Scared of high monthly payments and hidden fees when looking for finance? It's time to finance smarter, and find the loan that works best for you.
When choosing finance for your next car, it is important to pay attention to all aspects of your loan to ensure you are getting the right deal.
Whether it's the benefit of lower monthly repayments, including a balloon payment or omitting early exit fees, shaping your loan around your needs will ensure you get the finance deal that is right for you, and avoid unnecessary fees coming back to bite you.
One option that stratton offers our customers when tailoring a loan is a Balloon Payment.
What is a Balloon Payment?
A Balloon Payment is a lump sum payment paid to the lender at the end of a loan term, after all your monthly repayments have finished.
It's like a reverse deposit, made at the end of your loan instead of the start.
Say you agree to a 25% Balloon Payment on a 3-year loan, you will pay back 75% of your loan over those 3 years, then make the final 25% payment in one go.
What are the benefits?
This allows you to repay a smaller percentage of your loan over its term, which means lower repayment costs month-to-month. The remaining percentage owed on the loan is paid in bulk at the end of the contract.
Having that extra money back in your pocket month-to-month means less strain on your wallet, and helps you save some money for a rainy day.
Because many people choose to trade in their vehicle at the end of their loan, this generally then covers the balloon payment amount when it is due, and allows them to upgrade to a new car.
Alternatively, for those who want to keep their car, they can choose to refinance to pay off their balloon payment over a period of time. This gives them the ability to refinance their original loan to get a better interest rate or to change financiers.
It's best to ask questions when organising your finance, to ensure that you are getting a package that is tailor-made to you and your needs.
What about Hidden Fees?
Low rates can look snazzy on a billboard, but be aware if there are any hidden fees you'll have to pay. If there are, work out what the overall cost of your loan will be to get the full picture, and make sure you don't get locked into a deal which will end up costing you more because of the lure of a low rate.
Fees to look out for
Early Exit Fees
An Early Exit Fee (or Early Termination Fee) is a fee for paying out your loan early. That means that if you were wanting to upgrade your car, or want to payout your loan in its entirety before your contract ends, you will be charged extra fees for doing so.
Monthly account keeping fees
Account keeping fees are small, monthly fees that you can often be charged simply for signing up for a car loan. Whilst they may be relatively low in cost, when charged every month over a 3-year loan, they can really add up!
Establishment fees and origination fees
These are one off fees that are charged for creating and processing your loan documentation - remember to account for them when working out how much your loan will cost you overall, or they can come as quite a surprise.
How does stratton help?
At stratton we pride ourselves on our knowledge and our communication with our clients throughout the entire loan process.
We will find you the right lender and a finance package that is tailored to your needs, and you will know straight-up what you can expect to pay throughout the loan term.
We also hate early exit fees, that's why we've created our own No Early Exit Fees offer. If you like to upgrade your car regularly (or think that you might have to go from a convertible to a family car in the near future), be sure to speak to your consultant about a loan with no early exit fees.
With access to a wide-range of lenders, we can find a great deal for you, not just one that looks best on the surface.
Finance smarter, and make sure you're getting the deal that's right for you.