A balloon payment as a lump sum that is payable at the end of your loan term.
The aim of a balloon payment is to make the monthly repayments on a vehicle loan more affordable for you. You can think of a balloon payment as a lump sum that is payable at the end of your loan term.To illustrate this by way of an example, suppose two friends – Sam and Sam's Bestie - buy the identical car – costing them R400 000 each.
At the end of term, Sam's Bestie will have paid approximately R18 000 more for the exact same car as Sam - see table. The real gut punch for Sam's Bestie, however, comes when the loan is paid off and the car can be sold.
Fin24 A: Don't buy anything on credit with a balloon payment ya dummy
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