Toys4RJill

Thanks

So they give you more off the price if you do it by balloon? Do you pay more interest?

stasek

As I explained above, you get to buy the car but get the better lease price.

The biggest drawback (if you let it be) is the finance charge. The entire interest is amortized over the balloon term, and the interest is generally high. And of course there that pesky amount due at the end. To alleviate this, you refinance or pay off the car right away.

Toys4RJill

Thanks... I never knew a balloon payment was available for autos...sounds like a horrible way to get into a car.

stasek

If you know what you’re doing, it’s a great way to take advantage of the manufacturer incentives. If you’re clueless, than yes - you might be in for a surprise.

F1Driver

That pretty sums up all Korean cars. They give you a lot of features for the buck but the Koreans aren't exactly quite there yet in terms of refinements compared to the Japanese.

coolsaber

I see Kia has picked one off the BMW Select handbook. Not a thread about ballon payments (I never understood it), would love someone to explain the difference between a ballon payment and variable interest rate products. For some reason I could never grasp the difference and always felt like the decision was taken out of a buyers hand.

RNM GS3

Balloon allows you to make lower monthly payments that are similar to the lease payment.
If you do a straight term loan, monthly payment would be significantly higher.

Great for folks that want to preserve present cashflow but still be able to purchase a more expensive vehicle.

stasek

THIS.... Plus, for example, if you live in Texas and lease, you pay the sales tax on the entire vehicle price and if you decide to buy out the lease at the end of term, you pay the sales tax AGAIN. With balloon, since you're buying the car, you only pay the tax once.
Another example where balloon is beneficial - say you live in the wonderful city of Chiraq (I kid, I kid.... Chitown). The regular tax on a lease is 9.5% but there's also an additional 8% "use tax", making the effective rate 17.5%. With balloon, you get the lower monthly payments similar to a lease but avoid the "use tax".

tex2670

It means that you get a loan with a better interest rate, but you have to come out of pocket at the end of the loan term with a big payment, instead of having level payments throughout the term of the loan. Most people don't have the cash on hand to make the balloon payment.

arentz07

Does balloon financing allow you to have a better interest rate, though?

I think I'd feel more comfortable just paying a down payment instead of deferring that large payment till the end. That way it's less risky for me if the car gets totaled or I need to sell it.

stasek

Regarding interest rate - I really don’t know, but in this particular case the whole idea of balloon program is to get the much higher lease cash rebate.
If the rate is crappy, you can always refinance the loan using third party bank/credit union (which is what most people do).

As far as putting bigger down payment up front - I guess you could do that too, but in the end it doesn’t really matter. You either pay up front or at the end (in case of the car being totaled or traded in/sold). Personally, I would rather have the cash on hand than tied up in a car (especially if the interest rate I’m paying is low).

stasek

Buy a new(er) car they said.... it will be fun!
Since I've basically decided to upgrade one of my cars, and started negotiating the Stinger, I started thinking.... Hmm.... WHAT ELSE can I get in the rather vast 20-30K (out the door) price range???
The must haves include Apple CarPlay and folding rear seats. Nice-to-have? Sportier ride.... Prefer no CVT transmission. Oh, and average and above reliability.

On the new car front - that price range should get me pretty much any mainstream mid-size sedan. Just out of curiosity, sent out a request (via Costco) on a '20 Accord Sport 2.0T. MSRP - $32K, got a quote of $26,877. Not a bad start!
Waiting on a quote for a Mazda 6 Grand Touring Reserve (the Signature would be nice, but probably hard to get under $30K new). Would qualify for loyalty incentive ('11 CX9) and previously owned Protage, MX-6, and 626.
Altima/Maxima? Nah... Next.
Other Koreans? Very tempting, but might as well get the Stinger.
Domestics? Not sure I like any of the Fusions, Malibus, Chargers, etc....

On a used car front, the options appear endless.
Not sure about any of the Germans - owned 3 (A4, 330i, and Jetta) and all were very reliable, but we're going back 20 years.
Acura TLX - the transmission problems worry me... ILX? Small...
Infinitis - ancient tech...
Volvo? The CPO program seems solid, but again - reliability.
Domestics? MKZ w/ the 3.0TT engine looks promising, but... Lacrosse? Regal Sportback?

Daymn! This was supposed to be easy.....

Stroock639

i've seen a number of stingers driving around now, i think they look really nice! if you're getting the TTV6 it seems like a solid choice, and reviews tend to be favorable overall... it's probably not something i'd want to own for awhile though, however i haven't actually driven one lol so maybe it's like actually the best thing ever

arentz07

I know what you mean about it seemingly being easy... I am trying to find a replacement for my IS. The lease is going to be up in a couple months.

Just focus on a price range and what features you want. Does it need to be RWD-based? Do you want ventilated seats? etc. and just check cars off the list. For me I am trying to be a lot more frugal this time, so I am not left with many options. But I'd say if you are trying to keep it under $30k you have quite a few.

Have you thought about IS/RC? You can get a gently used 350 F Sport for right around $30k.

stasek

I would love to pickup another Lexus (whether it be GS, IS, or maybe even an ES), but ancient tech aside, none of them offer rear folding seats.
The car that I’m most likely replacing is the Tundra, and the extended cargo space is a must.