Ford Options – a New Lending Program Exclusive to the Mustang Mach-E

by Giovanni

If you live on Earth, you’ve heard of Ford. The legacy automaker revolutionized the world as we know it with the first mass produced affordable car. Since then, every automaker has followed suit making the transition from horse driven carriage to automobile available for anyone. As the company prepares to enter the next generation of vehicles, they’re reenvisioning their business motto from the inside out.

The Mustang Mach-E is not only just another electric car coming in the next few months, it’s being used as a gateway to take Ford in an entirely new direction. Since the inception of this vehicle, we’ve seen the company make massive internal changes inching closer and closer towards a Tesla themed system. They’ve redone dealer invoicing to provide a better customer experience, and now are planning to innovate the way leases are done.

In an internal bulletin sent out today, we received first glimpse of Ford’s new purchase program. Ford Options, a program used strictly just for the upcoming electric Mustang Mach-E, seeks to offer customers the traditional ownership experience but with the benefits and flexibility associated with leasing.

In summary, Ford Options is a purchase program that allows you to lower the monthly payment of the car. It is treated as a standard sale but on a balloon loan. However, unlike a standard balloon loan, you’re not responsible for the final payment, if you wish to return the car. To keep things simple, Ford chose to base payments and interest off their leasing program. Now the breakdown:

Like a traditional lease, once the term is up you’ll have the option to return the vehicle and collect any positive equity gained throughout the term. You could also refinance the remaining balance and continue on life with the vehicle. More simply, you can return the car with no hassle (plus a $475 “Disposal” fee).

Payments are based on a standard leasing platform on either 36 months or 48 months. However, in both cases, the final payment is a balloon payment comprised of the remaining balance after subtracting your monthly payments from the MSRP. There happens to be a minimum final balloon payment of 15% of the adjusted MSRP.

If you choose to sell or trade in the car, that final balance will be the deciding factor as to how much positive equity you’re owed. If you choose to return the car at the end of the term, the dealership pays the balance. The interest rate (or money factor) will be based off the current Ford Red Carpet Lease Factors as seen below:

Tier 36 48
0 5.5 5.66
1 5.89 6.05
2 7.05 6.89
3 8.45 8.33
4 10.78 10.45
5 10.78 10.45

Add-ons such as as the title, tax, fees, or even the Mach-E charger are financed throughout the term (ignoring the residual). F&I options such as Gap Coverage are also available under the new program.

The company has released a handy tool for dealers to use to calculate estimated monthly payments. However, it doesn’t work as intended with Excel formulas placed incorrectly. Hopefully the calculator is fixed soon and doesn’t lead to any misinformation sent to customers regarding monthly payments.

We have yet to see the official residuals for the Mach-E but based on the above calculator, we see 42% for 36 months and 35% for 48 months which is… not the best.

The default annual mileage is pretty good at 15,000 miles. Options range anywhere from 7,500 to 19,500 annual miles. With 19,500 annual miles as an option, it seems Ford has confidence in their new battery technology.

Interestingly, Ford Options comes with a maximum down payment of 25% of MSRP. This includes trade-ins, rebates, or cash down. Taxes are treated as a retail sale and added to the cost of the vehicle up front.

It is unknown if Ford plans to also offer a standard lease on the Mach-E or if this new option is entirely replacing that need.

The dealer material reinforces our prior information stating that dealers will begin taking official orders for the Mach-E beginning this quarter. June 22nd is the exact date given to us earlier this month. We now have more confirmation that deliveries for the Mach-E will begin this year with stated contracts for Ford Options being sent out in Q4 and training on the new program beginning sometime in Q3.

Ford is not the first automaker to revamp leasing with a fancy new name. While it might just sound like a rebadged leasing program, Ford Options is specified as a retail program. This implies the debt will be carried by Ford Credit rather than their leasing partner, Cab East LLC. Unlike with a lease, those who opt for the program own their cars. The program is offered for both retail and business customers with some exclusions such as rental fleets and public transportation.

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