Discussion
I test drove a used 2007 model a few weeks back and asked for a finance quote. I was told an HP deal over 48 months with a £10k deposit would be c£840 a month. I wanted to do lease purchase with balloon to get the monthlies down. I have c£10k deposit with c£600 a month to spend but i was told they can't do lease purchase with balloon on a car that age.
Anyone else done lease purchase with balloon on an approved used? whats the deal here? i didnt realise you couldnt do lease purchase on used over 2 years old - i've always done lease purchase on my cars but never bought older than 2 years so never heard of this.
Whats the experience here?
Thanks
Anyone else done lease purchase with balloon on an approved used? whats the deal here? i didnt realise you couldnt do lease purchase on used over 2 years old - i've always done lease purchase on my cars but never bought older than 2 years so never heard of this.
Whats the experience here?
Thanks
The problem is that with only a £10k deposit on a car which I'm guessing is at the £50k mark, its possible (in the banks eyes) that after 2-3 years you'll be a long way into negative equity. HP with a balloon does not reduce the balance in the same way that finance without a balloon does, so you could, at just about any time, walk away and hand back the keys leaving the finance company with a net loss.
Having just financed a V8 Roadster myself, I researched all the options, but decided that the balloon option was the worst by far!! You're not reducing the balance but the car is depreciating, it's all to easy to get into trouble.
It is a bit odd though that the banks feel its more of a risk on older cars, when in reality, its less of a risk as there is less of a depreciation hit to be had!
Personally I financed my V8 on HP with no balloon and a 40% deposit; it was a bit like a savings plan.
When I sold it, I got quite a bit more money back than I had originally put in as I'd made 8 monthly payments.
If I'd done the balloon option, my monthly payments would have been about £600 less, but when I sold, I'd have got about 50% less money back than what I'd put in.
They are basically just using up your deposit to pay the interest on the balloon.
I think the balloon option on a finance deal is as terrible an idea as the 100%+ mortgage idea was last decade, and look at the problems those caused in the end!!
HTH
G
Having just financed a V8 Roadster myself, I researched all the options, but decided that the balloon option was the worst by far!! You're not reducing the balance but the car is depreciating, it's all to easy to get into trouble.
It is a bit odd though that the banks feel its more of a risk on older cars, when in reality, its less of a risk as there is less of a depreciation hit to be had!
Personally I financed my V8 on HP with no balloon and a 40% deposit; it was a bit like a savings plan.
When I sold it, I got quite a bit more money back than I had originally put in as I'd made 8 monthly payments.If I'd done the balloon option, my monthly payments would have been about £600 less, but when I sold, I'd have got about 50% less money back than what I'd put in.
They are basically just using up your deposit to pay the interest on the balloon.
I think the balloon option on a finance deal is as terrible an idea as the 100%+ mortgage idea was last decade, and look at the problems those caused in the end!!
HTH
G
Edited by Mr Noble on Friday 8th January 10:28
try a different finance company - they all have different rules/deals on at the time, depending on how desperate they are for your business
...think about it though - the used car market is pretty volatile - in the last 18 months prices have dipped and come back again by like 25% it seems on some premium models
so they obviously dont want to risk getting the balloon wrong - 48 months is a long time on a new car, let alone 2 years old....
they dont have a chrystal ball to see how much a 6 yr old Aston is going to be worth, and if they give you the option to walk away at anytime and give them back a car thats in negative equity, it could be pretty bad for them
car finance, like mortgages and other finance, has become tighter since the crunch you will have to shop around for something that suits you better, or put more cash into it
...think about it though - the used car market is pretty volatile - in the last 18 months prices have dipped and come back again by like 25% it seems on some premium models
so they obviously dont want to risk getting the balloon wrong - 48 months is a long time on a new car, let alone 2 years old....
they dont have a chrystal ball to see how much a 6 yr old Aston is going to be worth, and if they give you the option to walk away at anytime and give them back a car thats in negative equity, it could be pretty bad for them
car finance, like mortgages and other finance, has become tighter since the crunch you will have to shop around for something that suits you better, or put more cash into it
Cash. yeah unfortunately i don't have £50k sitting around!
The balloon route is not a silly idea if you do it properly and know what you are buying / what finance you are signing up to. Or at least no more silly than buying a new vantage in cash and throwing £30k away in a year?? I went into my CSL with £4k deposit, £29k loan with £12,500 balloon over 4 years, worked out £475 a month. i'll walk with £10k when i sell in a few months. Now i could've saved for 2 years and driven a £4k fiesta instead, then ploughed my savings into a depreciating asset but what use is that? yes yes theres interest but it allows people with little capital to get straight into decent cars.
Anyway, having done some more research it appears the finance companies are forecasting the residuals on 2006 models to be £15,000 in 4 years time. Whether that is realistic or not is the chance you take. I happen to think its not a bad number, given the low number of vantages about they'll be relatively sort after at some point and i'd have thought they'd be higher than that. If i can sell a 6 year old CSL that was £60k new for £25k then you'd have thought an 8 year old v8 vantage would be worth more than £15k. Again, the right cars will stand you in good stead when it comes to future residuals.
The reality of the situation is that the finance companies have really toughened up on balloons because of the ridiculous deals some people were signing up to - and rightly so. I don't know, looks like i'll have to be without a car for a while once i've sold the CSL and then go in with a higher deposit to get the monthlies down. Or get a cheaper car. Balls.
The balloon route is not a silly idea if you do it properly and know what you are buying / what finance you are signing up to. Or at least no more silly than buying a new vantage in cash and throwing £30k away in a year?? I went into my CSL with £4k deposit, £29k loan with £12,500 balloon over 4 years, worked out £475 a month. i'll walk with £10k when i sell in a few months. Now i could've saved for 2 years and driven a £4k fiesta instead, then ploughed my savings into a depreciating asset but what use is that? yes yes theres interest but it allows people with little capital to get straight into decent cars.
Anyway, having done some more research it appears the finance companies are forecasting the residuals on 2006 models to be £15,000 in 4 years time. Whether that is realistic or not is the chance you take. I happen to think its not a bad number, given the low number of vantages about they'll be relatively sort after at some point and i'd have thought they'd be higher than that. If i can sell a 6 year old CSL that was £60k new for £25k then you'd have thought an 8 year old v8 vantage would be worth more than £15k. Again, the right cars will stand you in good stead when it comes to future residuals.
The reality of the situation is that the finance companies have really toughened up on balloons because of the ridiculous deals some people were signing up to - and rightly so. I don't know, looks like i'll have to be without a car for a while once i've sold the CSL and then go in with a higher deposit to get the monthlies down. Or get a cheaper car. Balls.
Edited by stevenleith on Saturday 9th January 10:29
I went down the finance with Balloon payment as due to my circumstances (I lend money) it made sense, the deal I have with Santander is
Purchase price £47,000
Deposit £12,000
48 Payments £599
Balloon £13,474
Total charge for credit £7552.52
APR 3.84%
I personally think that if I did take this to term it would end up being pretty much interest free if the car is worth more than £21k.
As I earlier stated this is a no brainer for me as I will earn in excess of 20% per anum on my cash so even if the car is only worth the balloon I will still not really lose out.
Let me know if you want the broker details
Purchase price £47,000
Deposit £12,000
48 Payments £599
Balloon £13,474
Total charge for credit £7552.52
APR 3.84%
I personally think that if I did take this to term it would end up being pretty much interest free if the car is worth more than £21k.
As I earlier stated this is a no brainer for me as I will earn in excess of 20% per anum on my cash so even if the car is only worth the balloon I will still not really lose out.
Let me know if you want the broker details
V8LM said:
V8VKK said:
I will earn in excess of 20% per anum on my cash ... Let me know if you want the broker details
Yes please!if your making 20% on your cash then just borrow 400k.....make your 20% ( the excess of 20% you can use to insure and service the AM )and hand over the 80k profit to the dealer.......free car !!
Edited by michael gould on Tuesday 12th January 10:33
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