‘BALLOON LEASE? Haven’t heard that since the 80s that’s very shady’: Man warns of Honda dealership after saying salesman made him a bad deal

It sounds like Ceasar Avila has been through a lot in the quest to buy a reliable car. And the really bad news that came after getting bounced back and forth by offers from a couple of Honda dealerships in Irvine, California is that they’ve now got to deal with the financial commitments of the balloon lease that came with the Honda Civic they now can’t get rid of.

The driver had the car for more than a year before realizing that they made a shady purchase.

What's a balloon lease?

For the unfamiliar, a balloon lease is a form of contract that gives a car buyer with bad credit or less income the option for lower monthly payments than might ordinarily be available. The catch is that at the end of the lease the owner has to make a large balloon payment to take over full ownership of the vehicle or end their responsibility to whoever backed the loan.

It’s a form of lease agreement that seems to be rare these days. This is fortunate for most people other than Avila, who starts a recent TikTok clip explaining how they’d been close to a deal with one Honda dealership before the team from Norm Reeves Honda Superstore Irvine swooped in with what seemed like a far better lease deal with payments they could easily afford.

In the clip that has been viewed more than 160,000 times, Avila details some of the questionable interactions and customer service they experienced while closing the lease deal. But the really bad surprise comes more than a year later when Avila, racking up mileage that far exceeds the lease terms, tries to sell the car and enter into a more traditional loan.

'That bank won't sell to us'

“I've been taking this car now to several dealerships. I took it to Carvana, of course. I took it to Carmax. The general places people take their car,” Avila said. “I took it to two dealerships. They all turned me away and said, We cannot buy this car from you because they didn't put you through American Honda financial. I'm like, 'What do you mean?' They're like, 'They put you through an actual bank, and that bank won't sell it to us.'”

One possible reason for the difficulty selling the car with a sizable balloon payment due at the end of the sales agreement is that if the amount due exceeds the estimated value of the car then technically the lender would be “upside down” on a loan where the asset is worth less than the loan balance. In situations like that there’s not much motivation for the holder of the car to make good on the loan since they’re paying out more than the value of the asset they’re taking ownership of.

The economics of balloon leases and the leverage involved on both sides is tough to map out, but the folks at Autotrader and Car and Driver do a fair job of explaining the pros and cons of what has become a rarely used financial instrument in the auto sales world.

Don't make the same mistake

The lesson in all of this, as Avila notes in the clip, is to look deep into every page or your loan or lease agreement and make sure the low monthly payments don’t have a financial time bomb attached to them at the end.

Commenters on Avila’s clip were understanding and sympathetic over the situation.

“BALLOON LEASE? Haven’t heard that since the 80s that’s very shady. What they did to you. Most likely it (wasn’t) explained to you thoroughly,” one of them wrote.

Another had some solid advice for other distressed or inexperienced car buyers: “Go thru a car broker if you don’t know what your doing That’s what I did I got my 2024 Honda Civic Sport back in Oct 2023.”

And another wisely said buyers should take plenty of time reviewing their agreement before signing on the dotted line.

@ceasaravilabeauty DO NOT purchase or let alone LEASE from Norm Reeves ESPECIALLY the one in Irvine!!! ##scam##dealership##honda##carsales##liar ♬ original sound - Ceasar Avila

“They def took advantage of you but lesson for you - if you don’t know terms of loan - ask everyone until you understand- then sign docs.”

The Daily Dot reached out to Avila via email, and to the dealership via web contact form.

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The post ‘BALLOON LEASE? Haven’t heard that since the 80s that’s very shady’: Man warns of Honda dealership after saying salesman made him a bad deal appeared first on The Daily Dot.

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