4 ms·

Surely they would do this for leases instead of sales? Why would Ford want to do this for sales anyway, in the case of a sale, the financing company pays ford i

by lukevp 4y ago

Surely they would do this for leases instead of sales? Why would Ford want to do this for sales anyway, in the case of a sale, the financing company pays ford in full. The only exception would be if ford financed the car with its own financing arm. Incentives could be aligned to make leasing the preferred option for most people who are likely to miss payments then. Also I’m not sure you’re correct about the ownership and the lawsuits. Sure you can sue anyone for anything but why would this be any different from me leasing a car from ford and the same thing happening? That doesn’t seem to have been an issue for automakers so far… For the record, this sounds like a dystopian nightmare to me. I’m not in favor of the concept.

toast0 4y ago
> Why would Ford want to do this for sales anyway, in the case of a sale, the financing company pays ford in full. The only exception would be if ford financed the car with its own financing arm. Ford has a huge financing arm. And it will probably get bigger as interest rates rise, because they have more room to offer lower than market interest rates as a hidden discount without dropping the purchase price.
- Kon-Peki 4y ago
  Their financing makes money on the differential between the rate they pay on demand notes and the rate they lend to car buyers. Anyone (well, US Persons at least) can buy the demand notes [1], which are currently paying 4.75%. So as long as they are lending at an average rate above 4.75% after defaults and other problems I guess they are in a good position. But they can also move money around internally, I suppose, to make lower rates possible. [1] https://www.ford.com/finance/investor-center/ford-interest-advantage/ https://www.ford.com/finance/investor-center/ford-interest-a...
  - Clubber 4y ago
    I've heard people opine that motor companies: Ford, GM, Harley Davidson, etc. aren't really motor companies anymore, they are finance companies and just use the vehicle as a means to get the financing paper. They are obviously both, but it would explain why the quality of US vehicles keeps deteriorating since around 2007 or so.
    - panopticon 4y ago
      > it would explain why the quality of US vehicles keeps deteriorating since around 2007 or so I hear this meme a lot but is it actually true? By most benchmarks cars from the last 10 years are more reliable than those from two decades ago.
      - Clubber 4y ago
        It is in my experience. I used to only buy US cars until I had a brand new 2017 GM vehicle have transmission issues within 6 months of purchase. This was to replace a 2013 GM vehicle that I was having trouble with. I took the 2017 to the dealer and they fixed it for another 6 months, then the issue came back. I took it to my personal mechanic and he said I should get rid of it, so I did. GM trucks have transmission issues. Look up the "Chevy shake," for another example. I don't know about Ford, so they might still be ok, or at least better than GM. I don't want to pay $40K+ to find out though. I expect to be able to drive vehicles without major issues for about 10 years. I've done this in the past with GM vehicles, but after 2007, the two I owned had significant issues all the ones I purchased prior did not. I put significantly less than 10k miles a year on my vehicles.
    - brewdad 4y ago
      This has been true since well before 2007. GMAC (now Ally Bank) was almost single-handedly keeping General Motors afloat in the decade prior to the financial crisis. It certainly wasn't the quality of their vehicles.
    - Galacta7 4y ago
      It seems like that's literally true for Ally bank, which started its life as the finance arm of GMAC, and still technically is despite being a full-fledged bank in its own right. I don't think they're owned by General Motors anymore, though.
motohagiography 4y ago
The rationale I'm using for Ford owning it is there is a compelling argument that ownership as the effect of two factors, custody and control, as it applies to data today could apply to the car, where if Ford can disable the vehicle, it has control of it, and the custody the driver has is secondary. Leasing companies are different because they license the vehicle to you for a term, whereas loan financing means it's yours. I'm not a lawyer at all, however much of my work on privacy and security has been about reconciling technology architecture and implementations with privacy and other laws and regulations, and security architecture is about allocating risk between counterparties in a technology solution, so from that view, this could be reasonably interpreted as a predatory technology.
ubermonkey 4y ago
N.B. that "leases" today, at least in the consumer auto world, ARE sales. They're just sales with a balloon payment due at the end. They are, in all other respects, the same as a traditional loan-based purchase.

by lukevp 4y ago

toast0 4y ago

> Why would Ford want to do this for sales anyway, in the case of a sale, the financing company pays ford in full. The only exception would be if ford financed the car with its own financing arm. Ford has a huge financing arm. And it will probably get bigger as interest rates rise, because they have more room to offer lower than market interest rates as a hidden discount without dropping the purchase price.

Kon-Peki 4y ago
Their financing makes money on the differential between the rate they pay on demand notes and the rate they lend to car buyers. Anyone (well, US Persons at least) can buy the demand notes [1], which are currently paying 4.75%. So as long as they are lending at an average rate above 4.75% after defaults and other problems I guess they are in a good position. But they can also move money around internally, I suppose, to make lower rates possible. [1] https://www.ford.com/finance/investor-center/ford-interest-advantage/ https://www.ford.com/finance/investor-center/ford-interest-a...
- Clubber 4y ago
  I've heard people opine that motor companies: Ford, GM, Harley Davidson, etc. aren't really motor companies anymore, they are finance companies and just use the vehicle as a means to get the financing paper. They are obviously both, but it would explain why the quality of US vehicles keeps deteriorating since around 2007 or so.
  - panopticon 4y ago
    > it would explain why the quality of US vehicles keeps deteriorating since around 2007 or so I hear this meme a lot but is it actually true? By most benchmarks cars from the last 10 years are more reliable than those from two decades ago.
    - Clubber 4y ago
      It is in my experience. I used to only buy US cars until I had a brand new 2017 GM vehicle have transmission issues within 6 months of purchase. This was to replace a 2013 GM vehicle that I was having trouble with. I took the 2017 to the dealer and they fixed it for another 6 months, then the issue came back. I took it to my personal mechanic and he said I should get rid of it, so I did. GM trucks have transmission issues. Look up the "Chevy shake," for another example. I don't know about Ford, so they might still be ok, or at least better than GM. I don't want to pay $40K+ to find out though. I expect to be able to drive vehicles without major issues for about 10 years. I've done this in the past with GM vehicles, but after 2007, the two I owned had significant issues all the ones I purchased prior did not. I put significantly less than 10k miles a year on my vehicles.
  - brewdad 4y ago
    This has been true since well before 2007. GMAC (now Ally Bank) was almost single-handedly keeping General Motors afloat in the decade prior to the financial crisis. It certainly wasn't the quality of their vehicles.
  - Galacta7 4y ago
    It seems like that's literally true for Ally bank, which started its life as the finance arm of GMAC, and still technically is despite being a full-fledged bank in its own right. I don't think they're owned by General Motors anymore, though.

motohagiography 4y ago

The rationale I'm using for Ford owning it is there is a compelling argument that ownership as the effect of two factors, custody and control, as it applies to data today could apply to the car, where if Ford can disable the vehicle, it has control of it, and the custody the driver has is secondary. Leasing companies are different because they license the vehicle to you for a term, whereas loan financing means it's yours. I'm not a lawyer at all, however much of my work on privacy and security has been about reconciling technology architecture and implementations with privacy and other laws and regulations, and security architecture is about allocating risk between counterparties in a technology solution, so from that view, this could be reasonably interpreted as a predatory technology.

ubermonkey 4y ago

N.B. that "leases" today, at least in the consumer auto world, ARE sales. They're just sales with a balloon payment due at the end. They are, in all other respects, the same as a traditional loan-based purchase.