. What could you be thinking? Take a class and learn something. The next decade is going to be smooth sailing. No one ever got bit by a small chance.

You’ll find me and JD on the golf course, smoking big stogies and laughing at you fools who think about things & take precautions with stuff like your money.

If your finance class taught you to go into debt for a deprecating asset, you had a terrible teacher.

 

[Fat Mach]

If your finance class taught you to go into debt for a deprecating asset, you had a terrible teacher.

Like a lot of things in life, it depends. I like to put nothing down on cars and pay 3% on that depreciating asset, while investing whatever down payment most people think is a good idea and make upwards of 30% on it.

 

[engnrng]

The tax isn’t due separately upfront. It just gets added to the total purchase price and can be rolled into the financing.

In other words: with Ford Options, if you are in an outrageously high sales tax state like CAL, then your monthly payment will be higher than the exact same model deal in another state with moderate or no sales tax. I feel your pain, am also in CA. But we have great roads, don't we (/S)? Well, we do out in the high deserts where truck traffic hardly ever goes...

 

[engnrng]

If your finance class taught you to go into debt for a deprecating asset, you had a terrible teacher.

My MACH-E purchase is not for a business, it is personal, so depreciation is not a factor if I keep it for a decade. If I have the choice of reducing interest costs for a 2% loan vs buying a stock paying 8% dividends, I will put the minimum down and buy the stock. I really like the Ford Options approach since it helps cash flow.

 

[DBC]

If I have the choice of reducing interest costs for a 2% loan vs buying a stock paying 8% dividends, I will put the minimum down and buy the stock. I really like the Ford Options approach since it helps cash flow.

As a data point, the current dividend yield for the S&P is 1.55%. Additionally if the dividend yield moves up the stock price may well move down, resulting in a net loss.

Like a lot of things in life, it depends. I like to put nothing down on cars and pay 3% on that depreciating asset, while investing whatever down payment most people think is a good idea and make upwards of 30% on it.

That would certainly be special. The average investor makes about 2.5%, well below the average return from a balanced portfolio. The average equity investor made about half the average return of the equity markets, which is about 10%. No doubt you could beat this but you would have to first disabuse yourself of the notion that you're going to make 30% a year.

Investing in stocks requires a longer time horizon than what you get with a car loan. The S&P was at 1450 in April of 2000. It was at 750 in April of 2009.

Bottom line is that paying 3% on a depreciating asset and using that money to invest in the stock market short term is not a good idea. On the other hand, taking a down payment on a car and investing it for 20 years, and then figuring out how to otherwise pay for the depreciating asset, is not a bad idea.

 

[SteveUk]

24 months for me at a stupid interest rate of 4.9% !

 

[Fat Mach]

As a data point, the current dividend yield for the S&P is 1.55%. Additionally if the dividend yield moves up the stock price may well move down, resulting in a net loss.

That would certainly be special. The average investor makes about 2.5%, well below the average return from a balanced portfolio. The average equity investor made about half the average return of the equity markets, which is about 10%. No doubt you could beat this but you would have to first disabuse yourself of the notion that you're going to make 30% a year.

Investing in stocks requires a longer time horizon than what you get with a car loan. The S&P was at 1450 in April of 2000. It was at 750 in April of 2009.

Bottom line is that paying 3% on a depreciating asset and using that money to invest in the stock market short term is not a good idea. On the other hand, taking a down payment on a car and investing it for 20 years, and then figuring out how to otherwise pay for the depreciating asset, is not a bad idea.

For starters, I get a minimum of 15% on my company's stock purchase plan. This upcoming buy in May I'll pay $199 each on shares that currently trade for $560. I'll have about $10k in the fund when purchase day comes around, which is every six months. I'd have to be brain dead to put that money towards something that is costing me 3%.

I doubt the average investor only makes 2.5%. A simple SP500 fund exceeds that by 3x. Why did you cherry pick the April of 2000 to April of 2009 dates? Oh, because in April of 2000 it was an all-time high and April of 2009 was after the crash that year. How about looking at more recent returns?

I seriously can't remember the last time my portfolio made less than 30%, but I actively trade my lessor performing stocks and funds for better performing ones. It was probably about 6 or 7 years ago if I had to guess.

The bottom line is paying 3% on a depreciating asset and investing that money in the stock market for 4 or 5 years is a good idea.

 

[macchiaz-o]

I actively trade my lessor performing stocks and funds for better performing ones.

I've heard this advice from many people now. Buy high, sell low.

Methinks I should give this a try... hmm. Thank you!

?

 

[Fat Mach]

I've heard this advice from many people now. Buy high, sell low.

Methinks I should give this a try... hmm. Thank you!

?

To "trade" means to sell, in market lingo. Not "buy."

As an example, I bought 3 shares of AMZN in early Dec and it hadn't done much by then end of Dec. I sold 2 shares and bought IZEA with the proceeds. I just sold my IZEA for well over 200% gain. You basically have to be an idiot not to make money in the market these days.

 

[macchiaz-o]

To "trade" means to sell, in market lingo. Not "buy."

As an example, I bought 3 shares of AMZN in early Dec and it hadn't done much by then end of Dec. I sold 2 shares and bought IZEA with the proceeds. I just sold my IZEA for well over 200% gain. You basically have to be an idiot not to make money in the market these days.

I understand what a stock trade is.

Good luck!

 

[jlamarca73]

I can't wait for everyone to get their car. The BS is giving me a headache!

 

[Wisconsin Pony Gal]

I’m considering Ford options but I have no experience with anything other than traditional auto financing. It’s my habit to pay more than the minimum monthly payment, to knock down the amount at interest as quickly as possible. With Ford Options, I assume the balloon amount sits there at interest for the length of the term. Would additional monthly principal payments apply towards the balloon balance, or shorten the length of the contract?

 

[lwilliams0514]

I'll be taking the 72 (Or 75) mo option. I drive 35k miles a year. RCL or Options will not work for me.

 

[BlueMach]

Possibly a stupid question - the "mileage" limits only apply if you want to sell it back to Ford, right? If I put 100k on it, as long as I make the final payment to buy it, there's no "overage" fee for something I don't give back, right? I guess I get why they have the mileage tiers for the different residuals, but it reminds me a bit too much of leasing and the $0.25/mile overage or whatever.

If I wanted to cash out of my paid-off current car, buy the Mach-E on Options with a low mileage limit, and invest the cash in the interim, I could put as many miles on it as I wanted, and just as long as I make the agreed-upon balloon payment at the end, nobody need know the actual mileage, right?

Sponsored