Balloon Note

People who want a car balloon loan will have to consider the end payment in 4 or 5 years and how much the car will be used. If the car will be pretty shot by the end of the term, it will come as a bitter pill to pay anywhere from $6,000 to $16,000 for a beat up, high mileage vehicle. A car balloon loan payment is a lot like a lease agreement, but the end result could be either paying it off in full, or refinancing for another term. That new amount, whether a normal auto loan, may have a higher interest rate due to it now being an older vehicle which doesn't qualify for the low rates given on new cars. Thus, auto buyers have to weigh every option.

This type of lending is designed to be an easy way to pay for a vehicle that is higher priced than one would normally attempt to purchase if stuck with the old-fashioned loan system. Car balloon loans will first of all, allow the driver to finance without any down payment. This is very enticing and can be used to the buyer's benefit if played with discipline and financial prowess. If the smart car buyer takes the no-down payment option, the money that would have been the down payment should be invested in a smart way to make money, such as an investment account. The interest earned can help pay for the car or be held along with the principal for the car balloon loan grand finale payment. Another option would be to use the saved down payment to payoff other loans that have higher interest rates such as a credit card. Either way the money is working for you and not spent frivolously.

Another enticing factor of car balloon loans is the low monthly payments. Saving the greatest portion of the car's cost until the end is simply making the lesser percentage that which is due over a period of 4-7 years and that will make the payments very manageable. But the key here is planning for the payoff of the car balloon loans. These loans are not a smart idea, unless the borrower has no other options, or they are extremely well disciplined financially, or have a benefactor to pay the amount off for them. Individuals should talk to lenders and financial professionals about this type of borrowing. It's also important to pray for wisdom. "Who teacheth us more than the beasts of the earth, and maketh us wiser than the fowls of heaven?" (Job 35:11). If a driver has any doubt about their ability to pay what is owed, it's best to look at other options.

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