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Old 02-13-2003, 07:13 PM
New2Mercedes New2Mercedes is offline
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Join Date: Aug 2002
Location: Northern Virginia
Posts: 64
My Beautiful Balloon

The balloon loan (flex financing) is being touted by dealers as an answer to the lease. It addresses the negative aspect of leasing that no "equity" is built up but also provides a lower payment due to its basis on the expected "residual" value not on the full balance. The higher the residual, like leasing, the lower the payment. In theory, if at the end of the term the residual is $24k and you could sell for $28k...CHAAACHING...go for it...but as was stated the reverse might be true....dreaded NEGATIVE EQUITY, muy mal.

I think it comes down to how long you want to own the car. Since you will want to swap out frequently your best choice will be whichever financing option offers you the least money upfront and a payment that fits your budget since you will not be able to capitalize those funds over a long term ownership. Make sure you sit down with a good F&I manager at the dealer, they can run each scenario for you and you can make an informed decision based on the model you are considering . Remember the car suffers its greatest depreciation in its first 2-3 yrs, about when you would consider a trade-in and that money has to be absorbed by someone and that someone will likely be the owner.

My .02
92 500e Spruce/Parchment (41k)
95 E320 Cab Cabernet/Parch (30K)
94 LS 400 Anniv Ed (traded on 500e)
85 Toyota Supra (103k)
90 Toyota 4Runner (56K)
Sometimes you have to put your foot down to get a leg up
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