Joseph Law

Bumper Content Writer

Car finance is a great tool for getting a modern, safe, and 

 without the massive expense of buying it outright. However, as with any finance agreement, you should always be aware of all the terms and conditions, balloon payments in particular are one of the most important things to be aware of. 

In this blog, we’ll discuss balloon payments in-depth, including whether or not it makes sense to pay them and potential benefits. 

Most commonly offered on PCP (personal contract purchase) 

, balloon payments are the last one-off payment that allows you to purchase and own the car. They are calculated at the start of the contract, based on the car's predicted value at the end of the finance term. 

Balloon payments are optional, and many choose to either allow the deal to end, exchange the car for a newer one, or take out a new PCP deal on the same car. 

What is Personal Contract Purchase? (PCP) 

To fully explain what a balloon payment is, it helps to fully understand 

. Personal Contract Purchase is the most commonly used finance option in the UK. It allows the customer to drive a new or used car for a lower monthly payment than through HP (hire purchase) but without the upfront cost. 

PCP allows the purchasing of the vehicle at the end of the finance term, by paying the balloon payment, at which point the car ownership would pass to the customer. 

For more information about PCP vs HP, check out 

Balloon payments are an estimation of the car's value at the end of the finance term; different finance providers use different methods of calculating the balloon payment. 

Your monthly payments are then adjusted to accommodate this final value, including the interest you pay to borrow the money. 

If you’re already in a PCP finance agreement you can choose to pay the balloon or not, if you don’t wish to pay the balloon many finance providers will offer another finance term for the same vehicle. Bare in mind that the rates for this may not be as competitive as with a new deal, as you are already locked in. 

If you haven’t yet taken out car finance, and would rather pay more per month instead of paying a balloon, consider 

 agreements instead. These have higher monthly payments, but you own the car - with no balloon - at the end of the term. 

Before signing up to a finance agreement, make sure you are fully aware of the costs and payments required from you. The best way to check these is to read the documentation fully, but to help understand that documentation, the below example should help. 

In this example, the financier estimates the value of the car to be £6,520 at the end of the 48 month/4 year term, this means that the total paid in order to own the car is 

. To hand the car back the amount paid would be 

If you like your car and have the cash to hand, it may be best to pay the balloon and own the car. However, If you don’t mind paying a monthly payment or want a newer car, handing the car back and finding a new finance deal is always an option. 

Still Don’t Know Whether to Pay the Balloon Payment? 

Paying the balloon can be a good or bad financial decision, regardless of your thoughts on the car itself. 

 can almost be described as a fixed-term lease, with the option to buy at the end, the caveat being that the final cost is estimated at the start of the finance term. 

If you are indifferent to the car, and purely want to make the best financial decision, look up your vehicle on something like Autotrader for a comparable price. If your balloon is significantly more than comparable values, it’s probably not worth paying. 

Conversely, if your balloon is lower than market value, as may be the case if your 

 started before the current spike in the used car market, buying may make more financial sense. 

Unfortunately, you cannot change the balloon payment once it has been agreed between you and the finance company. Even upping your monthly payments cannot decrease the final value settlement, as the car value will still be the same. 

If you are thinking of taking out a finance agreement, increasing the 

 can decrease the balloon payment, as the car will theoretically be worth less if it has more miles on it. This only makes sense if you intend to do those miles, as your monthly payments will increase slightly. 

Benefits and Drawbacks of a Balloon Payment 

Compared to finance methods that do not feature a balloon payment, such as HP or leasing, balloon payments offer some distinct advantages: 

These benefits are possible with leasing or HP, but they cost more per month for the entire finance term. 

Depending on your circumstances, another kind of finance method may be better, these are a few of the downsides to balloon payments: 

Balloon Payments Vs Other Types of Financing 

 is the only type of finance arrangement that typically includes a balloon payment. Depending on your intentions there are other financing options that may suit you better. 

Hire purchase agreements can be considered similar to buy now pay later credit schemes, whereby you pay off the total amount for the car - plus interest - in monthly instalments over a period of time. 

The monthly payments are typically higher on hire purchase deals, as there is no balloon, but it can make managing your finances easier in the long run. 

HP is perfect for those looking to buy a car and own it past the end of the finance period, if you can make the monthly payments you will own the car at the end of the term. 

Leasing a car is the same as renting a car, just over a longer predefined period of time, these can often range from 2 to 6 years. With leasing you will never - and usually don't have the opportunity to - own the car. There is no balloon payment with car leasing. 

The monthly payments on a lease are typically of a similar cost to 

, but leasing is generally only offered on new cars, so if you’re considering a vehicle a few years old, leasing is likely to be the most expensive option. 

If you do not intend to own the car, and want a brand new one, leasing can be a more straightforward process over PCP, and often works out cheaper. As with PCP there are strict guidelines on vehicle damage, servicing and mileage limits, though. 

Personal financing - Bank loan or Credit card 

In addition to the financing options given by a dealer or seller, there are some options to help cover the costs of buying a vehicle. The most popular of these options is a personal loan. Many banks and credit unions offer unsecured financing for buying cars. 

The interest rate on a personal loan is often better than on PCP or contract hire, but you will have to make sure you can afford the payments, as the interest rates on late payments can be substantially higher. 

 option is a credit card. Quite a few card providers offer zero-interest credit cards for a set period, often up to 20 months. You will need a reasonable credit score to qualify, and find a car dealership that accepts credit cards. 

If you are worried about your end of finance fee, but you have only recently entered your finance period, there are a few things you could do to alleviate the stress. 

Calculate how much your car will be worth at the end of the deal, and if the balloon is worth paying. Even if you can afford the final payment, it may not be the best option to take, especially if the car is worth less than the balloon amount. 

If you can, put money aside for the balloon payment in advance, some banks offer regular saver accounts that give better interest rates on regular saving, meaning your savings will grow faster than in a regular current account. 

What To Do If You Can't Afford The Balloon Payment 

If you are approaching the end of your PCP finance deal, you will have the choice to pay the balloon or not, if you cannot afford the balloon payment you can hand the car back to the finance company. 

Another option is to take out a further finance deal on the same car, many finance providers will allow this, either as a 

 again or a HP agreement. This can let you keep your car without having to pay the large balloon payment. 

Be aware that handing the car back will result in it being inspected for damage, and the odometer checked, as almost all PCP deals have a limit on mileage per year. 

Balloon payments are usually included in PCP finance deals, and are calculated based on the value of the car at the end of the finance term. If paid you will then own the car, but returning the car without paying is also an option. 

To know whether to pay a balloon payment or not you should look at comparable prices on the used car market for your cars make and model. Also take into account how much you like the car, its reliability over the term and what you would replace it with. 

Regardless of whether your car is financed or owned, it makes sense to spread the cost of car repairs with zero-interest financing from Bumper. Search for your

 has been writing about cars for over seven years and writing for Bumper for over two, blending his passion for automobiles with a talent for storytelling.

Joseph has written about engineering and cars for Autozilla, Komaspec, and several engineering manufacturers. When he's not writing or tinkering with one of his five cars, Joseph dreams of owning an Alfa Romeo 33 Stradale.

What Is A Balloon Payment On A Car? 

Private plates have been around since the early days of motoring in the UK, and roughly 400,000 are sold every year. There are many reasons drivers opt for a personalised plate, but one consideration is whether you are even allowed to change the registration plate if your car is on finance or lease. 

With around 20-30% of new cars being leased, we’ve put together this guide to help you, covering the legalities, process, and costs. 

Regular number plates are assigned to a car when first registered, they follow one of the 4 set styles, depending on the vehicle's year of manufacture. Private number plates make use of this to allow the driver to personalise their vehicle. 

Private number plates can be used to display various things, the most common uses are names or variations of, initials, birth years or even sports teams. Many private plates are bought by companies to add brand identity to their signwritten cars or vans. 

Number plate styles change every so often, usually because the format has run out of variations for displaying the registration year. Below are the four types of plate format. 

The most commonly used for private plates, these were used before registration plates started to include the year, in 1963. Because there is no need for conveying a year, they can be as short as two characters. 

Plate “F1” is one example of this, and was last sold for over £440,000 in, but we’d guess it worth even more now. 

In 1963 number plates started using the last character to display the registration year. A designated a 1963 car, B a 1964, and so on. The format used three letters, then 2, 3, or 4 characters, with the last one always being a letter. 

1983 saw the DVLA run out of suffix-style letters to use, so a new system was introduced, the prefix style used a letter again to designate year, but it was at the start of the registration number. 

Like suffix plates, some letters such as Q are not used as they are reserved for specialty registrations. 

Since 2001, we have been using the numbers at the end of the first block of seven to show registration age. The first used was 01, for example, “LG01 HCP”. This was the first format to split the year into two allocations, with “51” being used after the 1st September. 

The latest number plate allocations for 20204 are “24” - registered between March and September, and 74 - registered after September.

One of the biggest factors to consider when buying personalised registration plates is if it is allowed on your car. Registration numbers with dates have to be the correct year or older than your car. In other words, you cannot make your car appear newer with a personalised plate. 

Further to that, allowing the general public to control what their number plate says without rules or restrictions would be a recipe for disaster, so the DVLA bans number plates if they deem them to “cause offence, embarrassment or are in poor taste”. 

Examples include plates that spell profanity or religious/political references.

Can You Put a Private Plate on a Lease Car? 

Yes, there is no legal restriction on putting a private plate on a leased car, but you will need permission from the finance company. 

Many leasing companies have no problem adding a private plate, but they often charge an admin fee to do so. 

We’ve summarised the process of how to get a private number plate, but always read the DVLA guidelines thoroughly before making a change, also remember to notify your insurance company. 

How to Add a Private Number Plate to Your Leased Car 

The process of adding a private plate to a lease car is slightly different, as you cannot apply to the DVLA directly, you will need to do it through the leasing company. 

Factors to Consider When Putting a Private Plate on a Leased Car 

What Happens to the Private Plate at the End of the Lease? 

To retain the number plate, you will need to instruct the leasing company in advance of the end of the lease term. As the registered owner of the car, the leasing company will need to send the appropriate forms to the DVLA to have the plate transferred. 

What are the cost implications of getting a private plate? 

The personalised plates start at around £250, with fees and transfer costs, expect that to rise to over £300. To remove the private plate, you must either transfer it to another vehicle, or put it on what's known as ‘retention’ 

The DVLA charges £80 to put a registration number on retention. 

 is another consideration, most insurers will not charge a higher premium, but some will charge an admin fee to swap it mid-term. 

Can I put a private plate on a company car? 

Yes, but your employer will be the deciding factor here, generally speaking, business lease companies are just as willing to apply for personalised plates, but your company may not allow it. 

If you are self-employed with a leased car or van, there are no restrictions other than those imposed by the leasing company. 

Should I get a personalised plate on my company van? 

Private or personalised registration plates are a common sight on company vehicles. They can add to the vehicle’s brand identity and appear more professional. Just make sure it doesn't spell anything unprofessional or embarrassing! 

Can I put a private plate on a second-hand car? 

Of course! There are no limitations that apply because you bought the vehicle 

. In some cases, such as the plate being relevant to the car’s make or model, they can increase the resale value of the vehicle. 

Can I keep my normal number plate when I sell my car? 

If your car’s original registration number is of significant importance to you, for instance the last three letters are your initials, or it holds sentimental value, it is possible to have a replacement registration put on, and you can transfer or put-on-retention the original plate. 

There are rules around this, so check the 

Can I find who owns a personalised number plate? 

If you’ve seen a car on the road with a number plate you would like to own, either private or of standard format, it is possible to g

et the driver to transfer and then sell this plate to you. 

However, if you do not know who owns the number plate, the DVLA will not pass on any information to help you buy it. They will only cooperate with such requests in the event of an accident, crime etc. 

Private Plates on Lease Cars - Final Thoughts 

So there we have it, the low down on adding a private plate on your leased car or van. The key takeaways to be aware of are that you do not automatically have the right to change the plate on your lease car, but most leasing companies will be obliged if you ask. 

For more information, we suggest contacting your lease provider, as they are likely to have a procedure for their customers to follow. To make sure you don’t end up with a fine or extra fees to pay, read through the DVLA website on private plate purchase and application. 

has been writing about cars for over seven years and writing for Bumper for over two, blending his passion for automobiles with a talent for storytelling.

Can You Put A Private Number Plate On A Lease Car? 

Leasing remains a popular financing method for driving a new car, with around 30% of new cars on the roads in the UK being on lease. If you’re thinking of getting a car on a lease, make sure you’re fully informed on what happens when the lease term comes to an end. 

To avoid incurring unexpected fees and costs, we’ll be discussing everything from what your options are at the end of a lease, what you need to do when returning your car and what to do if you don’t want to hand the car back. 

, is a long-term hire plan, usually only offered on new cars. It offers a reasonably cheap way to run a new car, with less hassle than buying and selling every three years. 

Leases are typically offered between 3-5 years, and as standard don't include the option to buy the car built in. 

What Can You Do At The End Of A Car Lease 

After you have driven and enjoyed your car for the 3-5-year lease period, there are a few steps you need to take to end the lease, these vary depending on the lease provider so make sure to check with your leasing company in plenty of time. 

However, you might be surprised to hear that handing the car back isn’t your only option come the end of your lease period, many leasing companies will allow you to extend your lease period or even buy the car from them. 

When it comes to knowing what to do and how to return a leased car, the option most people take is to simply hand the car back as agreed. This allows you to source a different car, via lease, finance, or purchasing. This option is the best if you want to change your car for something different. 

When returning a lease car there are often checks made by the finance company for damage, mileage etc. We discuss these in more detail later in this blog. 

What is Acceptable Damage for a Lease Car? 

The BVRLA sets out the guidelines for what is and is not acceptable “wear and tear” for a car on a lease or finance agreement. This document will be available through your lease provider, if not you may have to purchase it on the 

Small scuffs and scratches are acceptable, as long as they are under 25mm. The amount and extent of the damage should be in line with the age and 

 of the car, e.g. an old car with 100,000+ miles can have more damage than a newer model. 

Any trim or mouldings should be intact and not damaged, as should any wheel trims. Alloys are also only permitted to have scuffs under 25mm, but no serious curbing or damage. 

Tyres should have more than the legal limit of 

, and no tears, or rips of damage to the sidewalls. 

Seats and upholstery should be free of any major tears or rips, with only minor scuffs permissible. Any trim such as around the armrests, glove box etc should be free of scuffs. 

Minor scuffs to the steering wheel and gear knob are considered reasonable, depending on the age and mileage of the vehicle. 

The car should run and drive as it did when new, there should be no noticeable clunks, noises, or defects from the suspension, 

, or steering. Again, any minor defects the car does have should be appropriate to its age, although it should be able to pass an 

approved partners, and pay monthly with zero-percent interest financing

All lease terms include an inspection near the end of the leasing period, this is to make sure the car is in good working order, without any damage other than those listed above. If the car is deemed to have defects larger than wear and tear, you may be charged a fee. 

The fee schedule will be outlined in the lease documents, so make sure to do a thorough checkover of the car before booking an inspection, to save having to pay higher fees through the lease company. 

Most leasing companies will contact you within one to two months of your lease ending to book the inspection, so three to four months from the end of the lease is a good time to start inspecting the car. 

After the inspection has been completed, the car will need to be collected. You may need to budget some time off work for this, as you will need to be present. Collections are generally arranged up to 10 days beforehand. 

Yes, even if you agreed to a set period when starting your lease, most providers will allow this to be extended if you contact them before the lease is due to end. 

In some cases extending the lease period can reduce your monthly payments, so make sure to get in touch with your lease provider as soon as you can. 

This may be a good option for those that enjoy the car they have, and don’t want to have to exchange it for a new one. Look into the costs closely though, as new lease deals may be available that mean you can get a brand new car for the same amount as your extension costs per month. 

Can You Buy Your Car At The End Of A Lease? 

Some lease companies offer the option to buy the car outright. This can avoid the hassle of having to find and buy an unknown vehicle, as well as arranging for the lease car to be collected. 

The lease company will still want to do an inspection of the car, though. Buying the car is not likely to save you any costs you might expect to incur due to unrepaired damage. In fact, the lease company will probably charge you for this, and then still demand top money for the sale of the car. 

If you are yet to take out a lease, but think that buying a car at the end sounds like something you may want to do, then 

If you do want to buy your lease car when the term comes to an end, there are some pros and cons to consider before buying. 

When buying any car, there are always risks involved, these mainly revolve around how the previous owner/driver has kept it, fortunately, you know the previous driver! Assuming you have looked after the car and had it maintained properly, it is less of a risk than buying an unknown car from a dealer forecourt. 

However, some lease providers don’t want the hassle of selling a car to a member of the public, many simply auction off their old stock when the leases expire, as this doesn’t come with nearly as many consumer rights considerations. 

This means they may well want higher than market value to sell it to you, so make sure to check for comparable prices online before committing to buy. 

How to Save Money When Ending a Car Lease 

Now we’ve discussed the multiple options available to you when ending a car lease agreement, you may be thinking about which is the best decision for you 

. This depends on the individual circumstances, but we’ve put together some examples and our advice below. 

In this instance, your lease provider may well charge more than the going rate for repairs or touch-ups, so to save yourself some money, we would advise getting the car repaired by a professional before booking your end-of-lease inspection. 

You should read through your lease agreement, as some lenders require their car be repaired at an approved garage, otherwise, you may end up responsible for #

even more remedial costs if the repair isn’t up to scratch. 

Can You Extend A Lease And Keep Same Car? 

Speak to the finance company as soon as possible. Longer leases usually mean lower monthly payments. As such if you let them know well before the end of the term, they may be able to reduce your remaining monthly payments. 

Can You Get A Loan To Buy Your Leased Car? 

If you’re dead set on retaining ownership of your lease car, you may be able to buy it back, but even at three to five years old it will set you back a pretty penny. You could look into other methods of financing such as a bank loan, or even opt to extend the lease agreement allowing you to save up more cash to buy outright. 

Before committing to anything, speak to the lease provider to see how much they would charge for the car, compare this to other cars for sale using a site such as 

, inputting the mileage, damage, and age. 

What Happens At The End Of A Car Lease 

Mercedes Benz have built a name for themselves for reliability and longevity over their 141 years making cars, so you would assume they are a sure bet for a reliable used vehicle. 

However, even the best manufacturers have good and bad years, in this blog we take a look at the 9 most reliable used Mercedes-Benz cars on the UK market, and explain a little bit about what you get for your money. 

, the GL class Mercedes was their flagship luxury SUV. All models feature a 7 speed automatic transmission and 4MATIC 4 wheel drive. We’d recommend the 3.0 V6 diesel engine for its durability and efficiency. 

If more power is what you require, a 4.0 twin turbo diesel or a 4.7 Litre petrol engine are available, but only opt for these if you can live with sub 20 MPG figures! 2010 era GL350’s can be bought for around 

Despite sharing a platform and engine with the GL350 above, the M class is a good bit smaller, allowing for slightly easier parking and better fuel economy. Confusingly the modern M class is renamed as the GLE after 2011 after a legal dispute with BMW. 

 £3,500 for a leggy 2007 model, to over £10,000 for a 2012 onwards car.

 Whilst there isn’t much mechanically to differentiate between a post 2007 car has the newer facelifted bumpers. 

If you’re looking for a vehicle that is luxurious, on trend and good off-road, the G Wagon is probably your best bet. Considering it’s main rivals are probably products from Land Rover, the G wagon’s strong suit is its ruggedness and reliability. 

This reliability does come at a cost, though. For a mid 2010’s car - any older than 2008 and they are rather more utilitarian than luxurious - expect to pay in the region of 

 For a reliable powertrain we suggest the 3.0 Diesel V6 again, with the 7 speed G-Tronic 

Somewhat the gold standard for a full size luxury saloon car, the E-Class has been around since 1993, it is mentioned in nearly all saloon car reviews as being the benchmark for comfort, practicality and reliability. 

It’s no wonder then that it makes our list of most reliable Mercedes Saloons, in particular we’d recommended the E220 from 2008. This generation has the updated styling, more powerful 2.1 

engine, but the reliable 5 speed gearbox. An E-Class on less than 125,000 miles can be bought for a shade under 

If you're wanting the Mercedes feel, style and reliability but in a smaller package, the C class is perfect for you. It combines sharp styling with the bulletproof reliability found in the above-mentioned E-Class. 

Again, our pick is the 2.1 diesel engine, it’s track record for reliability and efficiency figures cannot be ignored, even if the larger 6 cylinder engines are slightly more refined. Surprisingly good condition C-Class’ are around the same price as the E-Class; a 2008 C-Class with the 7 speed auto box can be found on forecourts for 

Most Reliable Mercedes Hatchback and Estates 

In a drastic design and styling change from the first generation, the W176 (second generation) A-Class released in 2012 was a massive success with consumers. It’s modern proportions and styling made it a hit with younger drivers, as did the range of economical small engines making it a reliable choice. 

Whilst the smaller Renault supplied diesel engine is a good unit, we’d suggest the 1.6 petrol as it’s better suited to the car, giving it a more refined driving experience and a good bit more ‘poke’. Good examples of the Mercedes A200 from 2014 can be found for around

Need more boot space for the family pet, camping trips or tip runs? Mercedes makes their formidable E and C class saloons in estate versions too. The C-Class estate is a great pick, with later model years (2012 onwards) looking extremely stylish, even compared to modern estate cars. 

The same choice of engines is available as with the saloon, if you need efficiency on long drives, we’d say go for the C220 CDI again, if you don’t, or live inside the 

, the C220 2.1 petrol is a brilliant engine. 

gets you a tidy 2009 reg, that’s covered less than 100,000 miles. 

Given the vehicles we’ve covered above, you wouldn’t immediately think Mercedes was a big producer of sporty cars, but their AMG division is one of the most revered tuning departments in the world. In 2013 AMG turned their hand to the A-Class creating the A45 AMG. 

With 335hp it was more powerful than all of the competition at the time, and with 4 wheel drive and Mercedes’ excellent automatic gearbox it is an extremely capable hot hatch. Early 2014 Mercedes A45 cars with less than 90,000 miles on can be bought for around 

If you’d prefer a sports car to be the traditional low slung, 2 seater rear wheel drive setup, then the SL Class may be for you, the name SL is a throwback to the gorgeous Mercedes Benz 300 SL originally made in the 1950’s. The first car to feature Gullwing doors. 

Thankfully the SL class from 2003 to 2011 is much more reasonably priced at under 

for the 3.5L 7 speed automatic convertible. With 315bhp from the silky smooth V6 and some great luxury features such as the heated air scarf to keep you warm even with the top down. 

Service and Repair Your Mercedes Benz With Bumper 

As a consequence of their excellent engineering and reliability,

 Mercedes are generally more expensive to repair and service than other marques

. To help ease this, Bumper offers zero-percent finance on car repairs through our hundreds of 

9 Most Reliable Mercedes To Buy

BMW are one of the most popular car brands in the UK, they can offer the perfect combination of efficiency, style and comfort that many drivers want. Thankfully they are also generally quite reliable, but which 

 is the most reliable and which should you buy used? 

We take a look into which BMWs are the most reliable, what to look out for and how much to budget.

Made from 1998 to 2006, the E46 generation of BMW 3 Series is renowned for its reliability, with a wide range of durable engine and gearbox combinations on offer. We’d suggest the M57 engine, a 3.0-litre diesel. 

If you’re considering an older BMW such as this, then make sure to check thoroughly for rust, as they can become susceptible at this age, particularly on the rear sub-frames. A good condition E46 330D can be bought for as little as £4,000, so it’s by far the most reliable BMW you can buy for under £5,000. 

Other than corrosion, the E46 generation enjoys a good reputation for reliability including electrical systems, 

. Prioritise service history over low mileage, the 6-cylinder engines are very durable if maintained. 

As one of the first marques to enter the 

 segment, BMW had certainly perfected the formula by 2011, when it released the facelifted E70 X5. We think it offers the best combination of modern styling, reliable engines and price. 

A car with under 100,000 miles can be bought for under £7,000, making it one of the most reliable BMW SUVs for under £10,000. 

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