Why Ford Credit is abandoning Leasing for Mach E

[AndyS_OSU]

You’re free to finance your purchase at any financing institution, not really forcing you into Options.

I would ask you to keep an open mind until you see what the financing program details are at your time of your delivery.

I, for one, am glad Ford is trying to figure something out on the lease side. There has been a lot of discussion about the tax credit and the year you actually take possession. Some of us jumped right on board at the launch a year ago understanding that we would have a car by the end of 2020 and could apply the tax credit relatively quickly after taking possession. COVID has messed that up big time pushing deliveries back. Now it’s razor-edge close on whether some of us that jumped in early will get a car before January.
My only real concern is timing on the financing plans announcement. If my Dec 13 build somehow magically appears on the lot Dec 31, then great (a Festivus miracle)! If it won’t show up until January I may need all of December to weigh my options (adjusting 2021 tax withholdings, pursuing leasing options, letting go of my order, etc). Not knowing what all the financing options/numbers are now is kind of adding to the precarious position we are in with delivery timetables, etc.

Sponsored

 

[DBC]

Options doesn't behave "just like a lease" in important ways.

1) Sales Tax is due on the entire purchase price of the vehicle. With leasing, the sales tax is not based on the sales price or capitalized cost.

2) Options durations are less flexible, there is no 24 month Option available. 36 months is the shortest. Why is that?

1. You get a $2500 credit which should offset/cover the sales tax on the balloon payment. Additionally, unlike a lease, there isn't an acquisition fee so you're saving there as well. Finally you get the full $7500 tax credit.

On balance -- looking at both the minuses and the pluses -- you end up better than you would with a lease. What exactly isn't there to like?

2. A two year term would drive the monthly too high. (I think @hybrid2bev mentioned this, perhaps not directly enough).

 

[MerryBrown]

You don't have your car yet, how do you know what they are offering?
I have had leases, and they are not always "with" Ford. Ford sometimes uses other companies to place the leases. I'll bet you will have that option.
There have been so many rumors about this, and we have no documents yet.
Might not be a bad idea to wait a few weeks and see what reality is.

 

[First Edition]

Unfortunately the sales tax rate is 9.5%. The number you quoted is before local counties and cities have added their own tax. In some cities sales tax is 10.5%.

$59,800 x 9.5% = $5,681

 

[FredT]

Unfortunately the sales tax rate is 9.5%. The number you quoted is before local counties and cities have added their own tax. In some cities sales tax is 10.5%.

$59,800 x 9.5% = $5,681

Or we could look at from this perspective: Ford currently gives you $2500 for Options, so you could rationalize that you are effectively paying $3,181 in sales tax. For a traditional lease you will be paying tax on payments. For simplicity sake let's assume half the selling cost, in which case your sales tax would be $2840.

 

[SoriceConsulting]

Really confusing to me, but it might be a great Option for NJ folks. OK math people - would Options make sense for NJ?

I've ordered Prem/AWD/ER. Total comes out to $54,700 MSRP. $58,800 with Destination/Delivery.

I'll definitely qualify for $7,500 Fed credit in 2021 (which is when my order would arrive).
NJ also will give me (as Title Holder) a $5,000 EV Incentive rebate.
NJ does not charge sales tax on an EV purchase.

If you add all that up, is the Options Plan a good deal? I'd likely lean towards a buyout at the end of the 36 month term - if the residual is a realistic amount and close to the resale value. Or, if the 2024 Mach-E is much improved, I may want to trade in/up.

Not sure which would be better (given the high incentive amounts):
> Option plan
> Outright purchase
> Option Plan to get the $2,500 incentive (not even sure if that is available in NJ), and then just payoff the entire amount after a month or 2.

 

[AndyS_OSU]

You’re free to finance your purchase at any financing institution, not really forcing you into Options.

I would ask you to keep an open mind until you see what the financing program details are at your time of your delivery.

Another thought on this after reading @trutolife27 on a different thread: if we are talking even more delays as COVID spikes out of control, finding more consumer friendly ways to take advantage of the tax credit on the front end may encourage more people to hold onto their orders as they slip further into 2021.

My lease is up in December. I'm not worried about finding a vehicle to drive in the interim, but it would sure be helpful to know what the financing options are for the MachE before that so I know if I need to hold out until January or let it go and move on to something else.

 

[First Edition]

Unfortunately the sales tax rate is 9.5%. The number you quoted is before local counties and cities have added their own tax. In some cities sales tax is 10.5%.

$59,800 x 9.5% = $5,681

Leasing is a well known and well used ‘hack’ in California to partially mitigate the oppressive sales tax rate. Mercedes Benz even highlights the sales tax advantages of leasing on their web site.

That‘s why it’s so strange to me that Ford would walk away from leasing. Perhaps Ford Credit doesn’t have the same level of financial sophistication as it pertains to the California market as do other captive finance companies.

The issue is also more than the money portion of it, it’s the principle of paying for something you’re not getting, when options (real options, not fake Options) exist to minimize the issue.

 

[DBC]

Another thought on this after reading @trutolife27 on a different thread: if we are talking even more delays as COVID spikes out of control, finding more consumer friendly ways to take advantage of the tax credit on the front end may encourage more people to hold onto their orders as they slip further into 2021.

In a world of .01% interest rates, getting a tax credit this year or next isn't a big deal. I may get my MME this year. Or it may show up next year. Which occurs is of no importance financially.

However, if for some reason it did matter I'd take the credit for tax year 2020 regardless of whether I picked the car up on December 31 or January 1. No one will tell you to do that but there is no downside. All this fretting about when the MME arrives is much ado about nothing.

 

[AndyS_OSU]

In a world of .01% interest rates, getting a tax credit this year or next isn't a big deal. I may get my MME this year. Or it may show up next year. Which occurs is of no importance financially.

However, if for some reason it did matter I'd take the credit for tax year 2020 regardless of whether I picked the car up on December 31 or January 1. No one will tell you to do that but there is no downside. All this fretting about when the MME arrives is much ado about nothing.

I’m no tax pro...how would the last part of your response work?

 

[timbop]

Leasing is a well known and well used ‘hack’ in California to partially mitigate the oppressive sales tax rate. Mercedes Benz even highlights the sales tax advantages of leasing on their web site.

That‘s why it’s so strange to me that Ford would walk away from leasing. Perhaps Ford Credit doesn’t have the same level of financial sophistication as it pertains to the California market as do other captive finance companies.

The issue is also more than the money portion of it, it’s the principle of paying for something you’re not getting, when options (real options, not fake Options) exist to minimize the issue.

1. @hybrid2bev works for Ford.
2. @hybrid2bev already told you MULTIPLE TIMES to wait for further developments.

You can keep repeating the same thing over and over or you can correlate those 2 pieces of data

 

[hybrid2bev]

1. @hybrid2bev works for Ford.
2. @hybrid2bev already told you MULTIPLE TIMES to wait for further developments.

You can keep repeating the same thing over and over or you can correlate those 2 pieces of data

Thanks @timbop. It burns my britches when people disparage Ford and Ford Credit without knowing the facts. 91% of you on here don't know what is happening behind the scenes. Once people see what financing programs are available at the time of delivery, then they can informedly complain.

 

[First Edition]

Sorry, but Ford needs to cut the "hurry up and wait", stonewall, delay any decisions as long as possible nonsense.

Frankly EVERYTHING they've done relating to customers so far has been a screwup:

• Place an early reservation with us, but it won't mean a damn thing.
• There may be a lease, there may be incentives, there may be good rates and there might not. Check back with us sometime later... we're not sure when.. we just don't really know
• Hey, we've got a half assed scheme to sell more FE's, but it will literally take MONTHs to know anything about whether you got a car or not. We're not sure if you should cancel your existing order or not, because we aren't really sure if we are going to place an FE order for you. Enjoy playing the game of tag between the clueless Ford customer service people and the apathetic/incompetent dealer
• Hey, here's a cool app so you can set up your car - if you're lucky enough to get a VIN from your dealer. Oh wait, it's lame and badly written
• Make sure to learn the Fordpass app so you can do great things with your car like find charging stations and map routes. Oh wait, it's a buggy piece of crap too
• Hey, we're going to take a few cars around to dealerships, but not tell anyone about it. While you're there, you might get a ride or you might not. You'll have to go there to find out. Oh, and the webapp to make reservations is a badly written piece of crap
• Want to know the status of your car? great, go to out web app to see. Oh wait, you're dealer coopted your reservation? too bad, all you get to see is your dealer's contact info because the webapp is a buggy piece of crap

Apologize for the rant, but Ford needs to get out of its own way. It's not 1965 any more.

And here's what I see after getting a VIN and a build date:

I couldn‘t agree more with your observations.

 

[AndyS_OSU]

Thanks @timbop. It burns my britches when people disparage Ford and Ford Credit without knowing the facts. 91% of you on here don't know what is happening behind the scenes. Once people see what financing programs are available at the time of delivery, then they can informedly complain.

Like I said before I’m happy to hear there may be more options. It shows Ford is trying to be consumer friendly.

I guess my main hangup is the timing of these announcements. Finding out what financing programs are available “at the time of delivery” is problematic because, for some, the potential delivery window currently straddles January 1. For me, at least, one day on either side of that will mean a very different direction for the financing.

If these programs go public by say December 1 then no problem. If it’s slips into mid December that puts some of us in a crunch.

Sponsored