Balloon credit
The balloon loan (or final installment loan ) is a consumer loan in banking , which is based on different repayment rates .
General
When balloon loan is a installment loan whose repayment rates are not uniform over the repayment term are distributed and the last repayment installment ( "final installment") usually is the highest of all previous installments. The final installment can even be 100%, in which case it is in fact a bullet loan . The last installment is the remaining debt, which is also known as a "balloon". The term “balloon loan” is derived from this. It was borrowed from the Anglo-Saxon technical language ( English balloon , "balloon"), where it refers to redemption bonds , the last repayment installment is much higher than the previous repayment installments.
Balloon loans are purchase loans to finance consumer goods , mostly passenger cars .
Legal issues
Balloon credits are consumer loans according to § 492 BGB , which must be in writing and whose minimum contract content is prescribed in Art. 247 §§ 6 to 13 EGBGB . After the loan has been paid out, the borrower can use the loan amount to pay for the object of purchase (usually a passenger car), purchase it and become its owner . As a result, the borrower bears the risk of impairment . It is customary to collateral assignment or transfer of ownership of motor vehicles as collateral . The borrower retains beneficial ownership .
economic aspects
The financial innovation of the balloon loan was developed by car banks and is similar to leasing . The main difference is that the lessee only becomes the owner of the leased object and not its beneficial owner. At the end of the credit period, there is a calculated residual debt that is comparable to the residual value in the case of leasing. This residual debt is calculated in such a way that it does not exceed the expected market value of the vehicle. The borrower can settle this remaining debt in the form of the final installment either through repayment , look for follow-up financing for this , or sell the vehicle at the end of the loan period and use the purchase price to repay the remaining debt.
Due to the late repayment of a large part of the loan amount, on the one hand the current installments are low, on the other hand this increases the risk of default for the creditor , which is why relatively high interest rates are used.
Individual evidence
- ↑ Konrad Wimmer / Eugen Caprano, Finanzmathematik , 2013, p. 107
- ↑ Michael Rieger (ed.), Saving costs through innovative fleet management , 2003, p. 116
- ^ Karlheinz Müssig (Ed.), Gabler Bank-Lexikon , 1988, Sp. 230
- ↑ Michael Rieger (ed.), Saving costs through innovative fleet management , 2003, p. 116
- ^ Siegfried W. Kerler, Fuhrpark und Flotte , 2003, p. 45
- ↑ Michael Rieger (ed.), Saving costs through innovative fleet management , 2003, p. 116
