Balloon payment, or not.... ?

konfab said:
I think there is a bit of a market for people who *really* hate having mechanical problems with their car. If you are getting a new one every 3-4 years, you will probably stay within the service plan before you get a new car. Thus it is unlikely you will get mechanical trouble.

For some people the inconvenience of having to deal with the breakdown is far worse than paying more every month.
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I can understand that logic, but in all the years of keeping my cars past their maintenance period I only once had a serious breakdown when my clutch broke, and on a car still under warranty.
 
Roelie said:
I can understand that logic, but in all the years of keeping my cars past their maintenance period I only once had a serious breakdown when my clutch broke, and on a car still under warranty.
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True, but going it the balloon payment way isn't as much of a risk.
 
Oh there are risks...

From another forum:

I have a problem with my bank and the balloon payment on my 2010 Disco 4. Just about to get to the last payment before the balloon payment is due. I was hoping to refinance the 'balloon' for a further 3 years but my credit is shot due to an incident with another bank.

Anyone have any ideas how to finance this balloon payment if your credit record is shot?
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What if you get blacklisted during the finance period for whatever reason? Now when your balloon payment time comes up you either have sell the car and can't finance a new one or cant refinance the balloon payment.

Point is buy a car you can afford in the first place.
 
konfab said:
I think there is a bit of a market for people who *really* hate having mechanical problems with their car. If you are getting a new one every 3-4 years, you will probably stay within the service plan before you get a new car. Thus it is unlikely you will get mechanical trouble.

For some people the inconvenience of having to deal with the breakdown is far worse than paying more every month.
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Funny how the one car that I bought brand new had more problems in the first 3 years and 30 000km than any other car had over it's entire lifetime and 150 000km.

A brand new car can give you as much **** as a second hand or older one.

Pitbull said:
What is the business folds and I have a lease on these vehicles?
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How is it different from getting a regular loan then? If that's your worry the vehicles should be bought cash...and not every three years.
 
I have never bought a car without a residual. Before you break down my door and rush in with pitchforks lemme explain why it works for me...

I work for a basic salary plus some overtime. Sometimes my overtime is equal to my basic and sometimes for example when i am on leave, my overtime is only a few grand. When buying a car, i give 20% deposit and ask for a 20% balloon payment. During the good months i pay double my installment and during the not so good months i pay the bare minimum.

These days, the banks sometimes ignore overtime when calculating your affordability. My MO allows me to get a car, that I like and that I know i can afford during the good & the bad months.

As mentioned before, if you opt for a residual, just to make the car affordable while paying the bare minimum is a ****ty idea.
 
Radioboy said:
I have never bought a car without a residual. Before you break down my door and rush in with pitchforks lemme explain why it works for me...

I work for a basic salary plus some overtime. Sometimes my overtime is equal to my basic and sometimes for example when i am on leave, my overtime is only a few grand. When buying a car, i give 20% deposit and ask for a 20% balloon payment. During the good months i pay double my installment and during the not so good months i pay the bare minimum.

These days, the banks sometimes ignore overtime when calculating your affordability. My MO allows me to get a car, that I like and that I know i can afford during the good & the bad months.

As mentioned before, if you opt for a residual, just to make the car affordable while paying the bare minimum is a ****ty idea.
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I don't see how the residual helps you in any specific way? If it's about lowering the instalment in case of schitty months, then you should rather buy a car whose instalment you can afford in the schitty months. And then invest the extra you have in the better months.

You'll run into the same problems as others with residuals down the line.
 
OrbitalDawn said:
I don't see how the residual helps you in any specific way? If it's about lowering the instalment in case of schitty months, then you should rather buy a car whose instalment you can afford in the schitty months. And then invest the extra you have in the better months.

You'll run into the same problems as others with residuals down the line.
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Was thinking the same thing. This sounds like exactly the person that should not have a residual.
 
SauRoNZA said:
Funny how the one car that I bought brand new had more problems in the first 3 years and 30 000km than any other car had over it's entire lifetime and 150 000km.

A brand new car can give you as much **** as a second hand or older one.



How is it different from getting a regular loan then? If that's your worry the vehicles should be bought cash...and not every three years.
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Not at all. You can still sell the vehicles without a long term lease contract that needs to be paid. If you sell all the cars and still have an amount short that can be salvaged somewhere. You have a "buy" out option, where in the case of a long term lease, you don't. You will still have to settle the lease agreement in full for the time agreed. Also, depending on what you buy, you might even end up with more than you own thus can still keep one or 2 vehicles and maybe sell all with a little cash to help with the failing of the business.
 
Pitbull said:
Not at all. You can still sell the vehicles without a long term lease contract that needs to be paid. If you sell all the cars and still have an amount short that can be salvaged somewhere. You have a "buy" out option, where in the case of a long term lease, you don't. You will still have to settle the lease agreement in full for the time agreed. Also, depending on what you buy, you might even end up with more than you own thus can still keep one or 2 vehicles and maybe sell all with a little cash to help with the failing of the business.
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Aaah okay good point I didn't think about that.

I simply assumed you would have a percentage based buy out option or some such. Have never done a lease in my personal capacity so wouldn't know.
 
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