Balloon payments Pro's and con's

I could afford the full payment on my car but I was worried about unforeseen money expenses, so decided to get a residual on mine. I was religious about paying the spare money in before hand and it work out like a charm. Even got interest on it, so my interest payed turned out less. Will do so again when I buy my next car :)
 
I lost R20,000 over a 3.5 year period to drive a car I wanted. More than worth a R20,000 premium to me ...
 
Nefertiti said:
I could afford the full payment on my car but I was worried about unforeseen money expenses, so decided to get a residual on mine. I was religious about paying the spare money in before hand and it work out like a charm. Even got interest on it, so my interest payed turned out less. Will do so again when I buy my next car :)
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That's actually very clever. So invest the residual and make a "profit" on the balloon. I'm coming up to buying my next car, I may opt to do that instead of putting down a deposit.
 
phoenix99 said:
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.
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Expensive ass cars can appreciate but a car is never an investment unless you buy a super rare car and leave it in the garage.
I'd love to drive a fancy car but I can't justify the loss of value. Yes houses can depreciate but not at the rate of a car.

Dolby said:
I lost R20,000 over a 3.5 year period to drive a car I wanted. More than worth a R20,000 premium to me ...
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20K isn't too bad but you could afford the 20k, the majority of people that take balloons can't (educated guess)
If you can afford it there is nothing wrong with it but there are so many who are suckered in and they can't.
 
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ChocolateBadger said:
That's actually very clever. So invest the residual and make a "profit" on the balloon. I'm coming up to buying my next car, I may opt to do that instead of putting down a deposit.
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Its not really a "profit" though, since you are charged interest on the full amount (including the balloon) you finance. But by paying in extra I got some of that interest back. I havent done sums though to see if the interest earned back that way is more or less than what they charged up front. But hey it worked for me. Just a side note, I couldnt withdraw the money I paid in extra though it didnt matter in my case.
 
Nefertiti said:
Its not really a "profit" though, since you are charged interest on the full amount (including the balloon) you finance. But by paying in extra I got some of that interest back. I havent done sums though to see if the interest earned back that way is more or less than what they charged up front. But hey it worked for me. Just a side note, I couldnt withdraw the money I paid in extra though it didnt matter in my case.
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The refund is exactly equal to the interest you would have paid on that portion of the outstanding capital for that month
 
Sinbad said:
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.
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No it's not, contrary to popular belief anything that's is not generating income is a liability
 
Sinbad said:
The refund is exactly equal to the interest you would have paid on that portion of the outstanding capital for that month
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ooh great :D I thought that there might be penalties since its money the bank doesnt get.
 
OMB said:
No it's not, contrary to popular belief anything that's is not generating income is a liability
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lol.
Thank god you are on the production side, not the accounting side ;)

And yes, cars do enable generation of income actually.
 
Sinbad said:
lol.
Thank god you are on the production side, not the accounting side ;)

And yes, cars do enable generation of income actually.
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So does the petrol I put into my car. Doesn't make petrol an asset
 
Sinbad said:
lol.
Thank god you are on the production side, not the accounting side ;)

And yes, cars do enable generation of income actually.
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Enables generation of income, does not generate income itself

Stop buying into the claptrap your employer peddles :p
 
OMB said:
Enables generation of income, does not generate income itself

Stop buying into the claptrap your employer peddles :p
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GET OUT COMMUNIST AGENT! /waves capitalist manifesto
 
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