What is it?

Purchase Plan with a balloon is similar to our standard Purchase Plan product but with lower regular monthly repayments since a portion of the balance is deferred to the end of the agreement as a final payment. This final amount is known as a balloon payment and is an estimated value of the car at the end of your agreement based on an indicated annual mileage. The final balloon payment must be paid by you in full and there is no option to return the car.

How does it work?

  • Your dealer will structure the agreement to meet your requirements based on the car, the agreement duration, the available deposit, and your monthly budget
  • Your finance quotation will include the balloon payment
  • After paying the initial deposit you make regular monthly payments and the balloon payment to cover the amount borrowed plus any interest and fees
  • The interest rate is fixed so you’ll know exactly how much you will repay throughout the term of the agreement

At the end of the monthly payment period you have two options:

1

Retain the car

simply pay the balloon payment, and there is nothing further to pay
2

Renew the car

part exchange the car to pay off the balloon payment, choose another car, and use any equity from the vehicle value to put towards your deposit on the next car

Features and Benefits

  • Offers you a lower fixed monthly payment, compared to our standard Purchase Plan product
  • Could allow you to finance your car over a shorter term
  • May be better if you don’t want to be bound by mileage conditions

Other things you should know

  • The balloon payment is based on an estimated annual mileage. There is no option to return the car at the end of the agreement but if you exceed the estimated annual mileage there may be a risk that the value of the vehicle does not meet or exceed the balloon payment.
  • It is your responsibility to repay the balloon payment which means you take responsibility for any difference between the balloon payment and the value of the car
  • If you put down a lower deposit it could mean a higher risk of negative equity if you settle early or want to change the car before the end of your finance agreement
  • It is your responsibility to repay the balloon payment which means you take responsibility for any difference between the balloon payment and the value of the car
  • The balloon payment is not optional and also attracts interest throughout the agreement
  • This type of finance agreement is not available to corporate entities, e.g. limited companies, PLCs or limited partnerships

Following an accepted application, Santander Consumer UK will fulfil your Purchase Plan with a balloon as either a Conditional Sale Agreement or a Fixed Sum Loan Agreement. What does this mean?

Conditional Sale: The agreement is secured against the car. If you do not keep up your repayments, we may take steps to recover the money that you owe us, which may include repossession of the car. Only when all payments under the agreement have been made do you become the owner of the vehicle.

Fixed Sum Loan: You own the car right from the start of the loan. You will have no right to terminate the agreement early (under a voluntary termination through the Consumer Credit Act 1974). You may only use the loan for the purchase of the agreed car.