Balloon payments and Deposits
Buying a new car requires a lot of research to be done before you can even start the application process. Whilst some information may be easy to acquire, other information may not be so easily obtained.
At Carter, we’re here to help provide our customers with all the information they need. As a result, our customers would be able to make informed decisions regarding the car buying process. Here’s some information on balloon payments, deposits, and even a little on interest rates. 😊
What is a balloon payment?
A balloon payment or residual, as some may call it, is essentially a portion that is taken out of the total price of the vehicle which you would need to pay off at a later stage. By doing so, the balance is calculated, providing you with a more affordable monthly installment for you to pay off your vehicle.
In some cases, you may need to add a balloon payment to your deal due to affordability and/or your overall credit profile, which are the main criteria the banks consider when approving a finance application. In other cases, it is possible to purchase a vehicle without a balloon payment.
However, there are two other ways in which you can handle a balloon payment:
- You can trade in your vehicle whereby, the outstanding amount to pay off your current vehicle (including the balloon) is worked into your new contract.
- Finance the balloon payment at the end of the term.
Should you consider taking a balloon payment?
That will all depend on you as there are pros and cons in both scenarios.
By taking a balloon payment, your monthly installments will be more affordable. Even though there will be a large amount you would need to pay off, there are other ways that you will be able to handle the balloon payment.
Without a balloon payment, the stress of having to pay it off is removed. If approved for a deal without a balloon payment, your monthly installments would be slightly higher.
What is a deposit?
A deposit is an amount that you are willing to put towards the vehicle before any installments are deducted. In a way, this is an amount you are willing to pay for the car in advance.
At Carter, there is no set deposit amount for any of the vehicles we have, as it is possible to purchase a vehicle without a deposit. Although, putting a deposit down may help reduce your monthly installments.
When applying for vehicle finance, if a deposit is required to qualify it is usually due to affordability, credit, or it may be due to a vehicle you are trading in (to settle the balance you still owe on the vehicle).
So, if you are looking for vehicle finance, consider these facts and manage your finances accordingly. Ultimately, the decisions made will be tailored to cater to your needs.
By completing a finance application, you will be able to find out if you qualify. You will also be able to find out the type of deal you qualify for. That is, with or without a balloon payment and/or deposit. What your monthly installments will be and the interest rate you qualify for.
If interested, visit our website at www.heycarter.co.za to view the wide range of vehicles we have available. You can request quotes for a vehicle you are interested to apply for and one of our consultants will get in touch with you shortly after to help you get the process started. 😊
Alternatively, you can contact us on 010 045 2682 (Johannesburg) or on 031 045 0500 (Durban).
Carter, we’re here to make the car buying and owning process easier and hassle-free for you! 😊
