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by Marsh Finance on Aug 8, 2024 3:00:00 PM
You’re coming to the end of your personal contract purchase (PCP) agreement. The agreement is nearly done, except for a balloon payment. This is a fancy term for a lump payment that you need to make at the end of your finance agreement. With this being a large payment, you might be wondering, can I refinance it? The answer is yes! Marsh Finance is here to guide you through financing your balloon payment. We will give you all the information you need, plus any tips to make the balloon payment work for you.
Understanding Balloon Payments in PCP Agreements
Refinancing Options for Balloon Payments
What You Need to Know to be Eligible for Refinancing
Balloon Payments In PCP Agreements
The balloon payment (also known as the guaranteed minimum future value (GMFV)) is set at the start of your PCP agreement. A balloon payment covers the car’s predicted future value when you come to the end of your term. The end value is just a prediction. This means that the balloon payment can change based on the car itself, its age and usage.
Refinancing Options For Balloon Payments
There are circumstances that might mean refinancing is perfect for you. Let's say you want to keep your car but can't afford the balloon payment at the end. Refinancing might be your best bet. With refinancing, you can turn the balloon payment into easy-to-manage monthly instalments. This would be similar to how your current PCP payments would work.
How Refinancing Works
Refinancing involves taking out a new loan to cover the balloon payment. The new agreement will be separate from your PCP contract. It will be instead treated as a classic loan. The terms will depend on your credit score and how you handle money.
Eligibility For Refinancing
You might be thinking, 'do I qualify for refinancing?'. Being eligible for refinancing depends on lots of things. The two most important factors are your credit score and how you manage money. At Marsh Finance, we offer lots of refinancing options. This gives you the best chance to find a car finance agreement that suits you. We also offer a free car finance calculator. You can use this to work out what your monthly payments might look like if you want to refinance. Use our free car finance calculator: Get your budget now!
Applying For Refinancing
Applying for refinance is easy. With Marsh Finance you can apply in less than 30 seconds. See if you’re pre-approved for finance the same day. This hassle-free application has no impact on your credit score too! Find out if you're pre-approved for car finance.
Alternatives To Refinancing
If you’re not sure about refinancing, you do have other choices. Either return the car or use any positive equity you have as a deposit for a new deal. It's really important that whatever you do, you have thought about your finances and the car you want.
Wrapping Things Up
To sum up, refinancing your balloon payment is a good option if you want to keep the car on more flexible payment terms. At Marsh Finance, we are committed to helping you get refinance easily. Look through our car finance options and use our free car finance calculator. Plan out your refinancing properly. Remember, knowing your financial options is important when choosing a car. 🚗💡📈💳
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