Finance Agreements - daft questions

Cornucopia

Frozen_up_north wrote: »

The issue with these “final balloon payment” packages is when you reach the end of the payments, you have no value in the car to trade in against a new one.

There's no mystery or magic here. If you have equity in your vehicle, it's only there because you originally paid to put it there. If you didn't pay, and you didn't get equity, that's not automatically a problem.

It’s especially painful on your pocket if you put a deposit down too. They seem attractive at the start of the first car purchase, but less so at the end.

Personally, I don't like the word "deposit" in this context, as some people may think that it's an amount that you get back if/when you return the car. I think "initial payment" is more accurate.

If the car is a diesel it may have dropped in value significantly...

All new cars, and indeed most used cars drop in value, often significantly. The mistake that people make in judging car finance schemes is to assume that depreciation is most obvious in those schemes where it is made transparent, whereas the truth is that the depreciation on the same car will be the same, irrespective of the way in which it is financed.

ellecav

Thank you everyone - your replies have been really helpful. I haven't made a final decision on what I'm going to do next but I feel much better informed and more confident going in to speak to dealers about it now.