Balloon loan?

[connoisseurr]

I haven't found a private lendor to do this. I have the Ford Options financing for my Mach-E, which uses the final baloon payment. I chose this for the following reasons:

• Standard Retail Contract shaped like a lease, so I can sell at any time (I don't keep vehicle long)
• Terms of 3 or 4 years, with annual mileage (I chose 4 years @ 7500 miles for lowest payment)
• Ford Options gave me a low interest rate @ 1.9%
• Ford Options gave $2,000 finance incentive

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[NY_Rob]

1. Not planning to necessarily hold the car more than 3 years
2. The instant equity of Premarch orders along with likely high MMR/RV would make for rioe conditions for a balloon loan.

So basically, you're looking to flip it and want to pay close to nothing for as long as you own it.

 

[Ngkgb]

So basically, you're looking to flip it and want to pay close to nothing for as long as you own it.

Sounds about right.

 

[NY_Rob]

You might have been a little more forthcoming in your first post to save some drama and get actual helpful replies. A lot of people here don't think too highly of flipping... just saying.

Good luck with it.

How long have you been waiting for your vehicle?

 

[Ngkgb]

You might have been a little more forthcoming in your first post to save some drama and get actual helpful replies. A lot of people here don't think too highly of flipping... just saying.

Good luck with it.

How long have you been waiting for your vehicle?

Not necessarily going to flip it, but given the EV market, resale value will probably hold. I just don’t think it’s as black and white as people may think.

I put my order in January 2022 and got a Jan/Feb windows.

 

[NY_Rob]

^ Gotcha...

Well some here have waited 4+ years for their vehicles (and are still waiting) then they see someone who's waited a year get their truck and their first thought is to flip it. I'm sure you understand the hard feelings....

 

[Donald Stanfield]

Unless you can pay cash for the car now and you have another use for the money that will make you a higher percentage than the interest you're going to pay until the balloon is due there is absolutely NO advantage to taking that sort of loan. That kind of loan is what has caused many a person to lose everything they own.

Chances are if you're the sort of person who could actually use a balloon loan to your advantage you'd be financially savvy enough that you wouldn't care about anyone else's opinion on how to spend your money. Since you're asking for feedback, nothing wrong with that for the record, you aren't in the situation where you could take advantage of this sort of thing.

Let me reiterate, the ONLY way this makes sense is if you have a current investment that is making more than the interest you would be paying and you can pull the money out of that investment easily enough when the balloon comes due.

 

[Lawrence-of-Blaine]

what a terrible idea especially with only single digit inflation, rising rates, and that you will be upside down for years and need to refi or have cash at the end of the term. If you can't afford the vehicle, find something else.

Single digit inflation?? Where’s that happening?

 

[mini2nut]

A vehicle is a depreciating asset. I can hear Dave Ramsey screaming DON’T DO IT!!!!!!!

 

[thrill]

^ Gotcha...

Well some here have waited 4+ years for their vehicles (and are still waiting) then they see someone who's waited a year get their truck and their first thought is to flip it. I'm sure you understand the hard feelings....

This is hardly anyone's fault other than Rivian's.

 

[thrill]

A vehicle is a depreciating asset. I can hear Dave Ramsey screaming DON’T DO IT!!!!!!!

... when supply meets demand.

 

[Count Orlok]

Single digit inflation?? Where’s that happening?

yes single digit inflation: https://www.usinflationcalculator.com/inflation/current-inflation-rates/

Unless you rely upon media hype and political narratives that highlight headlines that "inflation is up 400%!!!!" simply because it went from 2% to 8%.

I would worry more if we saw a return to 2009's near zero and NEGATIVE inflation rates. Deflation might sound appealing but it is much more insidious than inflation (just ask Japan since 2000).

The fact is the U.S. experienced a rare and unusual period of low inflation from 2009 to 2020. Some economists made a career out of researching the question of "where has inflation gone?" as inflation is an organic component of market economies.

Compared to other economies, inflation in the U.S. remains low despite the shock of the recent return of normal inflation.

All that said, I know data won't convince people who have bought into (any) political narratives but back to the original post in this thread I would say inflation fear has to be one of the worse reasons to consider a balloon auto loan as it requires one to be able to predict changes in prices years from now and don't forget what the 20th Century philosopher Yogi Berra concluded: it's tough to make predictions, especially about the future."

 

[Lawrence-of-Blaine]

Yogi Berra was right half the time, wrong half the time, and unsure half the time.
The gubmint loves to lie to us. Removing critical items that people buy all the time from the calculation for core inflation is subterfuge at it’s finest. Two days ago, my homeowners policy renewed with the premium 80% higher than last year. When I called the insurance provider to ask why, they said inflation is affecting everything. (I’m not making this up.)
So, sure, you can massage statistics all day long and make an academic case that we’re at single-digit, but the real-world effect on John Q. Public is way the hell worse than that.
I agree that balloon loans are like playing with fire. Carry on!

 

[NY_Rob]

We also had a poster from MA say his electric rate (which was already high at $0.28/kWh) increased 64% starting Nov 1st!

 

[SANZC02]

Yogi Berra was right half the time, wrong half the time, and unsure half the time.
The gubmint loves to lie to us. Removing critical items that people buy all the time from the calculation for core inflation is subterfuge at it’s finest. Two days ago, my homeowners policy renewed with the premium 80% higher than last year. When I called the insurance provider to ask why, they said inflation is affecting everything. (I’m not making this up.)
So, sure, you can massage statistics all day long and make an academic case that we’re at single-digit, but the real-world effect on John Q. Public is way the hell worse than that.
I agree that balloon loans are like playing with fire. Carry on!

Do not discount the fact people take advantage of news cycles to push the envelope.

Perfect example are oil companies taking advantage of news about the rises in crude and the Russia/Ukraine war to raise prices not to recover cost but to set record profits…

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