Balloon Financing

HOW IT WORKS

If you are looking to lower your monthly payments but you still want a new Hyundai vehicle, Balloon financing is right up your alley.

With balloon financing, your total amount financed is essentially broken down into 2 segments. I will describe them separately as segment A and B.

1 SEGMENT A

Segment A is the amount you will finance over a short term, usually 36 months. The amount is paid back to your lender in the form of your monthly payments. Any rebate or money down will be applied to this segment to lower your payment. Any negative equity or accessories your purchase will also be applied to this segment resulting in an increase in your payment.

2 SEGMENT B

Segment B is the lump sum amount due on the 36th month after you have made all your payments and paid off segment A. The amount is calculated as a percentage of MSRP, usually 45-60%.

In balloon financing, you make a number of monthly payments (segment A) until your lump sum, or balloon amount (segment B) is due. At that time, you have 4 options

  1. Pay off the entire amount and keep your vehicle.
  2. Refinance the remaining balance and keep your vehicle.
  3. Trade your vehicle for a new Hyundai.  The GREAT thing about this option is that Hyundai's trade-in-guarantee goes perfectly with balloon financing, ensuring that your vehicle will be worth more than you owe at the time your balloon is due. See how Hyundai is now guaranteeing the trade-in value of their vehicles 2-4 years down the road!
  4. Turn in your vehicle and be done with it. Simply pay a $400 disposition fee and start taking the train.

Also keep in mind that most balloons have mileage restrictions of 12,000 or 15,000 miles per year. If you are trading or turning in the vehicle (option 3 or 4), make sure you take good care of your vehicle since there are deductions for damage in excess of normal wear and use.

Balloons are great for you if:

  • You need a low payment and are expecting more money later (ex: recent college grads)
  • You usually trade vehicles every 2-4 years anyways
  • You want to get rid of some negative equity without your payment going up too much
  • You need a payment of $100 or lower and have some money down (ex: trade an older, less reliable car and balloon finance a new Hyundai with warranty for very little per month)

    • PLUS, Hyundai often offers additional rebates for balloon deals. Rates are continually changing, so call us at (940) 220-6749 or contact us here for current rates and incentives.