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.