Ford has updated its website to assume 84-month payment estimates on nearly every model in its lineup. While longer auto loans are certainly not a new trend, this decision effectively shortlists the most expensive loan for a car and can result in consumers paying thousands of dollars in interest until almost 2030.
We looked at just about every payment calculator on Ford.com and found that the company pre-selects a finance term of 84 months on most cars. On the F-150 pickup, Ford’s main landing page says “select models finance at $424/month.” However, our analysis revealed that this is based on a 7 year loan at a rate of 5.9% APR.
In fact, the monthly payment of $424 is based on an entry-level F-150 XL with an MSRP of $32,290. A closer look reveals that a 7-year loan with no down payment at this price would result in nearly $7,200 in interest before taxes and fees. It also assumes that you are buying a truck with no options, which may be very unlikely.
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The Ford Bronco Sport is perhaps one of the brand’s worst offerings with a 7-year rate of 6.9% APR through Ford Credit. On the well-equipped Outer Banks version, a 7-year loan on an SUV priced at $35,495 would cost nearly $45,000. While longer loans can sometimes be a bargain, the 6.9% interest rate makes them bad value.
Believe it or not, these incentives are even worse than they look. This is because Ford also assumes a 10% down payment. In the case of the $424/month payment on the F-150, that means depositing $3,229 upfront. With $0 down payment, the payment would increase to $471, by Ford’s own estimate.
Fortunately, buyers don’t have to choose an 84-month loan, and choosing another term can mean much lower rates. The downside is that shorter loans can result in much higher payments. For example, the cheapest Ford Ranger has 0% APR for 36 months, but a $788 payment based on $0 down payment.
Your best bet for getting a deal might be to find a great place that lowers your total cost and offers a payout that isn’t completely horrible. In the case of the Ranger XL, Ford has a 60-month rate of 1.9%, which could bring the payment down to $496. On a new Ford Explorer, the best offer is currently 0% financing for 60 months.
Ford has taken a number of steps to bring more flexibility to consumers. Earlier this month, Ford Credit introduced 84-month financing on used cars. Last fall, the lender removed its minimum credit score requirement for 84-month financing, opting instead to rely on a proprietary formula to judge creditworthiness.
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