Car Loan Balloon Payments

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Balloon payments

• Car loan questions answered

1800 Approved Finance Solutions 33 Ereton
Dr. Arundel, QLD 4214 1800277768 http//www.1800ap
proved.com.au/
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Are you trying to buy a car and a little confused
over this balloon payment thing? Balloon payment
is also called residual value, residual payment,
or simply RV. There are pros and cons to having
one and the amount of balloon payment you pay at
the end of the term affects your monthly
repayments.
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For example You borrow 80,000 over 5 years and
chose to pay 16,000 (20) Residual Value/Balloon
Payment at the end of the loan term. Your
monthly repayments will be lower than if you
chose not to have a balloon payment but you will
have to save up for the 16,000 that you owe at
the end of the term. Balloon payments are
optional except on leases.
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Benefits of balloon payments
Cash flow management The lower monthly payments
will help with your cash flow especially if you
run a business.
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Benefits of balloon payments
Potential Increase in Loan Amount With lower
repayments, the balloon payment option may
potentially increase the loan size to help you
afford a car or item that was previously just out
of reach.
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Benefits of balloon payments
Upgrading Some people use the balloon amount to
keep their repayments down on a vehicle they plan
on trading in at the end of the term.
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Benefits of balloon payments
Tax Deductions Because you are paying less off
the principal of your loan with each repayment
you do end up paying more interest, which may be
advantageous if your vehicle is for business use.
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If it still sounds a little confusing, it is best
to consult with a finance broker and determine
what is best for you. Different situations
require different solutions.
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1800 Approved Finance Solutions 33 Ereton
Dr., Arundel, QLD 4214 1800277768 http//www.1800a
pproved.com.au/
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/
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