Ford offering 2.9% for 36 months or 8.9% for 84 months

[PWMDMD]

A friend is looking to buy a truck. He called me because the "incentives" right now from Ford are 2.9% @ 36months or 8.9% @ 84months. I understand supply is limited and 84 months is an extended repayment and there is typically a markup for those offers but 8.9%?! Money is still free from the fed?

My advice was to wait if possible and although I do see interest rates going up no matter what happens, once supply constraints are relieved pricing and rates should still be better than 8.9%. He is going to shop rates but that won't help with dealers wanting over MSRP. My local Ford dealer has 8 F150s, ZERO F250s, and a single F350 on the lot.

 

[RhondaHonda]

Nobody that needs to finance at 8.9% for 7 years should be buying a brand new vehicle. That kind of interest rate should be reserved for poor credit risks on cheap used cars. I’m surprised it’s that high direct from Ford.

 

[PWMDMD]

Nobody that needs to finance at 8.9% for 7 years should be buying a brand new vehicle. That kind of interest rate should be reserved for poor credit risks on cheap used cars. I’m surprised it’s that high direct from Ford.

Yup...that's our local top credit-tier offer. Just looked on a local dealer website. They're doing 60 months @ 6.9%. Crazy!

 

[wwillson]

Buying a vehicle and spreading the payments out over 84 months (7 years) and paying 9% interest is near insanity.

 

[supton]

Buying a vehicle and spreading the payments out over 84 months (7 years) and paying 9% interest is near insanity.

Not if you’re the bank holding the note. Then it’s like having a printing press in your backyard.

 

[RooflessVW]

Those rates are non-starters for me.

I beat their 36mo offer on 84mo with my credit union.

 

[BISCUT]

I have purchased 4 Ford Explorers/F150's and 1 Mountaineer over the years. Every single one, including the 2015 F150 in my sig was a September 0% 6 year offer from Ford. Can your friend wait to see if 0% is around in 5+ months?

Even at 2.9% I'd be looking for other solutions/vehicicles. 9% I'd

 

[oggb]

An 84 month vehicle loan... Are people leaving these things to their kids in their final will and testament!?

"And to my son, Boclecius Gentry the Seventh, I leave my F150 Platinum... and the $1042 per month payment that is due by the 12th of each month."

 

[BISCUT]

Those rates are non-starters for me.

I beat their 36mo offer on 84mo with my credit union.

Credit union is an excellent place for a car loan, usually! I have a savings account with a local credit union that has only had $5 in it for many years to keep me as a member in case I need it.

 

[Kira]

JRed: Death is the one sure way to get out of a 7 year car loan.

 

[PWMDMD]

Looks like they're only offering $500 cashback too. A year and change ago it was 0.9% financing up to 60 months or $2000 cashback for my Tundra. Crazy times...

 

[jhs914]

There are two things at work here. One is the supply of cars/trucks can't keep up with demand and this just another way for Ford to increase their profit (essentially raise the price of the vehicle) to take advantage of the increased consumer demand.

The other is that any lending institution that lends money over an extended period of time is pricing in the expected inflation rate during the term of the loan. The longer the loan the greater the risk to the lender if inflation/interest rates rise. With inflation the constant monthly payment dollars being used to pay off the loan are worth less and less as inflation rises during the term of the loan. With the economy heating back up and the Federal government dumping extra trillions of dollars into the economy inflation will be rearing it's ugly head soon. The lenders are anticipating this by raising long term rates. Mortgages will be next.

 

[BISCUT]

An 84 month vehicle loan... Are people leaving these things to their kids in their final will and testament!?

"And to my son, Boclecius Gentry the Seventh, I leave my F150 Platinum... and the $1042 per month payment that is due by the 12th of each month."

I see it similar to you BUT IMHO it represents just how outrageously expensive vehicles have gotten. I look around at the sheer volume of people in 75k-100k BMW X7/X5's, high end Audi's, MB's, and platinum F150's and GMC trucks and wonder how all these people can make that payment. I was offered a mngt position to run a small used car side business my friend owns. The gravy was the financing offered to those that really shouldn't be getting into the high % car loans over extended periods. Wasn't for me. I like to shower before work and feeling like I need another shower by noon is not for me.

 

[skyactiv]

I see it similar to you BUT IMHO it represents just how outrageously expensive vehicles have gotten. I look around at the sheer volume of people in 75k-100k BMW X7/X5's, high end Audi's, MB's, and platinum F150's and GMC trucks and wonder how all these people can make that payment. I was offered a mngt position to run a small used car side business my friend owns. The gravy was the financing offered to those that really shouldn't be getting into the high % car loans over extended periods. Wasn't for me. I like to shower before work and feeling like I need another shower by noon is not for me.

Some people blow too much income on their vehicle(s) and some don't.
A smart example of someone buying something he can easily afford.

 

[PWMDMD]

Some people blow too much income on their vehicle(s) and some don't.
A smart example of someone buying something he can easily afford.

Meh...Dave.

 

[HowAboutThis]

There are two things at work here. One is the supply of cars/trucks can't keep up with demand and this just another way for Ford to increase their profit (essentially raise the price of the vehicle) to take advantage of the increased consumer demand.

The other is that any lending institution that lends money over an extended period of time is pricing in the expected inflation rate during the term of the loan. The longer the loan the greater the risk to the lender if inflation/interest rates rise. With inflation the constant monthly payment dollars being used to pay off the loan are worth less and less as inflation rises during the term of the loan. With the economy heating back up and the Federal government dumping extra trillions of dollars into the economy inflation will be rearing it's ugly head soon. The lenders are anticipating this by raising long term rates. Mortgages will be next.

This is my thought. Seems like the Fed is even hinting things might be "a little hot" and a bit of a bubble, in some media pieces I've read lately. Maybe they were fake news. Who knows. I just know I am paying more for a pound of meat now than a few months ago. And gas, too. And everyone keeps getting free money, even if we still have our jobs and don't need it. Been scratching my head about how inflation won't occur if they leave rates at near nothing. So, 8.9% is actually a bit soothing for me. The world and economy MIGHT actually make sense again.

 

[ARCOgraphite]

Nobody that needs to finance at 8.9% for 7 years should be buying a brand new vehicle. That kind of interest rate should be reserved for poor credit risks on cheap used cars. I’m surprised it’s that high direct from Ford.

I think we are well below 3% from Service Credit union for 5 years.

 

[Blinker]

The crazy thing is 96 month loans are offered by some sub prime lenders. It’s only a matter of time before that take off and becomes available by the prime lenders.

 

[wpod]

JRed: Death is the one sure way to get out of a 7 year car loan.

Or a time share agreement.

 

[wwillson]

I found it a bit entertaining that in the video Dave Ramsey said, "the money part is important to him". I'm sure it is and I'm also sure he has to maintain a certain persona of being frugal, because if he didn't he might seem like a bit of a hypocrite on his radio show. I think his net worth is somewhere north of $200 million. I think he can afford the Roush and it doesn't matter if he squeezes the dealer for every last penny, but on video it's important to say he squeezed the dealer.