This is a discussion on Help understanding Balloon Finance within the Mercedes CLA Canada forums, part of the Mercedes-Benz CLA World Forums category; Hi hoping some of the sales folks can help me understand something. Here's what usually happens. I buy a car (CLA45) for a few years ...
Hi hoping some of the sales folks can help me understand something. Here's what usually happens. I buy a car (CLA45) for a few years and often like to return it. So typically I'm not adverse to leasing. I'd like to consider keeping the CLA45 (I may be kidding myself here). At the end of the lease, I have the option to return it or buy it out.
So why would someone do a balloon finance - I understand there's a lower interest cost in the term. But I essentially am obligated to the amount at the end of the balloon finance term. More risk in my eyes vs. leasing where I have the option to walk away.
Can someone explain if there ever IS a good reason to balloon finance?
Have you gotten the rates for finance vs. lease yet? My dealership says they will have it later this week or early next.
MB's best lease money factor for CLA250 of 0.00162 is 3.89%. The standard lease money factor CLA45 gets is 0.00225 which is 5.4%. So financing is a lot cheaper.
Maybe he means in interest cost?
Yeah, I think from the other thread the difference in interpretation in the balloon loan is whether there is interest charged on the balloon portion.
Now I've never used a balloon loan before so I'm not 100% sure but logically I can't see MB offering 0% interest on the balloon portion or else why would anyone pay cash? Leverage an interest free loan from MB and invest in something else during the 48 months.
Even if the dealer is telling you this, I'd do my own due diligence and research it myself before signing any financing terms. Most sales guys are not finance guys and sometimes they are not car guys either - how many times do you find that you know more about the car than the sales guy? lol