chuckd94

Hi, I am new to the forum. I kinda stumbled across it while researching the C230k, a car I have decided that I need. Anyway, I was wondering whether anyone has any experience with the MB Balloon payment financing option. I am leasing now, and I hate it (June is so far away). I like the idea of the smaller payments, but I worry that I will kick myself in a few years for not paying a little extra now. Thanks for the imput!

revstriker

The balloon option from my understanding is much like a lease. The final payment is the balloon. You make an agreement to turn in the car and walk away (I've heard this called something like a walk away loan), or refinance the final payment (or of course, pay in cash). There are advantages and disadvantages over a lease. Some states require additional insurance coverage for a lease. With a balloon loan you are actually financing, so you don't have to get this. One disadvantage would be if you wanted to get rid of the car early. Because you are only paying a small amount of the principle, the car depreciates much faster than you are paying (No Gap Insurance). You would be very upsidedown.

As always, weigh your options carefully for your situation.

Ethan

I looked at the balloon option on my last purchase. It's really not worth it at all. You end up paying interest on interest on the balloon... I suggest talking to your dealer, and after getting all the numbers, sit down and figure how much you're paying lease. vs. financing. vs. balloon.

By the way, those of you who went with MBCC financing, did anyone get lower than 7.5% interest? My dealer insisted this was the lowest they went?

KWiK

Chuckd94,
Don't do the baloon. Be patient and save until you have a down payment large enough to give you the payments you desire.

Ethan,
I didn't use MBCC, but I did get my financing at the dealer. I got a rate of 5.59% from Chase.

revstriker

I'm not disagreeing with you, but I don't understand what you mean by interest on the interest? You would be paying interest on the balance of principle, just like in any other car loan, only your balance would be higher due to the fact that you are paying your principle down at a slower rate.

I agree with you on about sitting down and looking at the numbers. This is always the smart thing to do. And don't take the word of the finance officer either. Make sure everything is in writing.

btw- I do not have a balloon loan, and I'm not trying to recommend, or not recommend one.

7.5 is what MB told me also. I already had a lower rate from outside, so I didn't go with them.

revstriker

I think this all depends upon the interest rate. With a lower interest rate, I would be much more willing to put less down. If I can afford to put down say 10K, but I get an nice interest rate of 5.5%, I will only put 3K down (or 10%), and put the remaining 7K in investments. I can easily clear more than 5.5% a year doing this, so I would rather have this money working for me than for them.

--Just a thought.

Flashman

Take a look at a 72 month (extra year) loan before looking at a balloon payment. There are some good rates online at http://www.peoplefirst.com/

chuckd94

I didn't realize that 7.5% is the lowest MB would go. That is a tough pill to swallow. I think that I will start looking more closely at the 72 month loans. Thanks everyone.

KWiK

According to Autosite.com MBCC is currently offering 6.5% on all but a few models.

galaxygrrl

Eloan has 5.5% if you have good credit. My last car loan was through them. They're fine.

revstriker

I've used eloan as well (not currently). I like the "blank check" idea. You can do this for a used car as well.