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Loans That Look Like LeasesMay 21 '00 Write an essay on this topic.Many credit unions around the country are now offering a new flavor of a conventional new-car loan that works like a lease, except better. Actually, these new loans are like the balloon loans that have been around for years. You sign up for low monthly payments, but owe a large "balloon" payment at the end to close out the loan. However, the new lease look-alike loans have been tailored to have the same or better features than a lease: no down payment, no security deposit, higher mileage limit, no extra charge for wear and tear, and no early termination penalty. Furthermore, you have the option of turning in the car at the end of the loan to avoid paying the balloon payment, or you can refinance and own the vehicle. And since you own the title, you can sell or trade at any time. For example, Premier Payment Shaver, one of the names used for these special balloon loans, has a mileage limit of 18,000 miles per year and only $.08 per mile after that. A conventional lease would hold you to 12,000 or 15,000 miles per year and charge you up to $.25 per mile for exceeding the limit. What's the catch? There really isn't any catch that I can see. It's simply free enterprise at work, providing a great product that meets consumers needs.  |
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