The most common car and LCV (Light Commercial vehicle) finance products are PCP and Hire-Purchase, both of which are also used for financing HGV’s, Construction and Agricultural machinery. Compatible with both new & used vehicles and machinery, these products, particularly PCP, transformed new vehicle selling by allowing more people to afford brand new purchases while keeping your monthly outgoings affordable. The product is made up of monthly repayments typically over a 3- or 4-year term, with a sum left at the end, known as the balloon value or balloon payment. You need to pay the balloon to own the vehicle. Not all Hire-Purchase agreements will have a balloon payment, but it has become an attractive option for many high-value purchases.
So, if you have a balloon payment due, want to keep your current asset but can’t afford a large outlay, what are your options?
Credo Finance and the broker partners that we work with have products available to refinance the balloon payment on (or just before) it falls due. The new lender pays off the current finance company & the value of the balloon is refinanced over a further 2-, 3- or 4-year term.
This means you keep your outgoings manageable, but also have the flexibility to settle the remainder early if you wish. You’re not tied in for the full term, keeping an asset that’s ever getting older and further from what you really want to be using.
Most people don’t know this is an option. At Credo we’ll contact our customers around 3 months before their balloon payment is due, to start the discussion around the options. Of course, paying the balloon through your own cash reserves is still an option, but we understand that many people would prefer to preserve their cash rather than put this into one asset.
We’re also able to step in and help with refinancing balloon payments owed to other lenders, ideal for if you’ve taken manufacturer finance options when buying a new asset or arranged it via the dealer.
If this interests you contact us today and we can talk you through your options
