The balloon financing is a variant of the car loan. One important feature is the relatively high final installment that must be paid at the end of the term and the low rates that are payable over the term. The balloon financing is more expensive than a normal loan, but allows for additional options at the end of the term.
What is a balloon financing?
Usually, balloon financing is used when buying new and used cars. At maturity, borrowers have two options on how to proceed with the final installment: pay the final installment or re-finance it. A return of the vehicle, as it is offered with the three-way loan, is not provided for the balloon financing.
Car finance with down payment and graduation rate
The obvious advantage of the final installment financing is the initially very low rates that have to be paid monthly. They are well below those of normal financing by installment loan or annuity loan. But waiting for the end of the term, however, a much higher final rate. The first method of doing this is to pay the final installment in full, after which the vehicle becomes the property of the customer. However, he can also convert the final installment into a installment loan as part of follow-up financing. This extends the term and at the same time the interest burden associated with the business.
Balloon financing and three-way credit: where is the difference?
The main difference between balloon financing and three-way credit lies in an additional option offered with the latter. In fact, the three-way credit also allows the return of the vehicle to the dealer or manufacturer. As a result, the customer will completely waive the final installment. The three-way loan is especially interesting for customers who are particularly interested in always driving a current model. After returning the vehicle, they can simply choose a newer model and proceed according to the same scheme.
Advantages and disadvantages of balloon financing
Advantages of balloon financing This form of financing offers low rates and can be extended with follow-up financing if needed. In addition, there is the option to repay the installment in one. Disadvantages of balloon financing There is a risk of underestimating the closing rate and not being able to pay. In addition, final installment financing is usually more expensive than a normal installment loan.
Balloon financing or car loan?
Many traders first offer their customers balloon financing, and in most cases, like commercial banks, they also provide a normal installment loan. An essential feature of most auto loans is that the purchased vehicle serves as collateral over retention of title. The registration certificate Part II (formerly called Vehicle Register) therefore remains with the lender until the vehicle has been fully paid off.
An advantage of the car loan is that the interest rates are more favorable because of this additional security than with comparable consumer loans without a purpose. In addition, car loans are usually designed as normal installment loans in the form of an annuity loan. This means that the monthly installments from the first to the last installment are always the same.
Speedy Loan also offers his customers an opportunity to auto finance. With the Speedy Loan small loan amounts of up to 3,000 euros can be claimed. This can be used, for example, to finance short-term repairs, because Speedy Loan car loan is not tied to a specific purpose such as the purchase of a vehicle.
Balloon Finance Online Compare
The same applies to balloon financing as to any other loan: before applying, the most comprehensive credit comparison should be made. The easiest way is of course online, because most banks offer their financing offers on their websites. Speedy Loan provides his customers with a loan calculator for this purpose. Incidentally, it is good to know that all loan inquiries at Speedy Loan are basically Schufa-neutral.
Alternative to balloon financing: Benefits of a car loan through Speedy Loan
1. Free calculator for car finance
Our loan calculator is available to all customers free of charge. It is easy to use and delivers the desired result after just a few seconds. Simply enter the required amount and the desired duration using the slider and the loan amount including interest is displayed.
2. immediate payment
Loans from Speedy Loan are particularly fast, because we have the money if needed already 60 minutes after the application. Simply use our express option!
3. All inquiries are Schufa neutral
Speedy Loan does not forward loan request data to Schufa, as is common with many other banks. The data is usually stored there for one year and can have a negative impact on one’s own base score. However, with a request to Speedy Loan, they make sure that does not happen!
4. No long bond
Long dependencies on banks are a thing of the past. Because with Speedy Loan you are bound by the short terms of our loans only for a short time. The loan amount is repaid within 30 days.
The advantages at a glance:
- Free financing calculator
- Schufa-neutral inquiries
- Immediate payment: credit in 60 minutes
- Short-term bond
Car financing received low
This is why Speedy Loan is so cheap because short-term loans with relatively small amounts bring only a relatively low risk. This allows us correspondingly low interest rates. In addition, we require neither commissions nor processing fees.
What are the interest rates for car financing?
That Speedy Loan is particularly cheap, we would like to demonstrate with an example. You want to replace the final installment of a balloon financing at once. This amounts to 800 euros. Enter this amount in the loan calculator. One month is required for the repayment – ie 30 days as a term in the loan calculator. The result is displayed immediately. The loan from Speedy Loan is available for only 9.27 euros, since the repayment amount amounts to exactly 809.27 euros.
Easier than a balloon financing: How a car loan works
1. Select loan amount Our credit calculator is available for this purpose. Simply enter the required loan amount and the desired term.
The repayment amount is also displayed in the calculator. If you agree with the conditions, then you can proceed with the application. 2. Apply for credit Clicking on the mouse will take you to a form in which you must enter all contact details. This is followed by the binding information, which must be completed in full and truthfully.
Next you can optionally choose from our extra services. 3. Verification With Videoident and Postident methods we provide two reliable options. For the videoidentverfahren a webcam is required, since you identify yourself online here by video chat. With the postident procedure, you can have the verification carried out at the nearest post office.
Conditions for balloon financing and car loans
Even with Speedy Loan there are a few prerequisites that have to be fulfilled in advance. If the following statements apply to you, nothing stands in the way of a loan:
- You are at least 18 years old.
- You have a German bank account.
- You have a regular income.
- Her main residence is in Germany.
- You have at least a medium credit rating
For the application you will need your ID card or a passport as well as the last payroll. If you want to be verified by Videoident, you also need a webcam.
Possible uses of balloon financing and car loans
Both balloon financing and normal car loan are provided by dealers or banks only for the purpose of financing new or used vehicles.
The car loan from Speedy Loan, however, is available for free use. It can also be used to pay the completion rate, to finance repairs or tuning – that’s up to our customers alone!
End balloon funding early
A comparison of the different financing options for new and used cars shows that balloon financing is the much more expensive alternative. It will only be cheaper if the loan is repaid earlier. Especially if follow-up financing of the final installment remains the only option, replacement with a loan from Speedy Loan should be envisaged to save on capital costs. At this point, one can easily resort to another loan without risking any prepayment penalties due to premature repayment.
Rescheduling balloon financing with car loan
Speedy Loan provides a favorable answer to the question of how best to deal with a pending closing rate. Our particularly low-priced short-term loans are very well suited to replace final installments and avoid expensive follow-up financing.