Baloon "Agility" "Ford options" - GFV

[piranha786]

I know most people guard against this sort of vehicle finance plans. However the terms sometimes seems great. (Low interest rates, Low monthly payments)

What interest me is always the Total cost of the Vehicle over the term of the finance agreement

which is Deposit + all installments = Total cost (disregard maintenance & insurance)

With the Agility / baloon options this will be Deposit + Installments + GFV (if re-financed the total of this installments)

Does some1 have a proper calculator that I can calculate total cost of ownership on these Baloon options.

Also is this ever a good idea to go this route?

 

[diapason]

If you need a balloon payment, you cannot afford the car.

 

[Toxic T]

If you need a balloon payment, you cannot afford the car.

But what if you someone like me. I do not want to own the car after 5 or 6 years. I want to trade it in after 3 for a newer car so I do not have to deal with servicing costs and so on.

 

[piranha786]

But what if you someone like me. I do not want to own the car after 5 or 6 years. I want to trade it in after 3 for a newer car so I do not have to deal with servicing costs and so on.

The downside is that you never build up equity in the car. Say you pay R6k per month over 36 months, your full R216k is gone. + R40 k deposit.

 

[piranha786]

If you need a balloon payment, you cannot afford the car.

Thats the usual answer yes.

From my simple excel calculations it seems that the total cost of ownership with a baloon payment will never be less than a normal installment sale.

 

[stricken]

The downside is that you never build up equity in the car. Say you pay R6k per month over 36 months, your full R216k is gone. + R40 k deposit.

This.

 

[Toxic T]

The downside is that you never build up equity in the car. Say you pay R6k per month over 36 months, your full R216k is gone. + R40 k deposit.

True that. But I was thinking of paying off my current vehicle. Keeping that for long term and then using the budget I was paying for the current vehicle to buy one on the GFV. And the way cars drop in value, even if you buy a new car for 200k today, in 6 years it going to be worth next to nothing.

 

[Tman*]

Ford GFV is means nothing. Just ask any Kuga owner.

 

[Foxhound5366]

Thats the usual answer yes.

From my simple excel calculations it seems that the total cost of ownership with a baloon payment will never be less than a normal installment sale.

It couldn't possibly, could it? Your balloon is effectively costing you interest over the whole term and none of your repayments are going towards reducing that balloon until the final payment. At least with installment sales your interest decreases as the capital amount owing decreases. I guess it doesn't hurt so long as you make a conscious decision that you're willing to throw money away in favour of driving a better car than you can realistically afford - and starting out again after a few years with nothing to show for all those repayments - but then just take that decision like an adult and don't try justify it in any way. It's wasted money but gained 'fun'/'social capital' (and maybe increased hijack risk lol).