rstone

I was talking to my dealer about a new vehicle and he seemed like he was trying to talk me out of finacing with a balloon payment at the end. He said they just arent attractive anymore.

I have never went this route with any other vehicle I have ever owned before, but like the idea of a lower payment. I prefer not to lease do to the restriction on down payment amount that mercedes has. Not to mention the lease due to that downpayment restriction would be higher than the financing option since I plan on making a large down payment, plus I have a generious amount of equity left in my current vehicle. While down payment will make the payment lower, I could probably cut it in half with balloon financing.

My plan would be to finance it with a balloon payment at the end, to keep the payments low, then pay it off prior to the end of the finance term.

Is balloon financing really not a good option? Mercedes financing says very little about this option and I could'nt find anything about it on the internet.

Any advice would be appreciated.

LeaseCompare

Balloon notes are basically an open ended lease as you are responsible for the "balloon" balance at the end of the term. This is one of the real advantages to leasing.

We normally don't recommend these.

elonepb

I'm pretty sure balloon financing is just another way of leasing, and was created for states that didn't allow leases? Maybe not allow... but something along those lines.

At the end of the term you can either buy the car outright, or the dealer buys the car back at the agreed upon price when you first sign the contract.

A balloon finance done right should pretty much just be a lease that you turn in at the end and wipe your hands clean. Depending upon the money factor / interest rate you are getting, it may or may not be better than their current lease offers.

rstone

Well if I understand how balloons work I don't have the 15k downpayment restriction with balloon financing, which means I can get a lower payment then conventional financing, with the attractive payment you would normally get with a lease.

If I were to lease, due to the 15k restriction on the down payment, it just isnt very attractive vs. balloon financing.

Example: (From MB Finance)

2007 S550 MSRP $86,175

Option 1: Convention Finance
35K Down, 60 mo, 7.25% = 1039 mo.

Option 2: Balloon Finance
35k Down, 60 mo, 7.25% = 508 mo.

Option 3: Lease
15k Down, 36 mo, 10K mi = 1020 mo.

It would appear to me that even with a higher interest rate on the balloon finance, its a more attractive monthly payment. Am I missing something? Why wouldnt a balloon financing be attractive if that is the case? Also I have no intention of walking away from the vehicle... since I want to own it in the end. So like I said before I plan on paying it off prior to the end of the term.

LeaseCompare

Put the lease in there for 60 months and see what happens to your comparison.

rstone

The price actually went up to $1024 when I checked for 60 months. The only thing thats going to bring that down is a bigger down payment, and MB has a max of 15k. I don't see how a lease for the amount we are taking about is more advantageous.

Source: Mercedes Benz Financial

http://www.mercedesbenzfinancial.com...ntEstimator.do

Raboom1

So, you've figured out that Balloon Financing is better than conventional financing? Is that what I'm understanding from you? I want to do Balloon next time, too. Too hard to stay within the confines of mileage with leasing and the payment for the same car would be about $200 less with Balloon financing. I want to do it; you gonna do it, too?

gplank

Does anyone have an new thoughts or experience with balloon financing?

I had it with my former BMW X5 and it made the payments a lot lower. And since I take good car of my cars and have low mileage, I know the resale value will stay high, so that I can sell it at the end of the term and maybe even get a few bucks back the end.

Mercedes Benz Financial offers balloon financing, but don't know who else would offer it for a MB SUV.

Penfed has a great deal on auto financing, including balloon. But they don't offer balloon for SUVs. (They also have a 5% back on gas credit card, which is the best I've found.)

Ally Bank offers balloon, but not for Mercedes Benz vehicles.

I would like to have a reasonable alternative to MB Financial, at least to compare.

autopia11

Well, as concern as balloon financing it has some benefits but still it is not so popular among the people yet eve at Mercedes financing you did not get the detailed information so better to leave it or if still you want to go for it then make sure to get full details as check does it really so beneficial to you and then decide.