balloon payment

[wizdumb]

so i've seen a few car adverts where you can buy a new car for whatever amount p.m. for like 54 or 60 months , 0% or 10, 15% deposit, and then a final (big) balloon payment...

...now my question is, can i take up this offer but pay the balloon payment upfront? kinda like a bigger deposit?

or will this change my monthly repayments?

 

[syntax]

I am confused....Why not just use it as a deposit then?

 

[unskinnybob]

idd - if you have the moola, don't take a balloon payment. Increase your deposit.

 

[Other Pineapple Smurf]

Agree with the above, your repayments will be less as the financed amount is smaller. Also do not fall for 0% interest, they just inflate the price beforehand.

 

[asshat99]

If you pay the balloon upfront (aka a deposit) It will reduce your payments as you will not be paying interest on the balloon amount for x months of the term of the loan. They can obviously work out a custom deal for whatever trade-in or deposit you have. The advertised one is just an example!

 

[wizdumb]

If you pay the balloon upfront (aka a deposit) It will reduce your payments as you will not be paying interest on the balloon amount for x months of the term of the loan. They can obviously work out a custom deal for whatever trade-in or deposit you have. The advertised one is just an example!

thats what i thought...

...and yes i know it was an example, it was something like 3k pm x 60, 0% dep, and +-70k balloon. so i was thinking pay 70k now (as a dep) and then pay 3k pm, but i'll go to dealer and see what they can offer

 

[Fazda]

thats what i thought...

...and yes i know it was an example, it was something like 3k pm x 60, 0% dep, and +-70k balloon. so i was thinking pay 70k now (as a dep) and then pay 3k pm, but i'll go to dealer and see what they can offer

Yes, be very wary of that sort of deal, and steer clear of balloon payments if at all possible...they are created specifically for people who are buying beyond their means, and if you were to be able to put down the equivalent of the balloon payment as a deposit then you wouldn't have to have the balloon and consequently end up paying less for the car in the long run.

 

[cleask]

thats what i thought...

...and yes i know it was an example, it was something like 3k pm x 60, 0% dep, and +-70k balloon. so i was thinking pay 70k now (as a dep) and then pay 3k pm, but i'll go to dealer and see what they can offer

If you take the offer now and pay the R 70k it will be no different to paying the R 70k at the end as a balloon. The interest and costs are already included in the deal.
Speak to the dealer and customise the finance terms to suit you, although also remember that the dealer takes a cut( a % of the interest, usually around 0.25% ) if they arrange the finance for you. Try arrange the finance yourself and play the financial institutions against each other, you may score 0.5 - 1% on the interest rate.

 

[ALFAHOLIC]

Don't do babaloon payment if the car WILL lose value. I put down a moerse deposit on the golf...hating every moment of it, but then I look at my repayment each month...and loving it!