Are You Sisyphus or Penelope? A Word of Caution on Car Finance Deals with a Large Final Payment

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Published on 14/05/2026

Financing arrangements with a large final payment are becoming increasingly common in the car market. Understanding how they work and what they imply can help you assess the financial commitment involved and make informed choices.

Buying a car is one of the most significant financial commitments many people make during their lifetime. More and more often, the purchase is financed through credit. According to the Experian-UNRAE Osservatorio Credit & Mobility, around four out of every five new and used cars are bought on finance.

Financing a car: mind the differences

For used cars, the traditional form of finance remains widespread. This involves fixed monthly repayments until the debt is fully repaid. In recent years, the duration of these agreements has increased and often exceeds five years. While a longer repayment period reduces the amount of the monthly instalment, it also increases the overall cost of borrowing, as interest accrues for a longer period.

For new cars, however, financing arrangements with a large final payment are becoming increasingly popular and deserve particular attention.

How does finance with a large final payment work?

This type of agreement is structured in several stages. Typically, it includes:

• an initial deposit, which may vary in size;
• lower monthly repayments than those of a traditional loan, usually over three or four years;
• a large final payment, often linked to an estimate of the vehicle's value at the end of the agreement, known as the "guaranteed future value".

During the repayment period, you do not repay the full value of the car, but only part of it. A substantial share of the purchase price is deferred to the final payment, which is precisely the aspect that can easily be overlooked.

The key decision: when the agreement ends

At the end of the contract, you are generally faced with several options:

• pay the final lump sum and become the owner of the vehicle;
• return the vehicle to the dealer at the "guaranteed future value". Any payments already made, including the deposit and monthly instalments, are not refunded. Additional charges may also apply, for example if the car has covered more miles than agreed in the contract or if there is damage beyond normal wear and tear, such as bodywork or interior damage;
• refinance the final payment with a new loan, often on less favourable terms, for example with higher monthly repayments.

The risk of an endless cycle

If the final payment is too high, or if refinancing it would result in unaffordable repayments, you may be tempted to return the vehicle and take out a new finance agreement for another one. In this way, you may never actually become the owner of a car, but instead continue making monthly repayments and, often, paying new deposits in order to drive one.

How much does financing a car actually cost?

One of the most common mistakes is to assess finance offers with a large final payment solely on the basis of the monthly instalment. This is often the main selling point highlighted in advertising.

Behavioural economics shows that people tend to focus on immediate benefits while underestimating future commitments. As a result, there is a risk of taking on a financial burden that may prove difficult to sustain over time.

To understand the full financial commitment, it is important to consider:

• the initial deposit;
• all monthly repayments;
• the final lump sum payment;

and, above all,

• the APR (Annual Percentage Rate, or TAEG in Italy), which reflects the overall cost of credit, including interest and charges.

You can find this and other useful information in the SECCI (Standard European Consumer Credit Information), the information document that lenders must provide free of charge before a consumer signs a credit agreement. The document may be available in a standard version, containing all the information needed to understand and compare financing options, and in a personalised version, setting out the terms that would apply to the customer if the agreement were entered into.

Are you more like Sisyphus or Penelope?

If you unwittingly enter a cycle of repayments with no clear end point, it is rather like the myth of Sisyphus, condemned to push a boulder up a mountain only to watch it roll back down every time.

If, on the other hand, you consciously choose to change your car frequently and are willing to pay a succession of deposits and repayments because you consider this option convenient or suited to your needs, you may be compared to Penelope, who wove by day and unravelled by night: a repeated action, but one undertaken by choice.

The difference is simple: are you trapped in the mechanism, or are you choosing with full awareness?

In conclusion

Finance agreements with a large final payment are not necessarily a poor choice if they are entered into with a clear understanding of how they work. Before signing, however, it is worth asking yourself:

• Can I afford the final payment without difficulty?
• What is the overall cost and financial impact of the agreement?
• What conditions apply if I choose to return the vehicle?
• Are there alternative solutions that would be more sustainable for my budget?

Taking the time to gather information and plan carefully can help you avoid decisions that may become a burden in the future.