Poll: Ford Options vs Finance

[DBC]

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.

Options will be better for the first three years because of the incentive. Just not by a huge amount. And Options won't be better in later years because you'll have to refinance the residual, presumably at a much higher rate.

If you don't buy the car Options isn't a great idea. The disposal fee isn't a big deal but the sales tax on the residual is a different matter.

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

This is not much of an issue since you can put more down at a later time. If you want to put 40% down, just put 10% down and then add 30% later. Not sure why you'd do this but it's an alternative.

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[DBC]

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.

Completely true but you're not financing, and the question is which is the better financing option.

 

[JDRGolfer1]

Makes no sense to me why anyone would pay cash when money is so cheap. That cash can be invested and earn a much better return than the amount you'd pay out in interest. Just my two cents.

 

[generaltso]

The disposal fee isn't a big deal but the sales tax on the residual is a different matter.

That depends on your state. If I sell or trade-in the car, I’ll get the sales tax paid on the residual credited to my next car purchase.

 

[AndyS_OSU]

Poll is missing the choices of RCL for 36 or 39 months.

But is that really an option for anyone with half a brain ? Teasing of course

 

[DBC]

That depends on your state. If I sell or trade-in the car, I’ll get the sales tax paid on the residual credited to my next car purchase.

That's a valid point. CA doesn't allow this though most states do. However this is a credit which reduces the sales tax due on another purchase. It's not a refund. AFAIK you won't get the refund by turning the MME back to Ford and buying from another dealer or not buying anything at all, right?

 

[generaltso]

That's a valid point. CA doesn't allow this though most states do. However this is a credit which reduces the sales tax due on another purchase. It's not a refund. AFAIK you won't get the refund by turning the MME back to Ford and buying from another dealer or not buying anything at all, right?

If you don’t buy anything at all after turning it in, no you won’t get your tax back. But if you turn it in or sell it within 90 days (before or after) of buying something else, you only pay tax on the difference. At least this is how it works in Vermont.

 

[MachE2021]

Does anyone know what happens if you do Ford Options and make extra payments and then want to walk away at the end? Do they give you $$ back equal to the amount you over paid beyond the buy out price?

 

[SnBGC]

I have nothing useful to add other than to say thanks for the discussion as it helps me learn. Love to learn new stuff. (seriously)

 

[Woeo]

Options will be better for the first three years because of the incentive. Just not by a huge amount. And Options won't be better in later years because you'll have to refinance the residual, presumably at a much higher rate.

Why would Options necessarily be better for the first three years because of the incentive? In my state the Options incentive is, as I mentioned, $1000. Still leaves ~$750 in interest to pay over 36 mos. [50k 2.25%] Normal financing, if you qualify for the .9% APR, would have you owing ~$700 over the same term. Interest nod actually goes to the .9, but I’d call it even. Maybe you ‘value’ Options for the lower monthly nut.

I see the value of Options in the escape hatch. The question is what is it worth? At 36 months the escape hatch would cost me $475 to exercise. At 48 months it would cost significantly more in interest than .9% financing even if I did not choose to return the MME, $475 more to do so.

My assumption is that my car would be paid off after 36 mos in either scenario. So there would be no refinancing of the balloon.

[/QUOTE]

If you don't buy the car Options isn't a great idea. The disposal fee isn't a big deal but the sales tax on the residual is a different matter.

Given the $1000 incentive doors not compensate for the higher APR over 48 mos and only matches at 36 mos, I would only consider Options if there was a chance I might not want to keep the car and would want to escape by turning the car over to Ford. If I plan to keep the car at all costs there is no need to consider Options.

The disposal fee is sufficiently large enough to consider in that decision making. It may only be roughly a percent of the cost of the car, but $475 is a large amount for most people.

Again, your situation may be different but in MD I pay sales tax on the full value of the car whether I pay cash, finance, use Options, or lease. Trading in a car doesn’t change that for me either. Maybe that’s why I am I of the opinion that $475 is not a small deal, I need to save where I can.

[/QUOTE]

This is not much of an issue since you can put more down at a later time. If you want to put 40% down, just put 10% down and then add 30% later. Not sure why you'd do this but it's an alternative.

One reason you might want to do this is to reduce the amount of interest that accrues at the higher Options rate.

One reason you might not do it? Perhaps you find it morally wrong to game the system in that manner, knowing that if a sufficient number of people do so, Ford may not offer a program like Options in the future.

 

[Woeo]

Makes no sense to me why anyone would pay cash when money is so cheap. That cash can be invested and earn a much better return than the amount you'd pay out in interest. Just my two cents.

Storm clouds on the horizon. Are they coming this way?

 

[hybrid2bev]

Why would Options necessarily be better for the first three years because of the incentive? In my state the Options incentive is, as I mentioned, $1000. Still leaves ~$750 in interest to pay over 36 mos. [50k 2.25%] Normal financing, if you qualify for the .9% APR, would have you owing ~$700 over the same term. Interest nod actually goes to the .9, but I’d call it even. Maybe you ‘value’ Options for the lower monthly nut.

I see the value of Options in the escape hatch. The question is what is it worth? At 36 months the escape hatch would cost me $475 to exercise. At 48 months it would cost significantly more in interest than .9% financing even if I did not choose to return the MME, $475 more to do so.

My assumption is that my car would be paid off after 36 mos in either scenario. So there would be no refinancing of the balloon.

With Ford Options you can avoid the disposal fee by trading in the vehicle when the balloon note is due.

 

[tdwatts]

Makes no sense to me why anyone would pay cash when money is so cheap. That cash can be invested and earn a much better return than the amount you'd pay out in interest. Just my two cents.

By that logic, why wouldn't you go borrow as much as you possibly can and turn around and invest it? It honestly makes no sense to me why you would go into debt for a car.

 

[Woeo]

With Ford Options you can avoid the disposal fee by trading in the vehicle when the balloon note is due.

Understood. I appreciate the reminder.

However if I am bailing after only a few years it will be because the FMV is significantly below the ‘balloon’ amount. If I am offered 20k in trade towards a 2024 MME but my balloon is 24k, is Ford going to call it even—assuming I am within miles and have no extraordinary wear?

Edit: or will I be able to use the balloon amount as a floor for a trade on a new Ford?

 

[back_at_it_19]

There's another potential reason to go with Options over regular financing. I just want the extra $2500 incentive.

Well some of us only get $1000 incentive, fyi... ?

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