Growth is not a one-sided event, growth does not mean one has only walked on the path of positive things, it also means some not-so-wonderful things have happened in your life.
Being a young adult comes with all sorts of responsibilities, great achievements, and sometimes even spectacular failures. All these things form a part of the growth. I have recently seen a social media post from a young person asking questions about her car sale contract/agreement. From what I could gather, it is clear that she has signed a deal with a high-interest rate without interrogating it or seeking advice. It didn’t end there; she tied a knot around her neck by entering into a balloon payment deal. This is where I got stuck, I couldn’t help but wonder how something like this could have happened.
Many years ago, one of my cousins walked straight into this trap. It is sad that in 2022 we still have people going through the same.
This article should be able to assist those young professionals and other people to make better car deals. If you’re going the route of buying a car through bank finance, please do thorough research before you even step into the showroom. I’d even take it further and say get pre-approval from the bank. That way you already have a clear idea as to how much you can spend.
Let us delve a little deeper and unpack balloon payment and its implications on your car finance.
WHAT IS BALLOON PAYMENT?
According to Absa vehicle Finance, a balloon payment is a lump payment due to the financier at the end of the loan term.
Now that we know what balloon payment means, the real question is, is it worth it?
At face value, this type of finance method might seem like a great idea as it automatically reduces your monthly installments. But there is always a catch.
While doing research for this piece, I couldn’t help but notice that there is plenty of information and often hiding in plain sight.
So, what is it that makes customers feel compelled to sign this disastrous deal? The answer is simple, lack of discipline and experience on the part of the consumer. The car salesperson is there to sell you a car, he/she gives you all the “wonderful” things about the car and how cheap they can give it to you.
The message is simple, don’t get tempted into entering a balloon agreement with the hope that your financial fortunes would have incredibly changed in five years. Unless you are actively working towards that with measurables in place.
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