Trying to understand the fine print of financing

Discussion in 'Fiesta ST Sales and Service' started by contourious, Jan 20, 2015.

  1. contourious

    contourious New Member

    So I finally test drove a Fiesta ST this past weekend! It drives really well. I didn't explore the car's power too much (being a test drive, and that it wasn't properly broken in yet) but I could feel the pull in 2nd gear :). I also kept in mind that this was with the truncated stock tune, which is nice to know that there is room to easily grow. After the test drive, we went inside to discuss financing. They had only one ST on the lot, and it wasn't exactly the options that I wanted, so I plan to order one (Tuxedo Black, navigation, moonroof, standard seats, Rado Gray wheels, and the ST protection package). Unfortunately, the dealer was about to close, so we only discussed financing options, rather than setting anything in stone. However, before leaving, I was told that I had two options: $1000 "Switch Cash," or 0% APR. I asked the salesman what my interest rate would be if I opted for the Switch Cash instead of the 0% APR, but he did not have that info off hand. I was curious to see which is the better deal. To get a rough idea, I went home and researched a few random banks' auto financing. It looks like the average rates today are around 2.5% to 3%. However, being that Ford wants to sell cars, their rate may be a bit lower than say Bank of America's would be. Checking the "Ford Credit" website didn't yield a clear answer either. Does anyone on here know?

    I will probably be returning before the end of the month, as Ford's website says that I must "take new delivery from dealer stock by 2/2/15." I'm hoping that means that I can place the order by 2/2/15, as it's highly unlikely that I'll take "delivery" before then. I hear that it will take weeks for an ordered car to arrive. That's fine by me, as the rock salt season will be ending lol. Though, should I hold off even longer, until next month to make the purchase? Will they have better deals after 2/2/15? Usually the longer you wait, the better the incentives. However, I don't want to wait too long and miss the cut off for placing a custom order. When is the deadline to make a custom car order? I'd like an ST, but one just for me! ha. All the ones that I've seen on lots so far are either fully loaded, or base model STs.

    I noticed something strange in the fine print of the 0% APR offer, "0% APR financing for 60 months at $16.67 per month per $1,000 financed regardless of down payment." What exactly does this mean? This seems a little fishy. It's not truly 0% if we have to pay for the 0% rate. It seems like an interest charge, simply re-worded. That could come out to be an extra car payment tacked onto the loan.

    I also noticed that in the fine print (bold print above) there was no mention about the $16.67 charge being applied for 48 months. It only mentions a charge for 60 months. With a true 0% APR rate, I was planning on going with 60 month financing, paying off more per month when I can. However, if I have to "pay" for a 0% APR on a 60 month loan, should I opt for the 48 months instead? I mean, if 48 and 60 month financing were both 0% APR, the 60 month option would be the better choice, as I can always pay more per month if I wanted, but if I have to "pay" for financing, it will probably cost more in the long run to opt for 60 months over the 48 months, right? A whole car payment more actually (~$23,000 x $16.67 = $384). The "regardless of down payment" part is also very lame, because even if someone had $5,000 to put down, they'd still have to pay that $16.67 on the full price of the car?

    Also, for reference, my credit rating is in the 700 range across all three bureaus. I was told that I wouldn't have an issue getting approved.

    Hopefully someone can help clear this up for me! I'd love to get behind the wheel of an ST :D, but I want to fully understand what I'm getting into before I walk back in that door.
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  3. timboslice

    timboslice Active Member

    1) There's some decent incentives in Canada right now but Ford is always trying hard to move cars. The best are when they combine finance deals with cash incentives. Maybe wait for a better deal or just tell them you won't pay more than invoice (the dealer still makes a few % holdback since the car never goes on their lot)
    2) You can order a car whenever you like as long as you are not in-between MYs ie. the plant stops producing 15s and has a shutdown to prep for 16s. This won't happen until the summer with orders closing around the start of April I think. Even then, it will just take a while longer to get your car.
    3) For your fine print question... that's common language in the fine print of any "0% APR financing for 60 months" deal. They are just listing the payment ratio against the principle. If you bought a $1000 car, it would cost you $16.67 per month over a period of 60 months to pay it off. The 48 month finance option will have its own ratio listed. Actually, if you run the math, $16.67 x 60 = $1000.20 so Ford is giving you a few pennies?
    4) As for purchasing decisions, I'm not sure what deals Ford credit is offering for interest rates (if you take the cash discount) you might get a slightly better deal at a credit union.
  4. contourious

    contourious New Member

    Thank you so much timboslice. I really appreciate the examples. I've never purchased a new car before, so this really helps a lot. I believe the two credit unions that I can join are Pinnacle and Affinity. However, Affinity offers 2.99% on 60 month new car loan, and Pinnacle offers 2.74%. I'm still not sure how to check Ford Credit's rate (if I were to opt for the $1,000 "Switch Cash" instead of the 0%). I assume that it may be a tad lower than what most banks/credit unions may be offering.

    I was just recently told by another user that the Ford 0% APR only applies to dealer stock, rather than ordering a car. Is this true? He says "The financing you speak of (0%) is for dealer stock. according to your post, if you order an ST, make sure they give you 0%. You will probably get a 2.5% interest rate for an ordered car @ 60 months." I really hope that's not the case. Does anyone have more info on this?

    Here are screenshots of the two credit unions that my job is affiliated with:
    [​IMG] and [​IMG]
  5. timboslice

    timboslice Active Member

    No, problem!

    Candidly, the deal you are listing doesn't sound like a great offer compared to what else is out there and some of the deals posted from other members.

    Are those the only Ford incentives listed in your state right now? If your're committed to ordering, you might be better off e-shopping for the car. Email 3-5 dealers about the specific car that you want (ie. rados, nav, paint, ect.) and ask for a quote. Say that they get one chance to provide the lowest quote and that's the deal you will take. They will hopefully offer around their invoice prices ($1500-$2000 less than MSRP) The dealer makes a hold-back bonus from Ford on the car (around 5% percent) depending on how long the car sits on the lot. A custom order that's already sold sits on the lot for 0 days. It's a super easy sale for them since you don't even need to come in to drive the car. Just sign the paperwork :)

    Regarding the 0% offer... not sure if the specific offer has an expiry date. You're original post seems to indicate that the offer expires 2/2/15? If that's the case, there's no way a new order would be delivered before 2/2/2015. So it is true that it would only apply to dealer stock. However, I doubt the offer actually "expires" though. I ordered my car at the end of last March and agreed to the 60 month @ 0% regardless of what the finance offers when I took delivery. Ford does let you hedge your options with incentives though. So if there is a $500 incentive when you order and a $1000 incentive when you take delivery, you get to pick which one you go with.
  6. Valeen

    Valeen New Member

    We ordered ours last week - ST, Tuxedo black, Recaros, Moonroof, Navigation, Rado wheels :rotfl:

    Incentives: The dealer wrote in our purchase order the deals ($1000 incentive and $500 Ford Private Cash). He said if there is a better incentive at the time of pick up we will get to use that instead.

    We opted for the $1000 cash now, over the 0% APR. Our credit union gave us 1.64%. Even if we just paid the minimum payment it's less then $1,000 in interest. We plan on putting money down, financing about $15,000 and paying it off in 3 years - In the end we'll pay $382.27 in interest.
    Excited to meet our new car in 6-12 weeks!!

    Wish you the best in your purchase :biglaugh:
  7. RDgolfer

    RDgolfer Active Member

    It means, buying a new car is not a straight forward, clear or lucid procedure...threre are pitfalls...know your price, have it approved, order your car...have it all initialled and keep your original...truecar is good, but look around and check all available sites to compare and contrast...and good luck!

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