Residual Based Financing

Residual based financing, commonly referred to as leasing or balloon loan lending, is a financing option in which the borrower pays for the vehicle’s depreciation during the lease or loan term, plus interest and fees, rather than paying for the entire value of the vehicle. At the end of the lease term, the borrower can either purchase the vehicle for its residual value, return it, trade it, or lease or finance a new vehicle. This financing model can offer lower monthly payments compared to traditional auto loans and is becoming an increasingly popular choice among consumers.

Despite its growing popularity, many Credit Union members are unaware of residual based financing or its potential benefits. For instance, members who prefer to drive newer models or who use their vehicles sparingly and wish to avoid the long-term commitment of a traditional auto loan might find residual based financing a more advantageous option. Understanding your options when financing a vehicle can empower you to make informed decisions that align with your personal and financial circumstances, potentially saving you money and reducing financial stress.

New FlexLoan

PFCU’s new FlexLoan is a residual based finance option that can be used to finance new vehicles and vehicles up to five years old, offering shorter lease/loan terms and lower monthly payments, compared to the conventional long-term loans. If you are interested in learning more, please visit www.PittsfordFCU.org/FlexLoan or call us at (585) 624-7474.