Baloon finance takeover

Alex_bm · 10-10-2011, 03:59 PM

Has any-one done this to tell how it works?

Thanks

achien · 10-10-2011, 04:58 PM

don't do it!!! unless you have a lot of cash, or expect a lot of cash coming (i.e. inheritance), at the end of the financing period.

it starts with a very low monthly payment (i.e. $500 - $900 per month), but you owe a huge balance at the end (i.e. 40% to 60% of the car, depends on how large and how long your monthly payments are), which you may have to find a bank to finance your car at 7% to 10%.

Quote:

Originally Posted by Alex_bm

Has any-one done this to tell how it works?

Thanks

itrocks4u · 10-10-2011, 08:18 PM

I think they give you an option to re-finance as well at the end of your first term. Or you can pay it off if you have the cash. the purpose of balloon financing is to lower your monthly payments.

It's the same concept as the lease, but you have to buy the car in the end and can't just walk away like in the lease.

ericlol · 10-10-2011, 08:36 PM

well, its like, u separate the payment into 2 portion, say the principle amount is 55k
portion 1: 35050
portion 2: 19950

assume interest rate of 1.9%, 4 years

for portion 1, you are financing it over 4 years, as if you were financing a regular 35k car, say $770 per month

for portion 2, you don't have to do anything about it, until the end, the interest rate just accumulated at portion 2, using the simple formula for compound interest, you have to pay the future value amount after 4 years, 21500

total paid = 770 x 48 + 21500 = 58460

cost of borrowing = 58460 - 55000 = 3460

Alex_bm · 10-10-2011, 10:53 PM

I should have formalized my question to be more clear.
I already have a baloon finance deal, the deal is actually not too bad with 1.9% rate, the interest for the entire loan is around 2k.

The question is really what it take to transfer the deal to some-one else?

d-burn · 10-10-2011, 11:51 PM

Do you have someone in mind already, or are you looking for someone to take it over?

What are the details?

Alex_bm · 10-14-2011, 10:59 PM

pm'd

was hoping to get some additional information from people who have done it in the past

Quote:

Originally Posted by d-burn

Do you have someone in mind already, or are you looking for someone to take it over?

What are the details?

10-10-2011, 03:59 PM	#1
Alex_bm Major 173 Rep 1,041 Posts Drives: Giulia QV Join Date: Oct 2006 Location: Canada, Toronto iTrader: (1)	Baloon finance takeover Has any-one done this to tell how it works? Thanks
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10-10-2011, 08:18 PM	#3
itrocks4u Colonel 649 Rep 2,449 Posts Drives: F80, F36, E90 Join Date: Aug 2011 Location: Bay Area iTrader: (3)	I think they give you an option to re-finance as well at the end of your first term. Or you can pay it off if you have the cash. the purpose of balloon financing is to lower your monthly payments. It's the same concept as the lease, but you have to buy the car in the end and can't just walk away like in the lease.
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10-10-2011, 08:36 PM	#4
ericlol BMW Amature 7 Rep 297 Posts Drives: 2011 AW 335i xDrive Join Date: Apr 2011 Location: Toronto, Canada iTrader: (1) Garage List 2011 BMW 335i [0.00]	well, its like, u separate the payment into 2 portion, say the principle amount is 55k portion 1: 35050 portion 2: 19950 assume interest rate of 1.9%, 4 years for portion 1, you are financing it over 4 years, as if you were financing a regular 35k car, say $770 per month for portion 2, you don't have to do anything about it, until the end, the interest rate just accumulated at portion 2, using the simple formula for compound interest, you have to pay the future value amount after 4 years, 21500 total paid = 770 x 48 + 21500 = 58460 cost of borrowing = 58460 - 55000 = 3460
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10-10-2011, 10:53 PM	#5
Alex_bm Major 173 Rep 1,041 Posts Drives: Giulia QV Join Date: Oct 2006 Location: Canada, Toronto iTrader: (1)	I should have formalized my question to be more clear. I already have a baloon finance deal, the deal is actually not too bad with 1.9% rate, the interest for the entire loan is around 2k. The question is really what it take to transfer the deal to some-one else?
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10-10-2011, 11:51 PM	#6
d-burn Private First Class 5 Rep 190 Posts Drives: '11 e92 335i xDrive M-Sport Join Date: Jan 2010 Location: Toronto iTrader: (0)	Do you have someone in mind already, or are you looking for someone to take it over? What are the details?
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