Balloon-payment car deals on the up
Know what you're getting into when financing a car
"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." That was vehicle finance market leader WesBank's advice in March 2015, when 18% of its total deals signed every month - for new and used cars - included balloon payments, typically 28% of the sale price. That percentage has almost doubled since then - now 33% of all finance contacts signed with WesBank have a balloon payment of about 30%. In other words, to get the monthly repayment down to a figure the buyer can afford, 30% of the price of the car is carved out of the deal and lumped on to the last month - usually month 72 - as a massive final payment, which must either be settled in full or refinanced at the end of the term. Car prices driving trend Almost half - 49% - of all WesBank's new-car deals now have balloon payments, versus 30.6% of new-car deals in March 2...
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