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Calculate your monthly vehicle repayments with or without a balloon (residual) payment. See how a balloon reduces monthly payments but increases total cost.
A balloon (or residual value) payment is a lump sum due at the end of your finance agreement. It reduces your monthly payments but means you'll owe a large amount at the end – typically 20-40% of the vehicle's original price.
Options at the end: Pay the balloon in cash, refinance it, or trade in the vehicle and use its value to cover the balloon.
Scenario: Purchasing a vehicle for R450,000 with a R50,000 deposit over 60 months at 13.0% interest with a 30% balloon (R135,000).
You can refinance the balloon amount, trade in the vehicle, or sell it privately. Plan ahead – compare refinancing options 6-12 months before the term ends.
Balloons make sense if you need lower monthly payments or trade in regularly. However, you'll pay more interest overall and may risk negative equity.
Vehicle finance rates typically range from prime to prime+3%, depending on credit profile. Typical rates range between 11.5% and 15%.
Yes, under South Africa's National Credit Act (NCA), consumers can make extra capital repayments at any time to reduce interest charges.
Negative equity means you owe more than the car is worth. Balloons delay principal reduction while vehicle depreciation continues normally.