Car loan balloon financing differs from conventional car financing in several key respects. The main characteristics are the low monthly repayment rates during the entire term and the high closing rate at the end. This closing rate is also called a balloon and gave the balloon loan car loan its name.
Requirements and providers
Anyone wishing to receive a balloon balloon car loan must essentially meet the same requirements as apply to any other car loan. This is above all a positive Credit Bureau information and a regular income, which ideally comes from working as an employee. However, some car banks also grant loans to freelancers and the self-employed.
The creditworthiness of the customer can often be increased by making a high down payment for the car. Car loans are offered by almost all German branch or direct banks. In addition, under certain conditions it is also possible to take out a car loan from Switzerland without Credit Bureau. Most car dealerships today also have their own car banks. They are then often represented with their own branch in the dealership. The advantage here is that the purchase and financing can be handled under one roof.
When concluding a loan agreement, the two contracting parties specify exactly how high the monthly repayment rate and how high the final rate should be. In addition, it is also necessary that the length of the term be clearly regulated. The principle applies that the lower the monthly rate and the longer the term, the higher the interest rate.
For this reason, anyone interested in balloon car loan financing should seriously ask themselves whether this is really the cheapest form of car financing for them and whether there may be cheaper alternatives.
On the other hand, it must also be taken into account that car loan balloon financing is very interesting for some groups of people and is often the only way for them to finance a new or used car. This is especially true for low earners. The monthly repayment rates for car loan balloon financing are so low that almost everyone can afford them.
A very important point in car loan balloon financing would also be to think about how the final installment should be financed when the contract is signed. Anyone who expects a larger amount of money in the foreseeable future, such as a tax refund, gift or inheritance, should have no problems with this. Otherwise, everyone else would also have the option of refinancing the final installment or returning the vehicle to the dealer.