Unlimited Mileage Finance Lease with a Balloon

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Unlimited Mileage Finance Lease with a Balloon

 

This is a cautionary tale and one that anybody who is currently looking for their next vehicle needs to be aware of. Finance Lease with a Balloon carries risk; the end value is all down to you, the customer, not the finance company.

Unlimited Mileage Finance Lease with a Balloon

Customer Risk

This may seem an obvious statement to make but it is important to understand that just because the word “lease” appears in the funding name, it doesn’t mean that you can simply hand the keys back at the end.

If the vehicle is worth less than the balloon when the contract comes to an end then ultimately, this is a shortfall that you will have to fund.

Of course, if you are comfortable with this prospect and would also entertain taking on a Lease Purchase where again, the end value risk is yours, this is not a problem. In fact, Finance Lease with a Balloon suits many parties very well.

Let’s take a look at what can happen if the product is mis-sold or misunderstood by the customer.

Unlimited Mileage Finance Lease with a Balloon

There are some companies that quote unlimited mileage Finance Lease with Balloon contracts. The “unlimited mileage” phrase sounds great, doesn’t it? No mileage restrictions and a fixed payment lease – what a wonderful concept.

Where the problem comes in is when companies will sell this product and calculate the end balloon working on the customer driving 10,000 miles per annum.

When the vehicle comes to the end of the finance lease and the 30,000 miles per annum customer realises that there is a – potentially very large – shortfall is where the problem occurs.

Bad or deliberately misleading sales advice can leave unsuspecting customers with a large bill at the end of their contract term.

Finance Lease with a Balloon

Like I said before, Finance Lease with a Balloon is not a problematic form of funding – it just needs to be done right (Click here to read our Finance Lease Contract Guide.).

A reputable company will work out your balloon payment based on your annual mileage, so it is crucial that you work with them on this when you are getting your deal together.

Obviously, if a company is happy to quote you Finance Lease without bothering to even ask your mileage per annum then alarm bells should ring.

If you are unsure or need advice on any the subject feel free to ask us on Twitter @MotorMistress & @LeasingAdvice or call the expert team at Compass Contract Hire Limited on 02392 228070.

Unlimited Mileage Finance Lease with a Balloon

 

 

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