Car Loans With A Balloon Payment
If you are looking for a car loan whereby the monthly repayments are reduced and you pay off a larger amount of the loan at the end of the term then you may wish to consider a balloon payment finance package. Our experts have access to a wide range of lenders and can advise you on the best deals that meet your requirements
What are balloon payment loans?
Balloon payments have been around for a long time, but it is only recently that they are seeing a resurgence in the financial market as lenders aim to improve their lending statistics. In simple terms a car loan with balloon payment is one in which a large amount of the loan is held until the end and then you are expected to make a lump sum payment as your final instalment.
What are the advantages of a balloon payment loan?
If you take out a car loan with a balloon payment then you will find for most of your loan period you will have payments that are lower than you would pay for the same loan on a normal repayment strategy. This means that you can potentially afford to take out a larger loan than you might otherwise have been able to and get the car that you want rather than having to settle for something that isn’t quite right.
What are the disadvantages?
If you take out a balloon payment car loan you are going to have to make sure that you have a plan in place for you to then pay off the final larger instalment at the end of the loan term. Saving regularly into a savings account is likely to be the most effective way of doing this as you can then spread the cost of repaying the final lump sum over the entire loan term. If you get to the end of your loan term and find you do not have the money to pay off the final instalment you will find that finding the finance to pay for that loan could be expensive and you could end up paying very high interest rates on the remaining loan.