Experiences financing with Ford Canada Credit?

[Basis0439]

Just wondering a few things:
1. are all terms of loans the same through Ford Canada? Can the Dealer alter things (such as open/closed loans). I'd like to know what to be wary of.
2. How easy is it to put $$ to the principal? Can I just set up my Ford Canada account as a payee and pay towards principal?

Anything else I should be aware of prior to sitting down with the Finance team at my Ford dealership?

Thank you

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[RickLightning]

Just wondering a few things:
1. are all terms of loans the same through Ford Canada? Can the Dealer alter things (such as open/closed loans). I'd like to know what to be wary of.
2. How easy is it to put $$ to the principal? Can I just set up my Ford Canada account as a payee and pay towards principal?

Anything else I should be aware of prior to sitting down with the Finance team at my Ford dealership?

Thank you

These are US answers, but I can't imagine Canada is much different.

1) No. The dealerships can, and do, markup the rate. The only time they cannot is when it's a promotional rate put forth by Ford Credit AND you qualify.

2) Very easy. Log in, make payment. There is a box for principal.

 

[Calvin H-C]

Just wondering a few things:
1. are all terms of loans the same through Ford Canada? Can the Dealer alter things (such as open/closed loans). I'd like to know what to be wary of.
2. How easy is it to put $$ to the principal? Can I just set up my Ford Canada account as a payee and pay towards principal?

Anything else I should be aware of prior to sitting down with the Finance team at my Ford dealership?

Thank you

1. I suspect that Ford's finance department sets the things about the loan and the dealership has no say, but ask very specific questions and repeat the answer back to them as you take notes just to be sure.

2. You can easily set up access to your finance account online so you can monitor what is going on with it. You may be able to make payments through there, but I just set up the account as a payee through my bank's online banking.

When you make additional payments, the accrued interest comes out of it first and the remaining knocks down the principle. I'm not sure if their system is set up to keep the same duration (until you pay it in full) or if an extra payment just reduces or zeroes the next payment.

I discovered this with my Focus Electric when one month an issue came up with funds not being available the morning the car payment was to go through. I called Ford Credit and was told there would be no penalty but to leave it a couple of days and it should be processed again automatically. I got nervous and made a payment through my bank the next day, and it turned out that it was reprocessed another day later (just like they told me!). Having made two payments that month, my next month had no payment taken.

With the recent Lightning purchase, we had hoped to be in a position to pay cash for the vehicle, but the stock markets had other plans, so we had to finance about $20k. We plan to pay this off within a year, but took a 4-year term so our required payment would be about $450-475. Two days after the first payment went through, we made an extra payment of $2200 and our next monthly payment amount became $0.

If we made no additional extra payments, I don't know if our second payment after the extra payment would still be zero and continue to do so until the extra was "used up" by zero payments, or if we would be back to regular payments. We made another extra payment again, so again the next payment shows as $0.


As for anything else you should do at the dealership: are you planning on getting an extended warranty and/or maintenance/protection plan? Be aware that your dealership may have just quoted you a price as if there was only one option. You can pick characteristics like duration, mileage, deductible, and a few other things. We were given a six-year extended warranty and maintenance plan that both only had 120,000 km. Since we typically drive 25,000 per year, this would run out before the six years (we discovered this with our FFE that had a six year or 100k extended warranty, despite our previous Ford vehicle having 150k - my bad for not catching it!).

When the Lightning was ready, I told the dealership we wouldn't be taking the warranty and maintenance package with the vehicle as we planned on shopping around to purchase it elsewhere. Saying that really got the discounts flowing. Getting both with 150k would have added another $800 to the price, but they cut it by $600, so it was only an extra $200. The 150k maintenance plan gets you nine service visits instead of seven.

Nothing like a little competition to bring out a better price. The only advantage to getting these with the vehicle is the ability to add it to the financing. If you're willing to pay up front for the warranty and maintenance package, you can likely get a better price.

 

[Basis0439]

1. I suspect that Ford's finance department sets the things about the loan and the dealership has no say, but ask very specific questions and repeat the answer back to them as you take notes just to be sure.

2. You can easily set up access to your finance account online so you can monitor what is going on with it. You may be able to make payments through there, but I just set up the account as a payee through my bank's online banking.

When you make additional payments, the accrued interest comes out of it first and the remaining knocks down the principle. I'm not sure if their system is set up to keep the same duration (until you pay it in full) or if an extra payment just reduces or zeroes the next payment.

I discovered this with my Focus Electric when one month an issue came up with funds not being available the morning the car payment was to go through. I called Ford Credit and was told there would be no penalty but to leave it a couple of days and it should be processed again automatically. I got nervous and made a payment through my bank the next day, and it turned out that it was reprocessed another day later (just like they told me!). Having made two payments that month, my next month had no payment taken.

With the recent Lightning purchase, we had hoped to be in a position to pay cash for the vehicle, but the stock markets had other plans, so we had to finance about $20k. We plan to pay this off within a year, but took a 4-year term so our required payment would be about $450-475. Two days after the first payment went through, we made an extra payment of $2200 and our next monthly payment amount became $0.

If we made no additional extra payments, I don't know if our second payment after the extra payment would still be zero and continue to do so until the extra was "used up" by zero payments, or if we would be back to regular payments. We made another extra payment again, so again the next payment shows as $0.


As for anything else you should do at the dealership: are you planning on getting an extended warranty and/or maintenance/protection plan? Be aware that your dealership may have just quoted you a price as if there was only one option. You can pick characteristics like duration, mileage, deductible, and a few other things. We were given a six-year extended warranty and maintenance plan that both only had 120,000 km. Since we typically drive 25,000 per year, this would run out before the six years (we discovered this with our FFE that had a six year or 100k extended warranty, despite our previous Ford vehicle having 150k - my bad for not catching it!).

When the Lightning was ready, I told the dealership we wouldn't be taking the warranty and maintenance package with the vehicle as we planned on shopping around to purchase it elsewhere. Saying that really got the discounts flowing. Getting both with 150k would have added another $800 to the price, but they cut it by $600, so it was only an extra $200. The 150k maintenance plan gets you nine service visits instead of seven.

Nothing like a little competition to bring out a better price. The only advantage to getting these with the vehicle is the ability to add it to the financing. If you're willing to pay up front for the warranty and maintenance package, you can likely get a better price.

Thanks for this fantastic anecdote.
My plan was to finance the vehicle (all of it) and then just rapidly pay it off. Hypothetically, if I finance $120,000 today with Ford, and tomorrow, send $120,000 + 1 days worth of accrued interest, should I be done?

Are you saying that they ensure that they get paid their Interest no matter if you put extra payments towards the vehicle?

 

[Calvin H-C]

Thanks for this fantastic anecdote.
My plan was to finance the vehicle (all of it) and then just rapidly pay it off. Hypothetically, if I finance $120,000 today with Ford, and tomorrow, send $120,000 + 1 days worth of accrued interest, should I be done?

When you log into your account, it will show a "payoff" amount that is in effect until a date (about the next payment date, I believe). Pay that, and you're done.

Are you saying that they ensure that they get paid their Interest no matter if you put extra payments towards the vehicle?

No - sorry if I sounded confusing. Paying it early will save you interest. An extra payment today will knock down the principle after the currently accrued interest is paid. From that point, interest only accrues on the new principle balance.

 

[RickLightning]

This does not jibe with the US interface to Ford Credit. There is a spot to type in a principal amount for an extra payment. That entire amount goes to principal, not interest.

If you go to do a payoff, it gives you an amount good for 10 days or so. Once funds are received, they refund any extra daily interest.

In principle, there is no reason that the Canadian interface would be any different.

 

[Calvin H-C]

In principle, there is no reason that the Canadian interface would be any different.

You would think so, but lending/banking laws and regulations are somewhat different here in Canada. This is more noticeable when it comes to mortgages, but there are a variety of things with other types of loans that differ.

From other discussions on this forum, I noticed a number of people in the USA whose Lightning was getting close to delivery and were asking about what sort of finance rate others were getting. Many were worried that the higher interest rates since when they had ordered might mean they might have to cancel the purchase.

Here in Canada, when we placed the order for our Lightning back in September 2022, they locked in the financing rate of 4.49% and did all the approvals at that time, basing it on how much we could put down if it were to be delivered at that time. When we picked it up at the end of May, the 4.49% rate still honoured, even though we were financing significantly less than they approved us for.

If you go to do a payoff, it gives you an amount good for 10 days or so. Once funds are received, they refund any extra daily interest.

That is basically how I understand it works here as well, though I have not done a full payout (yet).

I was speaking strictly from experience where we have now twice made an extra payment of approximately 10% of the original loan amount. When the payment goes through, it is easy to check both the principle balance and the interest paid-to-date amounts on the account. The principle amount drops by a little less than the payment amount, and the interest paid-to-date amount increases (as expected) by the difference between the payment and the drop in principle (i.e.: it adds up as it should).

 

[Basis0439]

So, if I take a loan for $100,000 through Ford Canada, and one day after I take it out, I pay down $50,000 through Ford Canada, will I essentially just be paying interest on $50,000 for the duration of the loan?

 

[RickLightning]

You would think so, but lending/banking laws and regulations are somewhat different here in Canada. This is more noticeable when it comes to mortgages, but there are a variety of things with other types of loans that differ.

From other discussions on this forum, I noticed a number of people in the USA whose Lightning was getting close to delivery and were asking about what sort of finance rate others were getting. Many were worried that the higher interest rates since when they had ordered might mean they might have to cancel the purchase.

Here in Canada, when we placed the order for our Lightning back in September 2022, they locked in the financing rate of 4.49% and did all the approvals at that time, basing it on how much we could put down if it were to be delivered at that time. When we picked it up at the end of May, the 4.49% rate still honoured, even though we were financing significantly less than they approved us for.



That is basically how I understand it works here as well, though I have not done a full payout (yet).

I was speaking strictly from experience where we have now twice made an extra payment of approximately 10% of the original loan amount. When the payment goes through, it is easy to check both the principle balance and the interest paid-to-date amounts on the account. The principle amount drops by a little less than the payment amount, and the interest paid-to-date amount increases (as expected) by the difference between the payment and the drop in principle (i.e.: it adds up as it should).

In the US, you apply at time of delivery. Rates are locked at time of order or delivery.

And we can pay exactly a principal amount.

 

[Calvin H-C]

So, if I take a loan for $100,000 through Ford Canada, and one day after I take it out, I pay down $50,000 through Ford Canada, will I essentially just be paying interest on $50,000 for the duration of the loan?

Almost. There will be accrued interest for that one day. Let's say the rate is 5% - one day interest on $100,000 would be about $13.70 (based on 5% of 100,000 divided by 365 - your mileage may vary slightly, as when you make the payment and when it actually posts can alter this significantly, especially if a weekend is involved).

Your $50,000 payment first goes to pay the accrued interest, leaving $49,986.30 to reduce the principle. Thus, further interest accrues only on the remaining balance of $50,013.70. The sooner you reduce the principle, the less interest you will end up paying.

 

[Basis0439]

Is it possible to have Ford adjust the monthly payments if you do end up paying a bunch of the principle off early in the loan?

 

[RickLightning]

Is it possible to have Ford adjust the monthly payments if you do end up paying a bunch of the principle off early in the loan?

In principle, it's spelled "principal".

No. By paying principal ahead of time, the allocation of each payment to principal vs. interest changes, but the payment amount does not change.

 

[Calvin H-C]

In principle, it's spelled "principal".

That is correct. Not sure why, but I often get these mixed up when talking money, but for some reason I don't when speaking about principles (truths or propositions) or about school principals.

Perhaps it's because of the old memory trick: "your school principal is your pal" that I equate "principle" with any other use of the word. ?‍

Is it possible to have Ford adjust the monthly payments if you do end up paying a bunch of the principle off early in the loan?

Not that I'm aware.

However, when you make an extra payment, they treat it as having made your next payment early (if the extra payment is equal to or greater than your monthly payment). Thus, your next "due" amount will show as $0.00. When I log onto my account today (Aug 2), it shows our next payment on August 24 will be $0.00.

Now if I wait to see what it says on August 25, I suspect it will once again show our regular monthly payment being due on September 25 (even though we have made extra payments that place us 20% through our payment progress, despite being only two months into a 48 month term).

Alibi can say for sure right now is that making an extra payment equal to or greater than a regular payment let's you skip your next payment.

 

[Calvin H-C]

Just to follow up, back in March, we were in a position to pay off the rest of the loan. I forget the exact amounts, but the balance was just above $2200 and the pay-off amount was about $10-$15 more.

We paid the pay-off amount and about a month later got a cheque in the mail for a whopping $2.43 for the overpayment of interest. I believe the postage was about half the value of the cheque. ?

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