Refinancing your balloon payment
In its guide published on the 4th of March 2019, the Money Saving Expert explained that car finance lets you spread the cost of buying a car over several years – so that you are able to buy a better vehicle than the one you might otherwise be able to afford.
There are a number of finance options from which to choose, but a number of them are structured in a way that although the monthly repayments may be affordable, at the end of the agreement you are faced with a so-called “balloon” payment that might prove more difficult:
- some hire purchase (HP) agreements, for example, include a final balloon payment – and that helps to ensure that the monthly repayments are kept lower, even though you still have a significant amount to pay in that last instalment;
- lease purchase contracts are also structured so that the regular monthly cost of leasing the vehicle is kept low before the final purchase is made through a balloon payment;
- Personal Contract Purchase (PCP) agreements also have a balloon payment as the contract draws to a close and which must be paid if you want to keep the vehicle rather than hand it back to the finance company or sell it in part exchange.
To help you meet the cost of any of these balloon payments, you might want to consider balloon refinancing that is offered by us here at Forza Finance.
What is balloon finance?
It is a simple and straightforward way of using the value or equity which you have already built up in the car as security for a further loan used to pay off the outstanding balloon instalment.
That way, you avoid having to pay what is likely to be a significant balance yourself, or if the original agreement allows it, to sell the car or offer it in part exchange.
Balloon refinancing works the same way as any other type of car finance and, therefore, involves similar credit checks to confirm your ability to repay the loan as well as sight of the V5 document.
So, if your balloon payment is due anytime soon
You may still have the option of handing back the vehicle to the finance company (if you have a PCP) or try to pay off the balance with funds you have saved. If you want to be sure of keeping the vehicle, however, you may want to turn to us to arrange balloon refinancing – it may prove a simple and straightforward way of settling those hire purchase agreements which incorporate a balloon payment, a lease purchase deal or PCP.
Whether you are a private individual or a company, we are able to arrange either refinance agreements to cover the cost of the balloon payment and, so, let you keep the vehicle longer than otherwise – and still leave you with the option of changing your car if that is your preference.
Either way, talk to one of our friendly advisors today to explore your options by calling 01245 373419.
Header image credit: https://unsplash.com/photos/black-porsche-911-parked-on-parking-lot-bjjuwMXgwys
