Sinbad
Honorary Master
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No limit if I remember right.
Remember that company several years ago that put you into a sports car for a crazy low amount per month. Was something like 95% residual
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Balloon payments Pro's and con's
- Thread starter Pitbull
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No limit if I remember right.
Remember that company several years ago that put you into a sports car for a crazy low amount per month. Was something like 95% residual
Nerfherder
Honorary Master
It would have to be something to do with the persons circumstances.
Like perhaps they are starting out a business and they need the cashflow, and the business requires a bakkie thats new.
Most business lease agreements are basically balloon agreements where you trade instead of paying the balloon.
Its only bad if you end up refinancing the balloon payment... or if the car's value drops dramatically.
Nerfherder
Honorary Master
I remember there was a Merc that had a 75% residual and it was actually a good option because of the resale value.
konfab
Honorary Master
People will always fall for this type of thing as you can't regulate stupidity.
What you can regulate however is the advertising of cars that show how affordable the car is in nice big text, but have a few pixels showing that there is a 15% balloon payment. Car ads that advertise a monthly price should be forbidden to use a balloon payment in their ads.
What you can regulate however is the advertising of cars that show how affordable the car is in nice big text, but have a few pixels showing that there is a 15% balloon payment. Car ads that advertise a monthly price should be forbidden to use a balloon payment in their ads.
I have a different view on this to a lot of you guys.
I don't view a car as an asset. If I never own a car, I won't be too fussed.
I know how much I am comfortable paying each month and that's my focal point of affordability and the finance deal I select on cars.
Obviously I have some (IMHO sensible) provisors:
- I always owe less to the bank on my car than the trade value so I can always trade up or down without being out of pocket
- My car is insured at retail value (which is more than than I owe to the bank) so that if something happens I'm not left out of pocket
So I work a balance between deposit, balloon and finance term such that the repayment is within my comfort zone.
I would rather pay the prime linked interest rate on my car finance on that balloon payment, and divert the money I would have used for a bigger deposit into, for example, a unit trust investment that is earning more than my interest charges.
ScottulusMaximus
Honorary Master
Lollies... Do yourself a favour, call your insurance company and ask them what they will pay out if your car gets written off today, you'll **** yourself.
konfab
Honorary Master
I do see the logic, though you do need a lot of career stability, or insurance to cover the shortfall.
I won't **** at all. I know exactly how much they will pay out. It's in my insurance schedule which I finalised with them 3 weeks ago. I've had a car written off and paid out by them before, and they paid out on time and the amount agreed.
Correct - that's the one 'gamble'. I do have relatively good job stability, but both cars are financed such that if my employment ends unexpectedly, I could sell them with enough profit to get a couple older skedonks in which to get around.
F
Former member 61586
Guest
Car is not an asset? LMAO
Using this reasoning, you are basically renting a car forever. It IS an asset. A crap money-pit depreciating asset, but an asset nonetheless.
Using this reasoning, you are basically renting a car forever. It IS an asset. A crap money-pit depreciating asset, but an asset nonetheless.
It's only an asset if you can sell it and make money on the deal. If at any time you have to sell the car and the settlement including the balloon/residual is more than what someone buys it for....well then that was a liability and not an asset.
Once it's paid off and you can sell it for more than you owe, then and only then, is it an asset.
FiestaST
Honorary Master
Shame that "poor" individual...cheese & crackers rest of the month big hey at least he has a sweet ride
Pitbull
Verboten
Geesus...
I can't see how anyone would agree to this
Yes. it's a brand new car now. But you will be stuck with it for 7 yes SEVEN years. And after 7 years you need to pay up 50% of the purchase price. Holy shyte
I'm not talking about a balance sheet asset. I don't own a business and depreciating that car value gives me no tax benefit whatsoever.
So a lifelong rental is all that a car is to me - basically a forever lease. I pay a monthly (affordable) amount for a means of transport of my choice.
If or when the economics/viability of Uber and public transport outweighs having my own car, I would likely consider it.
Do you have a bond or are you also just renting permanently?
dlk001
Executive Member
R15k take home or gross?
The cost of financing the car would be R7.5k @ 72 months with 50% residual
Insurance would be another R2k pm
Fuel costs another R3k pm
Another option VW offers is Guaranteed buyback
It's different. Property is an asset. It can appreciate in value instead of depreciate. When I can afford to upgrade the property, the previous property can be an income bearing asset that also grows in value. Double win. A car is just a sink hole of expenses.
Dan C
Honorary Master
Never again will I finance a car.
I took the plunge and drove my 2nd last car for 9 years. Saved up enough in the last 4 years by putting away the same amount I paid monthly and bought a new car cash
Now after only 3 years of doing the same, I have enough to even buy a better car cash.
Interest paid vs Interest earned .. big difference.
I took the plunge and drove my 2nd last car for 9 years. Saved up enough in the last 4 years by putting away the same amount I paid monthly and bought a new car cash
Now after only 3 years of doing the same, I have enough to even buy a better car cash.
Interest paid vs Interest earned .. big difference.
Sinbad
Honorary Master
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Whether it can appreciate or depreciate doesn't change whether or not is an asset.
Fact is, a paid-off car IS an asset no matter how you look at it. And the value of that asset, besides its use, can be realised should you decide to trade in, which will seriously reduce the interest burden your next car will pose.
Cars can appreciate and houses can depreciate. Many people have lost money on bad houses and many people make their living buying and selling cars. Seems weird that one is ok to own but the other isn't for you.
It's okay. You don't have to understand