Toyota Financial Services (TFS) is available to answer any questions you may have.
Here are some basic facts:
End of lease, instalment or rental option
Depending on what Finance Package you have with TFS, you’ll have one or two things
to take into consideration. If you’ve opted for an instalment, rental or lease agreement,
you’ll have these choices to make when your finance contract ends:
- Hand the car back to the bank
- Transfer the vehicle into your name – You can do this if you do not have a balloon
payment to make and have kept up to date with your repayments
- If your contract requires a balloon payment, pay the bank the outstanding amount
and take ownership.
- Refinance. If you don’t have the money to make the balloon payment, you may be able
to refinance the outstanding amount.
What is a balloon payment
Basically a balloon payment measures up the monthly repayments and the usage of
the car to structure a payment amount that will be equivalent to the anticipated
market value of the car when it is sold, so really this is an inflated instalment
that is payable at the end of your credit agreement.
Generally, the provision of a balloon payment is to lower the monthly repayments,
making it more affordable on a month by month basis for you.
Since you, the customer, bears the risk associated with a balloon payment you are
liable for the full balloon value in the final month of your contract. The balloon
forms part of the payment stream.
Know the lingo
Balloon Payment / Residual Payment
You may sometimes hear a balloon payment referred to as a residual payment.
Balloon payments & the NCS
1. Under the National Credit Act, a balloon payment can now be offered to any consumer
on an instalment sale or lease agreement.
2. The balloon amount is traditionally associated with a projected estimate value.
3. The estimate value is influenced by the length of the credit agreement (i.e.
36, 48 or 60 months), and by the market sentiment toward the vehicle being financed.