Buying a new car may be possible – even if you can’t afford the monthly payments

Need new wheels? WesBank’s Lebogang Goaaketse discusses a popular method for making repayments more affordable.

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Many consumers use balloon payments when they can't afford the monthly repayments.

Baloon payments do not actually make buying a new car cheaper.

Balloon payments are intended to support a buyer who can afford the purchase but needs to manage her cash flow.

What is a balloon payment?

A balloon loan is set up so only a portion is repaid over a set period.

The remaining balance is due as a final payment at the end of the term.

Africa Melane asked Lebogang Goaaketse (Head of Marketing and Communication at WesBank) for tips and tricks to use this method of payment to your advantage.

Balloon payments make repayments more affordable… If you don’t have a deposit, it gives you leeway to save… for when it's due at the end of the term… It defers interest to the end…

Lebogang Goaaketse, Head of Marketing and Communication - WesBank

We find… people don’t have the amount at the end… they fall into the trap of having to refinance it… Nine out of 10 times you’ll have a shortfall [when you trade in the vehicle] …

Lebogang Goaaketse, Head of Marketing and Communication - WesBank

People who opt for balloon payment are people who change their cars a lot…

Lebogang Goaaketse, Head of Marketing and Communication - WesBank

I know a lot of people who finance their cars with balloon payment because it makes it more affordable… It’s not a bad thing at all if you can afford that lump sum at the end…

Lebogang Goaaketse, Head of Marketing and Communication - WesBank

Be mindful of the full cost of ownership… Can you afford the added costs?

Lebogang Goaaketse, Head of Marketing and Communication - WesBank

Listen to the interview in the audio below.

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