Poll: Ford Options vs Finance

[timbop]

Actually I'm only focusing on the short term in the sense of doing options is a 3 year "lease" and so I was considering the alternative to that. Such as would it be better to run a 72 month financing and how would that compare in three years to the 36 month ford options. Actually in three years with 72 months financing and $15k down you actually pay more than the 36 month ford options, but I almost feel like it kind of balances out since I can only imagine the GT would be worth at least $30-35k at that point if not morend you'd effectively make back any potential loss on financing (just speculation since it's the top of the line model). Even 2017 Mustang GTs are selling right now in the high $20's.

This whole thing has been super confusing to figure out which is better but it may come down to just saying either one is just as good. The 72 month financing I feel like would have a good resale option in 3 years just in case I want to get out of the car at that point, but the 36 month ford options would have lower payments and a higher buy back if I wanted to keep it.

The mistake you are making is that the Ford options program is not actually a LEASE - you have 3 options at the end of the term:

1. return the car and walk away
2. refinance/pay cash to buy the car out at the prescribed price
3. roll any equity you have in the car over to another Ford vehicle (without having to buy it out first)

I went with the options because the rate was 2.25% AND they offered $2500 cash incentive. I did the math for 48 months; assuming I decided to buy out the car and refinance for 36 months at 3% it actually came out slightly cheaper overall than a 72 month loan.

The real reason I did the options plan is in the event that solid state batteries are becoming available and the residual value of the Mach E drops significantly. In that case I would just walk away from the car and buy another BEV with a much better battery that has longer range and DCFC's much faster. If such a car isn't at least on the horizon, then I'll buy out my Mach E.

Sponsored

 

[blue92lx]

The mistake you are making is that the Ford options program is not actually a LEASE - you have 3 options at the end of the term:

1. return the car and walk away
2. refinance/pay cash to buy the car out at the prescribed price
3. roll any equity you have in the car over to another Ford vehicle (without having to buy it out first)

I went with the options because the rate was 2.25% AND they offered $2500 cash incentive. I did the math for 48 months; assuming I decided to buy out the car and refinance for 36 months at 3% it actually came out slightly cheaper overall than a 72 month loan.

The real reason I did the options plan is in the event that solid state batteries are becoming available and the residual value of the Mach E drops significantly. In that case I would just walk away from the car and buy another BEV with a much better battery that has longer range and DCFC's much faster. If such a car isn't at least on the horizon, then I'll buy out my Mach E.

I think the unstable option here is number 3 where there's no guarantee you'll have equity. It's like making your regular payments and hoping it'll be worth more than you owe on the remaining balloon payment. It's kind of a bizarre thing they're doing with for options. Either way I guess it's still better since the choice is there if you're somehow ahead of the game. It's also weird to me that you're in a 3 year contract but can just go sell the car.

The whole situation is weird to me.

That being said I didn't think about the potential value issues if new solid state batteries come out by then. 3 years is a long time in technology and that could definitely hurt the resale for sure. So maybe the 36 month option would be bette.

 

[BMT1071]

The mistake you are making is that the Ford options program is not actually a LEASE - you have 3 options at the end of the term:

1. return the car and walk away
2. refinance/pay cash to buy the car out at the prescribed price
3. roll any equity you have in the car over to another Ford vehicle (without having to buy it out first)

I went with the options because the rate was 2.25% AND they offered $2500 cash incentive. I did the math for 48 months; assuming I decided to buy out the car and refinance for 36 months at 3% it actually came out slightly cheaper overall than a 72 month loan.

The real reason I did the options plan is in the event that solid state batteries are becoming available and the residual value of the Mach E drops significantly. In that case I would just walk away from the car and buy another BEV with a much better battery that has longer range and DCFC's much faster. If such a car isn't at least on the horizon, then I'll buy out my Mach E.

The turn in option is my main reason for going the Options route also. Seems highly unlikely, but if the value of the MME totally tanks for some reason I'm protected. FYI, my understanding is that you can finance the balloon payment at the same 2.25%.

 

[BMT1071]

I think the unstable option here is number 3 where there's no guarantee you'll have equity. It's like making your regular payments and hoping it'll be worth more than you owe on the remaining balloon payment. It's kind of a bizarre thing they're doing with for options. Either way I guess it's still better since the choice is there if you're somehow ahead of the game. It's also weird to me that you're in a 3 year contract but can just go sell the car.

The whole situation is weird to me.

That being said I didn't think about the potential value issues if new solid state batteries come out by then. 3 years is a long time in technology and that could definitely hurt the resale for sure. So maybe the 36 month option would be bette.

But you're not in a 3 year contract. You own the car from day one and can do with it what you please. All I see is upside in that you could pay it off at any time if you choose, or you can take advantage of a guaranteed value at the end of 35 months.

 

[blue92lx]

But you're not in a 3 year contract. You own the car from day one and can do with it what you please. All I see is upside in that you could pay it off at any time if you choose, or you can take advantage of a guaranteed value at the end of 35 months.

Quick question on that which had also confused the crap out of me. If they limit you to X amount of miles, how do you sell it prior to the end of the 36 months? Let's say I've owned it for a year and decide to sell it off, what happens to the estimated yearly mileage? Do they take over the last two years of the options "lease"?

 

[generaltso]

Quick question on that which had also confused the crap out of me. If they limit you to X amount of miles, how do you sell it prior to the end of the 36 months? Let's say I've owned it for a year and decide to sell it off, what happens to the estimated yearly mileage? Do they take over the last two years of the options "lease"?

The miles only come into play if you turn it in. If don’t, the miles are irrelevant.

 

[timbop]

I think the unstable option here is number 3 where there's no guarantee you'll have equity

#3 is just a bonus if there is equity and you don't want to keep the car. If you want to keep the car it has no impact on buying out the car because the price is already set when you sign the options, so you don't have to pay more to keep it. If the car has LESS equity and you don't want to keep it you walk away owing nothing else (other than a mileage overage). If you are way over on mileage (the fees are excessive) and you don't want to keep the car or buy another ford, you can pay the car off and resell it/trade it in elsewhere.

Don't take the options if you don't like it because it is weird; my only intention is to explain how it works so you're properly informed.

 

[blue92lx]

#3 is just a bonus if there is equity and you don't want to keep the car. If you want to keep the car it has no impact on buying out the car because the price is already set when you sign the options, so you don't have to pay more to keep it. If the car has LESS equity and you don't want to keep it you walk away owing nothing else (other than a mileage overage).

Don't take the options if you don't like it because it is weird; my only intention is to explain how it works.

100% I appreciate everyone answering my questions here. And actually in definitely leaning way more towards options now instead of a 72 month finance.

It just seems like a really pro buyer setup which maybe is why I almost don't understand the program. Like why would Ford do a no loss program where they'll buy back a car that's worth less than the balloon payment with no penalty to the purchaser? Or the whole mileage limitation but hey go ahead and ignore that and sell the car anytime you want and don't worry about the mileage.

Just seems too good to be true in a way where you can finance the car and ditch it in 3 years if the value of the car has plummeted. Then again is that reason for Ford to hold off on new battery technology for over three years so they don't lose their asses on people turning in their Mach E?

 

[timbop]

100% I appreciate everyone answering my questions here. And actually in definitely leaning way more towards options now instead of a 72 month finance.

It just seems like a really pro buyer setup which maybe is why I almost don't understand the program. Like why would Ford do a no loss program where they'll buy back a car that's worth less than the balloon payment with no penalty to the purchaser? Or the whole mileage limitation but hey go ahead and ignore that and sell the car anytime you want and don't worry about the mileage.

Just seems too good to be true in a way where you can finance the car and ditch it in 3 years if the value of the car has plummeted. Then again is that reason for Ford to hold off on new battery technology for over three years so they don't lose their asses on people turning in their Mach E?

If you buy out the contract then they get all their money for the car, so they don't care how many miles you drive. It does seem "too good to be true", except that the residuals are actually very conservative - much lower than an equivalent red carpet lease residual. They are banking on the car being worth more than the balloon payment so if people do turn them in at the end Ford can resell them for another profit.

They also realize that it is their first entrance to a completely new market and people are going to be skittish - overly pessimistic people like me are wary that the cars will be almost worthless after a few years. By putting a "just high enough" residual on the cars people like me are willing to take a chance and buy one now. Since a lease would disqualify buyers for the $7500 rebate they had to come up with an alternative that gave people a "safety net" that buyers would accept.

 

[blue92lx]

If you buy out the contract then they get all their money for the car, so they don't care how many miles you drive. It does seem "too good to be true", except that the residuals are actually very conservative - much lower than an equivalent red carpet lease residual. They are banking on the car being worth more than the balloon payment so if people do turn them in at the end Ford can resell them for another profit.

They also realize that it is their first entrance to a completely new market and people are going to be skittish - overly pessimistic people like me are wary that the cars will be almost worthless after a few years. By putting a "just high enough" residual on the cars people like me are willing to take a chance and buy one now. Since a lease would disqualify buyers for the $7500 rebate they had to come up with an alternative that gave people a "safety net" that buyers would accept.

True on all points. I may email the dealer for the fine print on the Options financing just to go over it in depth too. My wife doesn't think it's possible or there are loopholes due to the 'too good to be true' factor, it would be good to get in detail on it and know every bit of it.

As is, I think I may be leaning to the 4 year Options plan just for the cheaper payment, especially if I can just sell the car whenever I want to. It would still be cheaper to do that with a 3 year finance balloon payment than doing a full 8 year financing.

 

[will]

Hello everyone,

for those of you who have gone the Options route and have your vehicle already... how did getting the insurance work out? Do you know if they treat it as a 'Purchase' vs 'Lease'? I imagine it is 'Purchase' but wasn't certain.

Originally my plan was to do 1.9 60 Month financing through ford but now I'm thinking it makes more sense to do 48 month 2.25 and just have that flexibility in 4 years if battery tech improves etc...

 

[hybrid2bev]

Hello everyone,

for those of you who have gone the Options route and have your vehicle already... how did getting the insurance work out? Do you know if they treat it as a 'Purchase' vs 'Lease'? I imagine it is 'Purchase' but wasn't certain.

Originally my plan was to do 1.9 60 Month financing through ford but now I'm thinking it makes more sense to do 48 month 2.25 and just have that flexibility in 4 years if battery tech improves etc...

Purchase. Options is written on a retail installment contract.

 

[will]

Purchase. Options is written on a retail installment contract.

So I guess the only real risk I'm considering on Options is if the Feds try to adjust for inflation and I don't have the cash for the balloon saved up by then and need to do a new loan at some crazy interest rate.... however, If I go options my plan would be to just save that extra cash I would have been dumping into my payment and that'd get me most of the way there on that balloon payment so maybe the interest is moot at that point. Or battery tech has had some crazy break through and I won't want the car and I turn it in.

Man it is hard to not take that Ford Option Plan seriously. You guys will get the 7500 tax credit for this years taxes right?

 

[hybrid2bev]

So I guess the only real risk I'm considering on Options is if the Feds try to adjust for inflation and I don't have the cash for the balloon saved up by then and need to do a new loan at some crazy interest rate.... however, If I go options my plan would be to just save that extra cash I would have been dumping into my payment and that'd get me most of the way there on that balloon payment so maybe the interest is moot at that point. Or battery tech has had some crazy break through and I won't want the car and I turn it in.

Man it is hard to not take that Ford Option Plan seriously. You guys will get the 7500 tax credit for this years taxes right?

If you refinance it will be the lessor of your contract rate or the state maximum rate.

 

[blue92lx]

If you refinance it will be the lessor of your contract rate or the state maximum rate.

That's a concerning way to word it. It'll either be the lower APR in the contract, OR arbitrarily the highest permitted by law. Soooo.... it could be 2.25% or who knows what the highest the law permits at that time. Maybe 10%.

Sponsored