Ally Balloon Loan

[gmcleer]

I am currently leasing a 1500 and have considered getting a 2500 due to the payload of my camper. Anyone have any experience with a Balloon loan? It seems that leasing a 2500 is not a good deal and I really don't want the payments of a 2500 loan. The balloon looks like it could work out like a longer lease in a sense. Any experience or opinions? Do you qualify for all the discounts and rebates of a typical purchase?

[burntorngelonghorn]

You're just defering a certain portion of the payments of the loan until a balloon date at which point the principal balance and interest is due. Your lowering your payments so that you can pay more interest on the same balance and you better hope to hell you're not upside down at the balloon date.

[gmcleer]

So you will pay more interest? Are you paying interest for the full principal during the loan period, or is interest calculated based on principal - balloon?

[burntorngelonghorn]

You are paying interest on principal, but the idea of a balloon is you make smaller payments upfront so you're not paying principal down as quickly.

 

Balloons are more typical in the business world as a way of getting access to capital with out a huge monthly payment. You're assuming whatever you're getting the loan for will make you the money needed by the balloon date to payoff the principal, or you'll be able to refi using new collateral.

 

However your vehicle is a depreciating asset, and so I struggle to see how you wouldn't be upside down in it at the balloon date.

[diyer2]

If you're leasing now, why not give some more money away?

Unless the lease is a bussiness write off, I repeat I don't get it.

[bndawgs]

Very similar to an Interest Only loan on a house. Except with the auto loan, you're going to need a bunch of money at a later date, whereas with the home loan, you'll never really pay off the principal.