[phiz118]

Originally Posted by JDBeck23

Those who are "scared" of this type of loan are simply unaware of the fine points of Pen Fed's loans compared to the fine points of "balloon" mortgage loans that so many people got burned on.

Balloon Mortgage loans have a low interest rate in the beginning and then BALLOON to market rate + an agreed upon additional point or 2 at a certain timeframe, 2 years, 5 years, etc.

The initial, low interest rate sounds great, and your house payments being so low is an evil tempter and proved really dangerous for many people, who have now lost their houses because of it.

Pen Fed offers a "Payment Saver" loan, this is not a "Balloon" type loan because the interest rate NEVER changes! It's a low, 4.25% for up to 60 months. The benefit of this loan is that if you dont want to put a large down payment to get an equivalent monthly payment, then this loan is an excellent option. You can put a small down payment, finance the car for 5 years and either add additional money to the car loan each month as you can afford. Or wait until the loan is at it's term end, and pay the remainder of the loan off. Lastly, you can always choose to refinance the remainder of the loan amount when the loan terminates.

I personally im using this loan from Pen Fed because I have the cash to almost buy my camaro out right... but cars are LOUSY investments. So Im choosing to finance the car with the most manageable payment and the least money down. If 5 years down the road comes and I still love my car, then I'll pay it off then, or refinance. There's no secret tiny writing that Pen Fed will use down the road, 4.25% is what you get for the length of the loan. That was better than my Credit Union's best rate at 60 months. It was a win win for me.

Sorry, off the soap box!

I'm really not sure how this is different from a lease. In a lease, you are protected, but in a payment saver loan you are not. You are right about cars being bad investments, and as long as you are earning over 4.25% on the money you could use to pay it off, then you are ahead.