Finance Services and Frequently Asked Questions
The friendly and helpful staff of the Sterling McCall Ford Finance Department are ready to answer your questions regarding car loans, auto financing, lease options and APR rates for new and used vehicles. Let us help you find an interest rate, car payment or loan schedule that suits all your needs. Our online credit application is secure, free and there is no obligation after you apply. We work with a large network of lenders so we can usually put together a financing deal that will let you drive the car you want! Good credit, bad credit - we are here to help!
Sterling McCall Ford not only offers Ford Motor Credit financing, where they often offer factory incentive interest rates as low as 0% (WAC), we also have a variety of other lenders and Credit Unions with MILLIONS OF DOLLARS TO LEND to help get you into your new Ford, our "ALMOST NEW" certified pre-owned vehicles or any of our top quality pre-owned cars, SUV's or trucks.
Vehicle Service Contract
A mechanical breakdown policy that covers the costs of parts and labor for covered repairs. Available with various coverage levels and deductible options. May also include rental car reimbursement and towing allowance.
Vehicle Maintenance Programs
Prepaid maintenance programs that may include oil and filter change, 20-point inspection, fluid top-off, routine lubrication and tire rotation with every other visit. Available in various terms and mileage intervals.
Guaranteed Auto Protection (GAP)
Will pay or waive the difference between the actual cash value and net loan payoff in the event your vehicle is a total loss due to fire, theft, or collision. May also include payment of your insurance deductible.
Tire & Wheel and Roadside Assistance Program
Covers the repair or replacement of your tires and/or wheels due to damage from a road hazard. Includes the cost of mounting, balancing, valve stems, labor, and sales tax. Provides 24 hour roadside assistance that includes change of flat tire, delivery of gas, oil, or water, jump start, locksmith service, and towing.
LoJack - Vehicle recovery system that works in conjunction with the police department. Reimburses the price of the system if vehicle is stolen and not recovered within 24 hours while under the two-year warranty period.
FREQUENTLY ASKED FINANCE QUESTIONS
Are monthly payments necessary? Unless you're in the position to pay cash for a new or pre-owned vehicle, you'll need to establish a payment plan to obtain that vehicle. Two options exist - taking out a loan or leasing.
How do loans and leases differ? When you take out a loan, all of the money used to pay it off applies to your eventual ownership of the vehicle. The initial down payment and principal on the loan cover the total cost of the purchase. Lease payments, however, apply only to the use of the vehicle. The total sum of payments covers the vehicle's depreciation over the time you drive it and is usually less than the outright price of the vehicle.
When is ownership transferred? When paid in full, a loan terminates and you assume ownership. Your bank sends you the title that had been held while the loan maintained an outstanding balance. When a lease period ends you forfeit the vehicle to the lessor, unless the lessor offers to sell the vehicle afterwards. During the entire lease period the lessor maintains ownership and simply allows you to use the car. Ownership is only transferred if you chose to buy the vehicle after the lease terminates.
How are monthly lease rates determined? In formulating a monthly payment structure, a lessor is primarily concerned with the extent to which the vehicle will depreciate throughout the lease and the cost of borrowing money to finance the car during that period.
Three key elements:
First, the adjusted capitalized cost is determined. This figure represents the real purchase price after elements such as the down payment, incentive discount and trade-in credit are deducted from the capitalized (actual) cost, while any fees or charges (e.g. destination) are added.
Second, the residual value, or estimated value of the vehicle at the end of the lease, is determined and then subtracted from the adjusted capitalized cost to yield a depreciation figure. The residual value depends on the length of the agreement, expected mileage and make/model of the vehicle.
Finally, a lessor assesses the money factor, a number that correlates with the cost of borrowing money during the lease period.
While these terms may seem unfamiliar, the Federal Reserve Board now requires dealers to publicize all leases' down payment amounts, lengths, residual values and interest rates.
What factors determine the purchase price at the end of a lease? Most leases rely exclusively on the residual value in determining the end of term purchase price. These closed-end deals require you to pay the fixed residual amount regardless of the actual market price. Open-end leases work differently in that the actual market value helps determine the purchase price. As a customer you are responsible for any difference between the residual and actual value when buying outright.
How are loan rates determined? The size of monthly loan payments depends on the amount borrowed, the length of the loan, the interest rate and other factors such as your credit history. Paying more money initially lowers the principal of the loan, thus reducing individual payments. At any period during the loan you may opt to pay off the principal in its entirety, at which point the title of the vehicle is transferred to you.
General loan specifications:
Down payment amounts may range between 10 to 20 percent of the vehicle's total cost, although some purchases require no down payment. A typical loan period is five years with an annual percentage rate around 8 percent. Some manufacturers offer lower rates, but be sure to investigate any associated conditions or clauses.
Are loans available for used vehicles? Yes, although they function somewhat differently from new car loans. A down payment of 20 percent or more is often required and the interest rate can be a point or two higher. Understandably, banks are more hesitant to loan money for used car purchases, as they would rather own a newer car if the borrower defaults. However, the market is full of good used vehicles, many of which are created by short term leasing.
Can extra fees and charges be financed? Yes, registration, taxes, extended service plans and other supplemental charges may be included in the financing plan.
Which option makes the most sense? The answer to this question depends on how you plan to use the vehicle. If you like the idea of driving a more expensive vehicle for a smaller monthly payment, leasing is a great option. However, if eventually owning the car is important, financing with a loan is the way to go.
What are the restrictions of driving a "borrowed" vehicle? Annual mileage restrictions are a major limitation for customers who choose to lease. Lessors want their vehicles returned in saleable low-mileage conditions, so they place mileage caps on them. A typical yearly figure is between 12,000 and 15,000 miles. Beyond the established limit, fees accrue on a per-mileage basis, usually in the range of $0.10 to $0.25 per mile. So if most of your driving is local, leasing makes sense. However, if you consistently tack on 500 or more miles a week, definitely look into a loan.
What are the other virtues of a loan? Loans are also sensible for those who want to customize their vehicles, plan on keeping their cars for long periods of time and plan to re-sell their vehicles to help recoup the costs of ownership or expenses of additional cars. For those who quickly wear vehicles out, loans may be safer bets as lessors often add "excessive wear" charges if the car is returned with wear over the limits established by the contract.
Why lease? Leasing ensures that you'll always drive a late-model vehicle, won't have to pay for warranty-covered repairs and won't have to bother with re-selling at the end.
- Loan payments contribute to the eventual ownership of a vehicle, while lease payments apply only to the short-term use of a car.
- Owning a lease vehicle is possible if purchased outright after the lease period ends.
- A typical lease period runs between 24 and 48 months.
- Three important factors - adjusted capitalized cost, residual value and the money factor - determine the monthly rate of a lease.
- Closed-end leases set a fixed residual buy price at the beginning of the term, while open-end deals base the final buy price on a vehicle's actual market value at the end of a lease.
- Pay more money down initially to reduce monthly loan payments. Otherwise, a typical down payment ranges between 10 to 20 percent of the total cost.
Need more information? Please contact New Internet Sales or our Finance Department