Ballon Payment – as reading this article you’re probably on a search for that dream car, but you want to do it right.
What is a balloon payment on a car, is a balloon payment a good idea?
In this article Good Bear explains disadvantages of balloon payment and how to how to pay balloon payment.
This is a 5 minutes read article that will help readers make a final ballon payment decision.
What is a Balloon Payment on a Car Loan?
One of the most important frastrating decisions when taking a car loan with a bank is should I pay the balloon payment.
This Residual value on the car loan or vehicle finance comes as an option that a loan seekers have final decision on.
Residual Value of Cars
On a lease agreement of car loan, a residual value defines the end of a fixed asset reference when its term has finished.
Here is a quick explanation of a ballon payment on a car.
When buying a car with a balloon payment included in montly instalments.
The balloon payment lowers car loan monthly instalments, so that buyer can afford to buy a car they could afford.
Is a Balloon Payment a good idea?
Is a balloon payment a good idea – well at first it may seem like a good idea, because you really want those wheels.
But unfortunately there are many pros and cons of balloon payment.
Many people have decided to add this option as they applied for vehicle finance.
But later realised they have taken twice of their car loans form their financial instutions.
The most deceiving part of a balloon payment is, you will be able to buy this dream car today.
But, what is going to happen after the main car loan has been paid up.
Pros and Cons of Balloon Payment
The Pros and cons of balloon payment are up to each individual point of view.
Good Bear puts it all on the table, basides that, buyer is to decide.
Here are the pros and cons of balloon payment, after reading the below
A buyer will decide if is a balloon payment a good idea on vehicle finance or car loan.
Advantages of Balloon Payment
So when buying a car that buyer can not afford, say the car cost R300 000.
Now a buyer decides to take a vehicle finance of up to R300 000,
With a car loan amount over 5 years with 25% Balloon payment on the car loan.
The vehicle finance institution will remove R100 000 and let the buyer pay the remaining R200 000.
That sounds good right!
This means the buyer will pay low montly instalments for the next 5 Years.
Disadvantages of Balloon Payment
Here is where the disadvantages of balloon payment comes in.
Now remember, after 5 years you still owe the bank R100 000 and it must be payed all back.
The buyer needs to pay the full amount back or roll that into a new loan to payback in instalments.
This means a buyer will be paying off their car for quiet a long time.
Now you’re left with another question, can you refinance a balloon payment?
To refinance a balloon payment might be the only option that the buyer is left with.
Selling a Car With a Balloon Payment
As a buyer, now you’re probably thinking of selling a car with a balloon payment.
Selling a car with a balloon payment is a good idea, but now the car has residual value.
Residual Value is the predicted amount an asset might be worth at the end of the line.
The other option that a buyer might be left with is trading in a car with a balloon payment.
Trading in a car with a balloon payment means that a buyer will payoff the balloon payment and start again
How to Pay Balloon Payment – Tips
Tips, here is a little bit from Good Bear on how to pay balloon payment.
When buying a car with balloon payment, one might want to look.
How to pay balloon payment without going into more debt and refinace a ballon payment.
Here is a quick balloon payment example.
Save money aside while paying for inital vehicle finance loan.
This will help a buyer pay off balloon payment cash and avoid interest on initial balloon payment amount.
Balloon Payment Calculator
Balloon Payment Calculator is a handy vehicle finance tool that breaks down all the car loan calculations.
This balloon payment calculator will help client view their monthly car loan repayments with balloon payment included.
Balloon payment calculator will also provide a break down on all amounts including selected vehicle finance loan.
The importance of this Balloon Payment Calculator is to help loan seekers with an idea of how much they can really afford.