How to buy a new car even if you don’t really have enough money for it
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:
The Ombud for Short Term Insurance’s aim is to resolve short term insurance complaints ''fairly, efficiently and impartially''.Read More
Wendy Knowler, consumer Ninja, on the small print and pitfalls of credit life insurance.Read More
The annual banking ombuds report has been released. Were they good, were they bad; how many complaints have been received?Read More
It seems many credit life claims are being rejected. Here are nine companies that were named and shamed in a new report.Read More
This edition of Consumer Corner looks at how lay-offs, closures and quarantine will impact people's income and ability to repay debt.Read More
Wendy Knowler, consumer Ninja, has a horror story about insurance policies being cancelled - by sms.Read More
Hundreds of small businesses which fell prey to a phone directory listings scam, should relax and read here.Read More
Wendy Knowler, consumer journalist, on Nedbank's early debit orders.Read More
Wendy Knowler, consumer journalist, on the importance of carefully reading your documents when you buy assets.Read More
In South Africa, Black Friday has become a spend-fest of epic proportions, says consumer journalist Wendy Knowler.Read More