topic Re: Best Balloon Payment Auto Loan Lender? in Auto Loans

Best Balloon Payment Auto Loan Lender?

Anonymous — Wed, 30 Apr 2014 18:01:05 GMT

I'm looking for a lender will offers balloon auto loans. (smaller monthly payments and large payy-off payment at end of term)

**MUST HAVE OPTION FOR REFINANCING FINAL BALLOON PAYMENT**

Sorry for the caps. I have a short credit history 2+ years.. but no missed payments.. 1% utilization of overall revolving debt.. a 3k personal loan... and fico of 720+

I know penfed offers one.. but ive heard their hard to get approved with.

Thanks in advance.

Re: Best Balloon Payment Auto Loan Lender?

pizzadude — Wed, 30 Apr 2014 18:33:16 GMT

I haven't heard of these loans before ~ not that they don't exist but I'm totally unfamiliar with them.

Almost sounds like a lease to me.

Re: Best Balloon Payment Auto Loan Lender?

Anonymous — Wed, 30 Apr 2014 18:42:38 GMT

@pizzadude wrote:
I haven't heard of these loans before ~ not that they don't exist but I'm totally unfamiliar with them.

Almost sounds like a lease to me.

Yeah, its like a lease but doesnt carry any milage restrictions or anything. Its basically financing the vehicle.

Example -

10k auto loan with balloon payment.

$100 a month for 36 months which is qual to $3600.

final balloon payment would be 10k-3.6k= 6.4k

Or you refinance the remaining 6.4k.

Re: Best Balloon Payment Auto Loan Lender?

StartingOver10 — Wed, 30 Apr 2014 19:48:10 GMT

Never heard of it either.

Sounds like a disaster waiting to happen though....wouldn't the car be waaayyy upside down at the end of the term? Most legitimate lenders wouldn't want to put you into a bad deal.

Re: Best Balloon Payment Auto Loan Lender?

Hoya08 — Wed, 30 Apr 2014 19:56:50 GMT

They do exist. I have one on my 2014 Audi.

They're almost identical to leases with the exceptions of: no mileage limiations, and you can refinance or sell the vehicle before the ballon payment is due.

PenFED offers this type of loan. It's called the Payment Saver Plan (for new and "used" vehicles). They have a calculator on their website to provide a ball-park monthly figure.

Re: Best Balloon Payment Auto Loan Lender?

azguy13 — Wed, 30 Apr 2014 20:00:56 GMT

I feel like in order to refi the vehicle before the balloon payment is due, you would need to come up with a decent size payment to get to the NADA 100% value. I would imagine hte vehicle would be WAY upside down at that point. Reminds me of when people got in trouble with the interest only mortgages which was one of the reasons for the housing market burst.

Re: Best Balloon Payment Auto Loan Lender?

Anonymous — Wed, 30 Apr 2014 20:04:47 GMT

@Hoya08 wrote:
They do exist. I have one on my 2014 Audi.

They're almost identical to leases with the exceptions of: no mileage limiations, and you can refinance or sell the vehicle before the ballon payment is due.

PenFED offers this type of loan. It's called the Payment Saver Plan (for new and "used" vehicles). They have a calculator on their website to provide a ball-park monthly figure.

Might I ask, where did you recieve your payment saver/baloon loan from?

If you wouldnt mind sharing your score? (or the one they pulled) as well ss credit profile situation at time of application?

Also, what rate did you get? Thanks in advance if you wouldnt mind sharing any info.

Re: Best Balloon Payment Auto Loan Lender?

Remember0 — Wed, 30 Apr 2014 20:17:54 GMT

As mentioned, Pentagon Federal is the only one I know of. They are conservative, but I think a 720 has a chance of working there.

You can refi the balance, BUT it's not a guarantee. AKA PenFed doesn't guarantee they will refi you. You'd have to apply to PenFed or someone else and get approved! (Keep in mind you'll likely need to bring cash to the table as you might be upside down)

Re: Best Balloon Payment Auto Loan Lender?

Hoya08 — Wed, 30 Apr 2014 20:21:53 GMT

I'm financing through PenFED.

MY FAKO scores (at time of application) are 770+

1.99% at application date, but 2.49% at dispersement date (60 months term).

As stated in this thread, you have to be fiscally disciplined with this plan or risk losing the car and ruining your credit.

Re: Best Balloon Payment Auto Loan Lender?

Anonymous — Wed, 30 Apr 2014 20:26:34 GMT

If i have 720+ score, no misses payments or deliquents on my 2 year history. If i made all ontime payments for the loan term, I dont see any reason why they would decline me for a refinance Correct?

Or even for another company to approve me for a refinance.

At that point my score would be even higher. 750+.

Re: Best Balloon Payment Auto Loan Lender?

Hoya08 — Wed, 30 Apr 2014 20:39:16 GMT

There are no guarantees PenFed will refinance their own loan. And depending on how much you put-down, and the value of your car at 59-months (PenFed utilizes NADA), you may be upside-down at 59-months. In that case, you will require another down-payment to refinance.

Re: Best Balloon Payment Auto Loan Lender?

azguy13 — Wed, 30 Apr 2014 20:49:35 GMT

@Hoya08 wrote:
There are no guarantees PenFed will refinance their own loan. And depending on how much you put-down, and the value of your car at 59-months (PenFed utilizes NADA), you may be upside-down at 59-months. In that case, you will require another down-payment to refinance.

So basically, set aside a decent amount of money and hope for a refi

Re: Best Balloon Payment Auto Loan Lender?

Anonymous — Wed, 30 Apr 2014 20:51:26 GMT

@azguy13 wrote:
@Hoya08 wrote:
There are no guarantees PenFed will refinance their own loan. And depending on how much you put-down, and the value of your car at 59-months (PenFed utilizes NADA), you may be upside-down at 59-months. In that case, you will require another down-payment to refinance.
So basically, set aside a decent amount of money and hope for a refi

That, or you can refinance with another company. That should be fairly easy with 59 months of on time payments 7 years history and nothing bad on credit. 750+ score. Someone will approve you with a good rate.

Re: Best Balloon Payment Auto Loan Lender?

Hoya08 — Wed, 30 Apr 2014 20:56:06 GMT

Yup.

He has 3 options:

1. Pay the ballon-payment at the 60-month mark; or

2. Put a sizeable down payment up-front so he's not upside down when he refinances later; or

3. Put a sizeable down payment when he refinances.

In any scenario, the OP has to set-aside money.

Re: Best Balloon Payment Auto Loan Lender?

Anonymous — Wed, 30 Apr 2014 21:05:58 GMT

@Hoya08 wrote:
Yup.

He has 3 options:

1. Pay the ballon-payment at the 60-month mark; or
2. Put a sizeable down payment up-front so he's not upside down when he refinances later; or
3. Put a sizeable down payment when he refinances.

In any scenario, the OP has to set-aside money.

Could you guys explain upside down? Sorry first time with an auto loan.

Also would being upside down affect you if you decide to do the following?

Refinance before 59 months. (maybe 50)

Or, Get a refinance laon from another company.

Re: Best Balloon Payment Auto Loan Lender?

azguy13 — Wed, 30 Apr 2014 21:07:58 GMT

@Anonymous wrote:
@Hoya08 wrote:
Yup.

He has 3 options:

1. Pay the ballon-payment at the 60-month mark; or
2. Put a sizeable down payment up-front so he's not upside down when he refinances later; or
3. Put a sizeable down payment when he refinances.

In any scenario, the OP has to set-aside money.
Could you guys explain upside down? Sorry first time with an auto loan.

Also would being upside down affect you if you decide to do the following?

Refinance before 59 months. (maybe 50)
Or, Get a refinance laon from another company.

Upside down means you owe more than the car is worth. Most lenders will lend up to 100% value of the vehicle (per NADA) so if you are upside down at the time of applying for refi, you would need to have a down payment to bring what you owe down to 100% NADA at a minimum.

Re: Best Balloon Payment Auto Loan Lender?

Anonymous — Wed, 30 Apr 2014 21:11:44 GMT

@azguy13 wrote:
@Anonymous wrote:
@Hoya08 wrote:
Yup.

He has 3 options:

1. Pay the ballon-payment at the 60-month mark; or
2. Put a sizeable down payment up-front so he's not upside down when he refinances later; or
3. Put a sizeable down payment when he refinances.

In any scenario, the OP has to set-aside money.
Could you guys explain upside down? Sorry first time with an auto loan.

Also would being upside down affect you if you decide to do the following?

Refinance before 59 months. (maybe 50)
Or, Get a refinance laon from another company.
Upside down means you owe more than the car is worth. Most lenders will lend up to 100% value of the vehicle (per NADA) so if you are upside down at the time of applying for refi, you would need to have a down payment to bring what you owe down to 100% NADA at a minimum.

Gotcha, but that would only be a problem when you refinance with the same company you got the loan from correct? I could essentially just go to capital one get a loan for the final balloon payment.

Re: Best Balloon Payment Auto Loan Lender?

Hoya08 — Wed, 30 Apr 2014 21:20:44 GMT

Regardless of which bank you refi with, If you're upside down, you're upside down (based upon NADA/Black Book/or whomever the lending instituation uses to asses the value of your vehicle at refi-time).

Re: Best Balloon Payment Auto Loan Lender?

Anonymous — Wed, 30 Apr 2014 21:28:34 GMT

Ahhhh I see now. Didnt know that. My apologises for being a noob with this.

One final question. If im upside down by approximately 1k or so. In my example

I owe 15k baloon payment.

Car is worth 14k according to them.

Would 1k+ downpayment, closing the gap essentially be enough to get me out of that upside down situatioin?

Re: Best Balloon Payment Auto Loan Lender?

Hoya08 — Wed, 30 Apr 2014 21:36:41 GMT

Not necessarily.

If the bank you're refinancing with covers 100% of a used car (since that's what your car will be), then 1k will suffice. But if the bank only covers 80%, then you'll need 3k. For the most part, most banks will cover UP TO 100%.

And in you're example, a balloon payment ~15k means (assuming you have excellent credit): a loan principal around 40k and a monthly payment around 480.

That's putting the horse before the cart. You have to be a PenFed member first to apply for their payment saver plan.