Totally agree…I just wanted to present an alternate view while completely siding with you.
And yes as someone that crawled out of crippling debt and was able to pay the house and own cars off…these financial decisions look fun in a forum but can destroy.
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Yes as said above think Jeep SRT, or Toyota, Honda. In fact most of the hellcat variants would fall under this but I would be cautious as to throwing out 90k on a summer car for most.
Thinking about replacing my gladiator with a new gladiator. I wonder if it would be a good idea on a rubi or not.
Gladiator is definitely a lease only vehicle. CCAP has good programs upto the Willys model. Ballon is only good for vehicles that go for above sticker at auctions - not sure how long this will last if you decide to risk a 36 mo balloon loan; unless the lender lets you walk away
I wish Penfed would bring their payment saver back. I had just gotten my membership approved and then they stopped offering them. The calculator as a member would you show an estimated final payment along with the monthly, which was nice to have. The AFG calculator on Hanscomb is nice to get an idea of payments, but I can’t see the RV as a non-member.
Try reaching out to them. Maybe if enough people show interest they might bring it back. I have penfed payment saver. Believe they closed it shortly after I got the loan. Which was last June.
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Thank you for contacting PenFed.
We appreciate you bringing this matter to our attention, however, we are unable to confirm that Payment Saver Loans will be offered again in the future. With this in mind, we offer a variety of products and services that may also be of interest to you.
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Cali peeps, here are two Credit Unions offering AFG’s balloon product:
- JACom Credit Union in Los Angeles, CA
- Torrance Community Credit Union, Torrance, CA
Credit Union of Colorado has pretty lax membership requirements but according to their website they only offer up to 48 month terms.
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I am a little unclear on this part. What happens at the end of the term? You can’t just turn the vehicle in? If you have to pay that amount, then you aren’t securing the RV.
It’s in the first post:
The RV on a balloon is the balance you owe at disposition. By all means, if RV is $30k and it’s worth $35k, a Ford dealer or third party will buy it. If it’s worth $20k, you still owe $30k.
Unlike a lease, you hold all the downside risk in a ballon, and you owe a disposition fee with the balance due, but Ford waives that fee if you end up leasing/buying another Ford.
What the heck. If there is no downside protection…
It’s literally the definition if this particular financial instrument.
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This is pulled from my Ford Options contract, unlike a traditional balloon, FO allows you to return vehicle at end just like a lease and pay dispo and applicable fees for miles & wear tear, regardless of market value.
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This is good to know. I my Ford dealer is not the smartest on the block. Need to figure this out with him
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Think of it as when you buy a house with an ARM 7/1 loan…could suck after the 7th year or could be good… No wonder so many were “sucked in” in 2007/2008 that couldn’t afford mortgage
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Yes, from what I understand, the Ford Options program allows you to turn in at end of term like a lease.
That’s why they only offer it on certain vehicles.
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With a true balloon loan, the residual value is effectively the final payment.
Therefore, the scenario that would favor a balloon loan are those where you believe the vehicle’s market value will exceed it’s residual value. A number of examples are cited in the original post, but a good one is with Tesla, which doesn’t depreciate anywhere near the residual value, and will almost always generate positive equity when the vehicle is sold, en lieu of the final payment. A balloon loan is not for every situation and every scenario, it must be a good fit to make sense.
Some lenders do offer hybrid balloon loan programs (ie Ford Options) that will allow for the return of the vehicle (AFG offers this option as well). I think discussing these program just complicates the concept of what a balloon loan is, as given the previous point, why would you return a vehicle that has positive equity?
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The only way to get the complete T&Cs is from a Ford dealer. I would never sign one of these without reading every word on the contract.
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Does Kia Motors Finance offers balloon option?
Yes I saw the AFG one, it was just turn in. And on other online places, I’ve read the same thing about Ford . Thats why your original post threw me off. Thanks for the clarification.