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How Much Your Payoff
Should Have Cost


The following worksheet will enable you to estimate the balance due on an early payoff of a Ford Credit lease, using the information contained in your lease contract. (If you have a printer, you can make a hard copy of this page by using the "print" button on your browser.) Be sure to read the instructions for each part before writing down any numbers.

A. Total Depreciation

B. Unpaid Depreciation

C. Lease Residual Value

D. Gross Payoff

E. Total Adjustments

F. Net Payoff Amount
_______________

_______________

+______________

_______________

_______________

_______________
Adjustments

Early Termination Fee

Purchase Option Diff.

Security Deposit

Misc. Charges

Total


+ ______________

+ ______________

-- ______________

+ ______________

________________

Instructions:

A. Total Depreciation is that part of the total monthly payments that represents depreciation, not taxes or lease (finance) charges. Since Ford Credit leases did not disclose monthly or total depreciation, here's how you can calculate the total depreciation on your lease: (Note: The items in brackets refer to the actual line numbers used on most Ford Credit leases before 7/95.) First multiply the "basic monthly payment" without tax [line 2a] times the number of months in the lease [line 5] to get the total of basic monthly payments. (Don't use the "Total of Basic Monthly Payments" number that's listed on the lease because that figure includes tax.) Then subtract the total lease charges [line 15] from the total of basic monthly payments and write the result on line A.

B. Unpaid Depreciation: Figure out how many monthly payments are left to be made according to the original terms of the lease, then find the matching percentage listed in the applicable table at the end of this section. (Don't forget that the first payment was made on the day you signed the lease contract, so there would only be 23 more payments to make on a 24-month lease.) Multiply the listed percentage by the Total Depreciation on line A, then enter the result on line B. (Example: There are 8 more payments to be made on a 24-month lease and the Total Depreciation is $8,000. The matching percentage for 8 remaining payments is 35.37%, so we would multiply that times the $8,000 which would give us Unpaid Depreciation of $2,829.60.)

C. Enter the Lease Residual Value [line 16].

D. Add the Unpaid Depreciation from line B to the Lease Residual Value on line C, then enter the result on line D. This figure is your Gross Payoff amount before adjustments. (Be sure to complete the next two steps.)

E. Total Adjustments: Using the column on the right, enter the proper amounts for the items that apply to your transaction. Early Termination Fee--this charge is listed in your lease contract under "Voluntary Early Termination" [paragraph 21], and it is usually $200. Purchase Option Difference--if you are doing an early payoff to keep the vehicle, check your lease contract to see if the Purchase Option price [paragraph 14] is greater than the Lease Residual Value [line 16]. If the option price is higher, enter the difference. (Example: A lease has an option price of $12,500 and a residual of $12,000. The difference is $500, so we enter that amount on this line. Note: The purchase option difference does not apply if the vehicle is returned to Ford, traded in on another vehicle, or totaled in an accident.) Security Deposit--this is listed on your lease contract [line 1c] as a "Refundable Security Deposit." (Subtract this item.) Misc. Charges--enter the total of any unpaid late charges plus any other unpaid fees (taxes, fines, insurance, repairs, etc.) that Ford Credit has been forced to pay on your behalf during the term of the lease. (Note: If you had no late payments or unpaid parking tickets, the registration and insurance were current, and the vehicle was properly maintained, there should be no entry on this line. Add this item only if those things are applicable.) Total the adjustments and enter the result on line E. In some cases, the resulting total could be a negative number, so be sure to enter this amount with the proper sign (plus or minus).

F. Net Payoff Amount: If the Total Adjustments figure on line E is negative, subtract it from the Gross Payoff amount on line D; if the Total Adjustments figure on line E is positive, add it to the Gross Payoff amount on line D. Enter the result on line F.

Note: The Net Payoff Amount on line F is the estimated balance that would be owed to Ford Credit on an early lease payoff if the vehicle was purchased by the customer. If the early payoff occurred because the vehicle was returned to Ford, or was used as a trade-in on another transaction, then the Net Payoff Amount would be reduced by the wholesale value of the leased vehicle at the time of termination. Wholesale value usually means auction price, so check the appropriate edition of the "N.A.D.A. Official Used Car Trade-in Guide" to see what typical auction prices were on your vehicle at the time of the payoff. If you can't find these guide books in your library, ask a used-car dealer to look up the numbers for you.
Is purchasing at lease end (or earlier) a good idea? Usually not. In the past, residuals on most Ford and Lincoln-Mercury vehicles were typically inflated by at least $1,000 to $1,500 over actual wholesale. So instead of getting a good deal, many lease-end buyers ended up paying closer to retail. (Residuals are supposed to be set at wholesale.) Some buyers were burned twice on the same deal--by inflated residuals and inflated purchase options. And those who returned vehicles to Ford on early terminations were often hit with huge assessments when their cars were sold at auction for less than Ford's net payoff balance.
The percentage tables (below) are based on a depreciation method that Ford is believed to be using, and they are provided to assist people in estimating early payoff balances. The tables are based on a typical lease rate of 9% and an early payoff that takes place on the due date of the next (unpaid) monthly payment. (If your lease rate is lower, or the payoff occurs between payment due dates, your actual payoff amount may be less than the tables indicate. Higher lease rates will increase the payoff amounts, with the greatest difference occurring at the midpoint of the lease term.) The only way to be sure that you are getting an exact early payoff balance is to request it from Ford Credit -- in writing. If this isn't possible, tell the dealer that you want a copy of Ford's latest statement on your account showing the current payoff balance. (This statement is called a "Red Carpet Lease Lessee Summary," and your local dealer receives one every month for each lease customer.)


24-Month Lease Term

(No. of Payments Remaining -- Percentage)

23 -- 96.19%
22 -- 92.34%
21 -- 88.47%
20 -- 84.57%
19 -- 80.63%
18 -- 76.67%
17 -- 72.68%
16 -- 68.66%
15 -- 64.61%
14 -- 60.52%
13 -- 56.41%
12 -- 52.26%
11 -- 48.09%
10 -- 43.88%
09 -- 39.64%
08 -- 35.37%
07 -- 31.06%
06 -- 26.72%
05 -- 22.35%
04 -- 17.95%
03 -- 13.51%
02 -- 09.04%
01 -- 04.54%

36-Month Lease Term

(No. of Payments Remaining -- Percentage)

35 -- 97.57%
34 -- 95.12%
33 -- 92.66%
32 -- 90.17%
31 -- 87.67%
30 -- 85.15%
29 -- 82.61%
28 -- 80.05%
27 -- 77.47%
26 -- 74.87%
25 -- 72.25%
24 -- 69.61%
23 -- 66.96%
22 -- 64.28%
21 -- 61.58%
20 -- 58.86%
19 -- 56.12%
18 -- 53.37%
17 -- 50.59%
16 -- 47.79%
15 -- 44.96%
14 -- 42.12%
13 -- 39.26%
12 -- 36.37%
11 -- 33.46%
10 -- 30.53%
09 -- 27.58%
08 -- 24.60%
07 -- 21.61%
06 -- 18.59%
05 -- 15.55%
04 -- 12.49%
03 -- 09.40%
02 -- 06.29%
01 -- 03.16%

Note to "Payoff-Packing" Victims

After completing this worksheet, some people may have reason to believe that they are "payoff-packing" victims. If you think that you were overcharged on an early payoff of a Ford Credit lease, here's what you should do:  Make copies of your completed worksheet, lease contract, payoff statement and/or cancelled check, and a letter explaining what happened. Make sure your name, address and phone number are in the letter. Mail the copies (not the originals) to your state's attorney general/ consumer protection division.

 

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