[BFarMachE]

Most people when they lease go for a roughly 3-year plan. I am wondering in the case of the Ford Options plan should a person go for a 48-month option. One benefit I see is that in the case when you return the car in 48 months, you can swap to a newer model which may be refreshed from the original. Most manufacturers refresh after 3 years from the new vehicle. If you return the car in 3 years the car may not be refreshed. On the other hand, you have to wait one extra year. What do you think?

 

[Diogenes]

Rough on a napkin math from the order configurator calculator. Setting aside Fed + Local tax incentives and Local sales tax for the moment (not likely to change the outcome).

Premium 4XE - $54,700
10% down - $5,470
10, 500 miles/year

Return after options term
36: $719.67/month, $25,980.12 total payments + $5,470 = $31,378.12 for 31,500 miles, $0.996/mile
48: 632.94/month, $30,381.12 total payments + $5,470 = $35,851.12 for 42,000 miles, $0.853/mile

Keep after options term
36: $719.67/month, $25,980.12 total payments + $5,470 = $31,378.12 (+ $25,100 balloon) = $56,488.12
48: 632.94/month, $30,381.12 total payments + $5,470 = $35,851.12 (+ $21,204.00 balloon) = $57,055.12

I see no real advantage to the 36 month term (I don't really have to have a new car every 3 years). you might want to run the calculation for your particular situation.

My plan is to go with the 48 months, drive it a LOT (probably 60K miles or more)... If Ford is willing to "forgive" the miles and give me an attractive offer on a mid cycle refresh of the MME at that time, I might bite. Otherwise, I'll finance the balloon payment with my credit union and keep the MME.

 

[JTK44]

Most people when they lease go for a roughly 3-year plan. I am wondering in the case of the Ford Options plan should a person go for a 48-month option. One benefit I see is that in the case when you return the car in 48 months, you can swap to a newer model which may be refreshed from the original. Most manufacturers refresh after 3 years from the new vehicle. If you return the car in 3 years the car may not be refreshed. On the other hand, you have to wait one extra year. What do you think?

The advantage of going for 36 months is that the car will covered under the manufacturers warranty.

The problem arises if there is an expensive repair between the 36 and 48 month which you must pay for. If you decide to keep the car, then you will amoritize that expense over the life of the car. However, if you decide to walk away after 4 years, then you bear the expense without getting the benefit.

For an example: you lease a property for 5 years and are required to maintain the premises. The boiler breaks in the 4th year. You have no choice but to replace the boiler which has a lifespan of 20 years. You pay the full cost, but only get the benefit of 1 year. The other 19 year's benefit goes to the landlord - Ford.

This is a real concern in an ICE. Only time will tell if it is a concern in an BEV: for example suspension, steering, controls including the screen are only covered for 36 not 48 months.

Also tires: at this point no one knows how long the tires will last. The cost of an extra replacement between the 36 month and 48 month will wipe out all your savings.


Personally, with a brand new car and other cars coming out in the next few years, I would go for the 36 month plan. As per Diogenes It only will cost you $600 more, just over 1% more. To me that is a small amount to pay to shorten the length by 12 months. That means you can be in a new car one year sooner for only $600 -less than one months payment!

That to me is a "no brainer!"

 

[Diogenes]

The advantage of going for 36 months is that the car will covered under the manufacturers warranty.

The problem arises if there is an expensive repair between the 36 and 48 month which you must pay for. If you decide to keep the car, then you will amoritize that expense over the life of the car. However, if you decide to walk away after 4 years, then you bear the expense without getting the benefit.

For an example: you lease a property for 5 years and are required to maintain the premises. The boiler breaks in the 4th year. You have no choice but to replace the boiler which has a lifespan of 20 years. You pay the full cost, but only get the benefit of 1 year. The other 19 year's benefit goes to the landlord - Ford.

This is a real concern in an ICE. Only time will tell if it is a concern in an BEV: for example suspension, steering, controls including the screen are only covered for 36 not 48 months.

Also tires: at this point no one knows how long the tires will last. The cost of an extra replacement between the 36 month and 48 month will wipe out all your savings.

Personally, with a brand new car and other cars coming out in the next few years, I would go for the 36 month plan. As per Diogenes It only will cost you $600 more, just over 1% more. To me that is a small amount to pay to shorten the length by 12 months. That means you can be in a new car one year sooner for only $600 -less than one months payment!

That to me is a "no brainer!"

I'm not really worried about any major breakdowns/repairs between months 36-48 (probably go over the miles before 36 months anyway). Geico and other insurance companies offer breakdown coverage (extended warranty) with a ~$500 deductible if this is an issue for something like $5-10/month (must be the original owner of a new car with less than 12K miles I believe). Not sure how you calculate $600 more for the 36 month term....

Many other BEVs in contention over the next 3 years in this class: Hyundai Ioniq 5, VW ID.4, Fiskar Ocean, Nissan Ariya, Bolt EUV, Mazda MX-30, Mercedes EQA/EQB, Polestar 2, XC40 recharge... 48 months to me seems a little more certain on more mid cycle refreshes. Hyundai seems to move quicker than anyone else here. Of course, there'll be new models like the Tesla hatch.

 

[JTK44]

Not sure how you calculate $600 more for the 36 month term....

36: $719.67/month, $25,980.12 total payments + $5,470 = $31,378.12 (+ $25,100 balloon) = $56,488.12
48: 632.94/month, $30,381.12 total payments + $5,470 = $35,851.12 (+ $21,204.00 balloon) = $57,055.12

 

[Diogenes]

36: $719.67/month, $25,980.12 total payments + $5,470 = $31,378.12 (+ $25,100 balloon) = $56,488.12
48: 632.94/month, $30,381.12 total payments + $5,470 = $35,851.12 (+ $21,204.00 balloon) = $57,055.12

Ah... yeah. Stupid me. I didn't do that simple math. I'm thinking of the opportunity cost in making higher payments earlier with the 36. Been watching too much CNBC.

 

[BFarMachE]

Great advice and comments guys. I will use it to make my decision when I am ready to sign.

 

[Diogenes]

Great advice and comments guys. I will use it to make my decision when I am ready to sign.

I'll just add this... Not financial advice... just what I'm doing.

JTK44 is correct. Purchasing on 36 month Options Plan is ~$600 less then the 48 month.
I'm going with the 48 months. I'll be holding onto the ~$87 difference in the monthly payments for the first 36 months and investing it. I also then, hold onto the big portion of the balloon payment from months 36-48 and invest it as well. The market may fluctuate in that time but over 48 months... which is pretty darned long these days. I expect to make up the $600 difference easily. A simple way of looking at it is that low risk bond funds, utility stocks, etc... yield much better than the 2.25% Ford Options financing.

 

[patmurphey]

I have no doubt that those balloon payments will be way below even the trade in value of Mach Es at 3 or 4 years. You'll get some of that money back on the difference.

 

[JTK44]

I'll just add this... Not financial advice... just what I'm doing.

JTK44 is correct. Purchasing on 36 month Options Plan is ~$600 less then the 48 month.
I'm going with the 48 months. I'll be holding onto the ~$87 difference in the monthly payments for the first 36 months and investing it. I also then, hold onto the big portion of the balloon payment from months 36-48 and invest it as well. The market may fluctuate in that time but over 48 months... which is pretty darned long these days. I expect to make up the $600 difference easily. A simple way of looking at it is that low risk bond funds, utility stocks, etc... yield much better than the 2.25% Ford Options financing.

You math is correct up to a point:

Yes over the first 36 months you will save $87, $3132 and it is reasonable to invest that short term, but short term, 3 years, it will be difficult to get even 2%. And remember that you are not investing the $3132 up front but over time.

On the other side you have committed to $632 for 12 additional months, $7,584, but the balloon has only decreased by $3,896. Where did the the difference, $3688 go?????

What is happening is the amount of the balloon is dropping rapidly indicating a rapidly declining value of the MME.

When you lease, the longer you lease the cheaper it is: a 24 month lease is far more expensive than a 48 month lease as the shorter lease reflects a greater percentage of the depreciation.

It should be the same with the Ford Option Plan: a 48 month plan should be substantially cheaper than a 36 month plan. Here the opposite is happening. This is crazy!

Also keep in mind, with a 48 month plan, you are out of warranty: Getting an insurance contract to cover that period is an added expense.

There will be additional normal "wear and tear" items the longer you keep the car: tires, etc. This is another advantage of the 36 month plan over the 48 month plan.

To me the added risk plus added cost of 48 months vs. 36 months, makes getting the 36 month plan a "no brainer".

Hope this clarifies.

 

[JTK44]

I have no doubt that those balloon payments will be way below even the trade in value of Mach Es at 3 or 4 years. You'll get some of that money back on the difference.

Why?

 

[MachDrive]

Why?

Ford has said the expected residual on the MMe Er/AWD is 58%, well above the final balloon payment. If you trade in or sell, that equity comes back to you for a down payment, or as cash.
You lose that money if you just turn it in.

 

[JTK44]

Ford has said the expected residual on the MMe Er/AWD is 58%, well above the final balloon payment. If you trade in or sell, that equity comes back to you for a down payment, or as cash.
You lose that money if you just turn it in.

58% is a fictitious number: it is based on:

• Ford is keeping the FTC of $7,500
• Ford has overinflated the interest rate at 5%

To those who use the Option Plan, and rely on the residual in the lease as a benchmark, they maybe, and I suspect will be severely disappointed.

 

[horsiedad]

I have the ability to pay cash upfront for my MME (I've been saving for a new car for three years). Here in Georgia, the Options has a $1,000.00 discount. I think that the Options plan makes sense though by giving me flexibility in three to four years depending on how technology changes.

Does it make sense for me to use the Option plan and pay it off in a few months? What's the best way to play this?

 

[JTK44]

I have the ability to pay cash upfront for my MME (I've been saving for a new car for three years). Here in Georgia, the Options has a $1,000.00 discount. I think that the Options plan makes sense though by giving me flexibility in three to four years depending on how technology changes.

Does it make sense for me to use the Option plan and pay it off in a few months? What's the best way to play this?

Just my opinion and $.02:

Since you have been saving and can pay for the car upfront, you should do what is the most efficient with your money.

If you are investing the price of the MME and getting more than 2.25% then the Option Plan makes sense.

If you not investing the money or getting less than 2.25% then the Option Plan does not make sense.

Here in NY the OP comes with a $2,500 incentive. Than can make a difference.

A $1,000 incentive is obviously only 40% of what we get here.

Finally, the OP plan does give you some downside protection because of the balloon. At this point it is anyone's guess as to how much - if any.

No matter which way you slice it, the MME is an expensive purchase relative to an SUV ICE. Unfortunately, when cars are expensive expect significant depreciation.

 

[patmurphey]

It will be worth a lot more than that balloon payment. Don't turn it in! Sell it or trade it.

 

[firstford]

So I refresh the site almost every 20 minutes and just cannot seem to get enough of this car. I ordered a Premium Star White Standard Range on 12/28/20. My build date is 2/21. I was and still am ecstatic about this car, but the financial side of this has me worried.

My purchase price is $51,640. I will be using the X-Plan and most likely Ford Options. I live in Florida so extra incentives aren't available.

Really don't want to put more than $5000 down and refuse to pay anything over $650 a month for a car in this price range.

Am I about to be heart broken? My issue isn't income or credit score.

 

[JTK44]

It will be worth a lot more than that balloon payment. Don't turn it in! Sell it or trade it.

This is just a repeat of your post #9.

Why do you think this? Can you give us your reasoning using real numbers?

Personally, and I have posted on another thread, I think at the end of the Option Plan, there is high likelihood that the balloon will be more not less than the value of the MME and buyers will just return their cars.

 

[JTK44]

So I refresh the site almost every 20 minutes and just cannot seem to get enough of this car. I ordered a Premium Star White Standard Range on 12/28/20. My build date is 2/21. I was and still am ecstatic about this car, but the financial side of this has me worried.

My purchase price is $51,640. I will be using the X-Plan and most likely Ford Options. I live in Florida so extra incentives aren't available.

Really don't want to put more than $5000 down and refuse to pay anything over $650 a month for a car in this price range.

Am I about to be heart broken? My issue isn't income or credit score.

No: your heart will not be broken.

You are being rational not emotional.

The MME, is a very, very expensive car for what it. It is not value. If it something that you desperately want, then pay the price.

I think that in a short time, the true value of the MME will come. On another thread, there is already for sale a FE by a dealer at MSRP, no mark up. After those who want to be "first" and are willing to pay are satisfied, then the market will come into play.

I for one, without a competitive lease will not take possession of my FE. I believe there will be many, many others just like me. These cars will then have to sold by the dealers. I doubt there will be many takers without either competitive financing or leases.

If you can wait, I would.

 

[firstford]

No: your heart will not be broken.

You are being rational not emotional.

The MME, is a very, very expensive car for what it. It is not value. If it something that you desperately want, then pay the price.

I think that in a short time, the true value of the MME will come. On another thread, there is already for sale a FE by a dealer at MSRP, no mark up. After those who want to be "first" and are willing to pay are satisfied, then the market will come into play.

I for one, without a competitive lease will not take possession of my FE. I believe there will be many, many others just like me. These cars will then have to sold by the dealers. I doubt there will be many takers without either competitive financing or leases.

If you can wait, I would.

Unfortunately I can name almost ten other luxury cars that are almost $20,000 dollars more that have payment options much lower than what Ford has currently. I picked the MachE and not those other options for a reason. It's not over yet!