How exactly do those ballon finance deals work?
02-03-2005, 05:26 PM
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How exactly do those ballon finance deals work?
My dad is looking at getting my sister a vehicle. He wanted to lease one for her but almost no places lease here in NY now. Most are doing those balloon payments. Can someone explain how exactly they work?
My understanding is that they are somewhat like a lease but the car company has less liability than they do when they lease cars, hence the main reason places stopped leasing cars. I belive that you can turn in the car instead of paying the balloon payment. Am I correct in this assumption?
My understanding is that they are somewhat like a lease but the car company has less liability than they do when they lease cars, hence the main reason places stopped leasing cars. I belive that you can turn in the car instead of paying the balloon payment. Am I correct in this assumption?
02-03-2005, 05:45 PM
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Originally Posted by benjamin
For Hondas and Acuras, yes, you are correct. At the end of the term you return the vehicle instead of the final payment.
Thanks man. Do you know about any of the other car companies balloon financing?
02-03-2005, 05:53 PM
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BMW offers a genuine lease in New York, so their balloon payment plan is different in that you actually have to make that final payment.
I'm not sure about any other manufacturers.
I'm not sure about any other manufacturers.
02-03-2005, 07:30 PM
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In New York, leasing is sort of a grey area right now due to something called vicarious liability. The short version is that, when a leased vehicle is involved in an accident, the title holder is not the guy who is leasing the car. In New York State, the party that has title is legally liable. It dates back about a hundred years to protect chauffeurs. Seriously.
I'd prefer a lease to a balloon payment because, when you lease the vehicle, you're only charged sales tax on the total amount of your payments. When you do balloon payment financing, you take title to the vehicle and are thus required to pay sales tax on the entire selling price of the vehicle. It sucks on something the price of an Accord -- imagine it on a 745Li.
Some manufacturers have responded to vicarious liability by increasing lease inception fees and some have just discontinued leasing in New York. The good news is that there are lobbying groups out there trying to eliminate vicarious liability as it no longer serves a purpose except making cars more expensive.
I'd prefer a lease to a balloon payment because, when you lease the vehicle, you're only charged sales tax on the total amount of your payments. When you do balloon payment financing, you take title to the vehicle and are thus required to pay sales tax on the entire selling price of the vehicle. It sucks on something the price of an Accord -- imagine it on a 745Li.
Some manufacturers have responded to vicarious liability by increasing lease inception fees and some have just discontinued leasing in New York. The good news is that there are lobbying groups out there trying to eliminate vicarious liability as it no longer serves a purpose except making cars more expensive.
02-03-2005, 07:32 PM
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In some states you have to pay all the tax up front. For example, Texas.
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