Problem with pre-paying Ford Options lease.

generaltso

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When you prepay part of your mortgage, don't you save on how much interest you pay?
Only if it’s a principal payment, and that’s not realized until the end since your monthly payments won’t change. Does your mortgage company let you make a principal payment and then not make any payments for 3 years without acruing interest?
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ARK

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When you prepay part of your mortgage, don't you save on how much interest you pay?
Well given this thread so far, I suppose the big question is this: If you make a big payment now but don’t pay off the full loan, do you know one way or the other if your final balloon payment is reduced? I would assume your balloon payment would be smaller since you have paid off some of the principal early, but do you know? I’d be interested in the answer to this question as well.
 
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Sleep7

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Only if it’s a principal payment, and that’s not realized until the end since your monthly payments won’t change. Does your mortgage company let you make a principal payment and then not make any payments for 3 years without acruing interest?
I'm trying to pay off everything including the interest on the whole amount. I'm not trying to avoid anything I owe. I just want to pay part of it upfront so I avoid some interest payments. This is what I was told I could do.
 

NoVAguy

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I'm trying to pay off everything including the interest on the whole amount. I'm not trying to avoid anything I owe. I just want to pay part of it upfront so I avoid some interest payments. This is what I was told I could do.
I will say if you were told this by the financing guy at the dealership then it may just simply be wrong information. Unfortunately, many of the finance people are not extremely well versed in Ford Options as it is a newer way of financing specific to the Mach-E.

If you asked this question to 3 different finance departments at 3 different dealerships I can almost guarantee you that you'd get 3 different answers. It sucks, but that's the truth.
 


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Sleep7

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No, you’re not. The entire amount you owe includes the balloon.
Of course I am. My payment would include the interest that is accrued on that as well for the 36 months. I just wouldn't pay that principal
 

Mickey the T

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I guess I'm struggling with this as well. If Sleep7 starts off owing $40,000 and then reduces the principal to $20,000, surely that must save him some interest somewhere along the way. To use the mortgage example, if you did this your payments would end sooner than originally scheduled. So in this case, does it reduce his balloon payment?
 

db4z

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I guess I'm struggling with this as well. If Sleep7 starts off owing $40,000 and then reduces the principal to $20,000, surely that must save him some interest somewhere along the way. To use the mortgage example, if you did this your payments would end sooner than originally scheduled. So in this case, does it reduce his balloon payment?
Yes it would reduce total interest but then your regular scheduled payments (which are a fixed amount every month just like your mortgage until you completely pay it off) would start reducing the principle on the balloon. However, if you walk away from the car in 3 years, I don't think they would give you a check back for the amount you reduced the balloon by. In other words, I don't think Ford isn't guaranteeing to buy back the car at the original balloon amount. Actually I think there is some sort of return/reconditioning fee of like $500 and then they take back the remaining principle on the loan with the car.

Now this is fine if you never planned on giving back the car but wanted to take advantage of the specific interest rate and incentives with Ford options because they were better than what you could get with traditional financing or paying cash.
 

hybrid2bev

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Hello!
I just got my first bill and had planned to pay off the whole thing in full. I called Ford to ask them how much the total of payments would be minus the interest since I was paying it off right away.
I was told that I need to pay the whole amount - that even though I was paying off the 35 payment "loan" right away the interest would still be charged.
I spoke to a few supervisors who said that they could not change it and whether I payed it off in 3 years or right away I would still pay the same amount.
Has anyone else had this problem?
Just a heads up to anyone who is planning on doing the same thing.. it seems it's not possible.
When I bought the car they dealership told me that there would be no pre-payment penalty and I would avoid interest payments by paying in advance.
Hopefully somebody from Ford is reading these forums and can clarify this for me.
Ford Options is a simple interest loan. In this case instead of having 60 monthly payments you have 35 monthly payments and one big one (about 25 payments worth) as a balloon.

Starting on day one of the loan interest is accruing. If you pay the 35 payments early you will pay less interest because you have lowered your outstanding balance (which includes the balloon amount too). If you have an outstanding balance then interest will continue to accrue until the whole loan is paid in full (balloon too).

There’s no prepayment penalty you just have to pay the accrued interest.
 

Rockcity313

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Yes. The 35 remaining monthly payments plus the balloon payment, minus the interest over the 36mos term, plus the interest on one month.

Oh, I don't know if you can pay just the 35 remaining payment without the balloon and avoid paying the interest. I didn't know that's what you're trying to do.
No sure why one would assume that they would not have to pay interest when thousands of dollars loaned (balloon pymt) are still outstanding.
 

smartino

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You paid the full amount including the balloon payment? I just wanted to pay the amount minus the balloon payment. I'm not sure I want to keep the car after 3 years
I was including the balloon payment in my calculations of the payoff amount because unless you do the loan is not satisfied and there is still interest to pay as the loan is not satisfied. The only way to avoid interest is to pay off the total loan including the balloon payment.
 

janitorjim

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I told them that. It didn't matter. She still said my payoff was my regular payment times 35 months. It was like I was explaining to her that 2 plus 2 was 4 and she didn't agree.
You paid the full amount including the balloon payment? I just wanted to pay the amount minus the balloon payment. I'm not sure I want to keep the car after 3 years
seems like you are trying to say 2+2-1=4
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