A balloon payment is a mechanism to try and make a car that is outside of your reach fit into your monthly budget. We recommend that clients actually not opt for balloon payments and rather buy more affordable cars.— WesBank (vehicle finance market leader)
The economy is toast, and car prices are skyrocketing.
Increasingly, instead of going without, consumers are opting for balloon car payment deals and buying cars they can’t afford.
A balloon car payment deal cuts the price of the car by, for example, 30%.
The rest is divided by, say, 72 months, leaving you with a lump sum to pay at the end of it.
You get to drive off with a brand-new, wealth-destroying machine par excellence.
It’s all fun and games until, after six years of paying it off, you still have to find the money for the 30% that is outstanding.
Many people then must finance what they still owe if they can.
It's a downward spiral.
Listen to the interview in the audio below (and scroll down for quotes from it).
If you have to buy a car with a balloon payment you, basically, can’t afford it.— Wendy Knowler, consumer journalist
Overall, 31% of Wesbank’s loan book is financed with a balloon deal…— Wendy Knowler, consumer journalist
Maybe you don’t qualify for finance seven years down the line… [If you do obtain finance] you’re financing an already financed amount…— Wendy Knowler, consumer journalist
Some people don’t realise that bogeyman is waiting for them… I’ve taken up many cases where there was clear non-disclosure… it’s not highlighted enough on the contract… quite small print…— Wendy Knowler, consumer journalist
In many ways, contracts are designed with the nastiest bits presented in an obscure way… Banking on people not reading the small print… blind trust… the stuff in there is legal…— Wendy Knowler, consumer journalist
There’s a focus only on what that monthly payment is… There’s a lot of exploitation of naivety…— Wendy Knowler, consumer journalist
It’s an expensive vanity purchase…— Wendy Knowler, consumer journalist
Enjoy The Money Show, but miss it sometimes?
Get the best bits emailed to you daily, right after it ends:
Recommendedby NEWSROOM AI
Should Naspers shareholders take up Prosus shares? Bruce Whitfield interviews personal finance advisor Warren Ingram.
Seattle Coffee Company has the worst takeaway hot chocolate in the country, according to, uhm, "research" by Chaos Theory.
The Money Show's Bruce Whitfield interviews TJ Strydom, a journalist at Business Day and author of Christo Wiese’s biography.
Washington Post technology columnist Geoffrey A. Fowler did a forensic analysis of the Russia-based app. Check it out.
The rand is trading at fair value. It’s the US dollar that's overvalued. Bruce Whitfield interviews George Glynos (ETM Analytics).
[From the archives] Jesse Clegg talks about his famous father and attitude to money (hopes and fears, successes and failures...).
The choir has been wowing TV audiences in the US and across the world with their energetic performances.
Large eye stickers are being stuck to the bottom of surfboards in order to deter sharks.
Daily Maverick associate editor at Scorpio Sikonathi Mantshantsha takes a look at the week's financial news.
The feline was found by detectives at a property in Athlone on Wednesday following a tip-off.
The inspiring South African choirU2's Beautiful Day at America's Got Talent quarter-finals.
Magda Wierzycka – Sygnia’s renegade CEO – on her attitude toward money (hopes and fears, successes and failures, etc.).
The reason for the leakage has been revealed, explains Table Mountain Aerial Cableway MD Wahida Parker.