If you need a new car but need a little time to pay it off, a balloon payment car loan might be a good choice for you.
With a balloon payment car loan borrowers pay smaller installments in the beginning and larger payments at the end of the loan. This is a great idea if you know you will have more cash on hand to pay off the debt toward the end of the loan repayment schedule.
Balloon payment loans are easier to get if you have good credit. If you have poor credit it is more difficult to get any type of loan, much less a balloon payment loan because lenders consider you a higher risk.
If you are pursuing a balloon auto loan you might need to consider making the deal a little sweeter for the lender. Securing a cosigner with excellent credit is one option for making you a better risk for the lender. You might also consider increasing your down payment. Increasing your down payment decreases your risk and shows the lender you have a vested interest in paying off the loan in order to recoup your investment.
You also need to consider the interest rate the lender is offering you. If the interest rate is too high it will not benefit you to pursue a balloon car payment loan. You need to know how much total interest you will be paying over the term of the loan. This will keep you from over reaching and ending up too far in debt to get out.
You should also be certain the loan fits your circumstances. Balloon payment car loans are best for borrowers who have a maturing investment or some other forthcoming payment which will enable them to repay the largest part of the loan when it comes due. You want the balloon car payment to come due when you are most able to repay the loan. If your loan continues too far beyond that point you will pay too much interest over time.
As the borrower you need to be certain you have the means to meet your obligations. Leaving a car loan unpaid can have drastic consequences for your credit history.