I was wondering what the difference is between a regular lease and a balloon lease. Thanx alot.

Chris

 

A balloon loan has a large payment of principal at the end.

balloon mortgage

balloon mortgage (b?-l?n? m

 

I think you might be thinking of a car loan with a balloon payment at the end. You really can't have a balloon lease.

Some of the finance companies have started to offer loans with a balloon payment at the end as an alternative to leasing. This program would let you pay-off the loan at the end or turn the vehicle in. The balloon is based on residual value like a lease.

However, with the balloon loans you can carry less insurance and have the advantages of buying. Additionally the finance company doesnt have the residual value risk.

Hopefully that explains things.

 

As Wimpy said:

"I will gladly pay you Tuesday for a hamburger today!"

Wimpy's burger strategy as well as large car balloon payments can leave the the buyer "underwater".

 

Sounds like just another way to make someone feel like they can afford something that they really can't. Many times a balloon loan involves interest only payments and then the total principal due at the close. Wimpy got to eat better today, and you will be driving a better car today - but tomorrow will come, and beleive me the dealer will not lose. Like Keith D said, this just transfers the residual value risk back to you. Ouch!

Keep on Tec'n,

Joser
Silver/Red

 

Well typically the payments on these facilities are comparable to a lease. You will pay *SOME* principal, but not much. You need to analyze what the balloon is at the end, and whether or not the car can be turned in in lieu of the value.

 

If you're going to lease a car AND you have a Palm device,
I highly recommend you download a program called Lease
it!

It's easy to use and it should help prevent them from "pulling the wool over your eyes"!!!

 

another option, if you belong to a credit union, is a company called www.paymentshaver.com . they offer a balloon-type finance product, the big difference is that residual is guaranteed and you have the option of walking away from the vehicle at the end of the contract. if you are a high mileage driver and don't want to commit to the vehicle (as with a purchase) this can be a valid option. lenth of terms vary from 36 months out to 84. they offer some attractive high mileage terms($0.08 per mile of 18K annual), but just don't expect the same sky-high residuals that honda finance is currently offering. their 3/36 is 55% while honda is 67 or 68%, last time i checked.

good luck.

 

You should be able to walk away from either a balloon or a lease. The main difference is that the balloon is registered in the owner's name (resulting in lower insurance) and the lease is registered in the leasing company's name.

If you are talking about American Honda Finance, the balloon and the lease are the same at the end. The main difference would be the tax credit (depend on your state).

I have done both, and haven't seen a difference, except that the lease payment is usually cheaper because of lower rates and tax advantages.

 

Actually, SOME company's balloon programs leave you responsible for disposing of the vehicle via a trade or private party sale. Thats the kick, you need to check and double check before you engage in any contract, which unfortunately some people don't do.