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  1. #21
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    Default Re: You should not do this

    Quote Originally Posted by Oppies3800 View Post
    So if I buy with a balloon payment and something happens, what happens to the balloon amount?
    There is some insurance product called balloon shortfall cover, if a vehicle is written off in an accident or stolen and the insurance payout doesn't cover the balance of the balloon payment then the insurance policy will pay that portion directly to the finance house to settle the outstanding amount.

  2. #22
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    Default Re: You should not do this

    Quote Originally Posted by Skylark View Post
    There is some insurance product called balloon shortfall cover, if a vehicle is written off in an accident or stolen and the insurance payout doesn't cover the balance of the balloon payment then the insurance policy will pay that portion directly to the finance house to settle the outstanding amount.
    and you could just as well have paid more on your loan anyway

    back to the original post:

    balloon amount = stupid

    done, full stop

    I did that once. Never ever again.
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  4. #23
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    Default Re: You should not do this

    Lets say you want to buy a kroozer for 500k. Now you trade in your old car and they give you 100k less than your settlement. They then add inflated extras to your kroozer like a roofrack for 50k and mags for 50k that was already on the vehicle.

    So you are in for 600k, but your vehicle is oly worth 500k. So you can only insure for 500k. Now in a writeoff you cannot ask your insurance to pay out 600k on a 500k vehicle. neither can you inflate te value to 600k for the insurance and expect them to sign you up.

    It happens a lot especially as I have described.

    Now if you dont have enough money you would do a baloon payment of 40% and then also extend the payment period to 72 months, and then you buy a new DC for 5999 a month. But after the period you then hope to sell the car for the remaining 40% still outstanding or trade it in for settlement. And that only works with guaranteed buybacks.
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  5. #24
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    Default Re: You should not do this

    Quote Originally Posted by Engel View Post

    Now if you dont have enough money you would do a baloon payment of 40% and then also extend the payment period to 72 months, and then you buy a new DC for 5999 a month. But after the period you then hope to sell the car for the remaining 40% still outstanding or trade it in for settlement. And that only works with guaranteed buybacks.
    and then if you haven't made provision for the balloon and you write the car off in the 18 months you still owe basically the outstanding @ around R270k PLUS the R150k balloon which is around R410k and the insurance pays out R350k and you're in the hole for R60k.................

    very clever
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  6. #25
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    Default Re: You should not do this

    Reading this thread, I guess I am old school when it comes to buying a new car.

    Only trade in when your vehicle is worth more than the settlement amount.

    Above that, save for a new car and put down at least 20% to 30% deposit to bring down your monthly premium to a rate you can afford comfortably.

    If you cannot do both, do not buy.

    IMHO.

  7. #26
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    Default Re: You should not do this

    Quote Originally Posted by Ricoffy View Post
    Reading this thread, I guess I am old school when it comes to buying a new car.

    Reading this thread I must be beyond stupid
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  8. #27
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    Default Re: You should not do this

    Quote Originally Posted by clubbie View Post
    You are wasting your time and energy.

    Stupid people will always try and impress people with their earthly possessions.

    Leave them be.

    In Afrikaans we have a saying, "As die kop dom is, moet die lyf suffer"
    So i am dom because i took a residual/balloon payment?
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  9. #28
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    Default Re: You should not do this

    Quote Originally Posted by Caracal View Post
    So i am dom because i took a residual/balloon payment?
    According to our fellow members, yes😑
    Always think: Could this be sarcasm?

  10. #29
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    Default Re: You should not do this

    Quote Originally Posted by Caracal View Post
    So i am dom because i took a residual/balloon payment?
    as die skoen pas............
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  11. #30
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    Default Re: You should not do this

    So there are alot of cons towards the balloons,

    What are some pro's? surely there must be something because its still a thing

  12. #31
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    Default Re: You should not do this

    Quote Originally Posted by MartinBravo View Post
    So there are alot of cons towards the balloons,

    What are some pro's? surely there must be something because its still a thing
    the dealers and the banks get more business, and some chops get suckered in

    Look, if you buy certain vehicles with excellent resale values then you COULD take the risk

    but I wouldn't buy a Volvo or Audi with any balloon payment, get my drift?
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  14. #32
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    Default Re: You should not do this

    We all got to where we are in life by at times learning the hard way.

    Thanks to those expressing views on valuable financial lessons learnt. Also let the less experienced take heed from the warnings learned through those hard lessons.

    Each does what s/he believes it is best for him/ her at the time.

    Two most important life hacks expressed here are,
    - buy what you can afford. Never buy to impress
    - if possible save for a bigger deposit and finance without a residual.


    Nobody's intelligence was insulted in this thread. You make your decisions in the moment under the prevailing circumstances that will for at that time

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  16. #33
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    Default Re: You should not do this

    The only pro for the buyer is the fact that he can drive around in a new(ish) more expensive car than what he can afford in order to keep up with mr and mrs Jones.
    All other pros are for the pockets of the seller/financier
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  18. #34
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    Default Re: You should not do this

    Quote Originally Posted by Damdan View Post
    The only pro for the buyer is the fact that he can drive around in a new(ish) more expensive car than what he can afford in order to keep up with mr and mrs Jones.
    All other pros are for the pockets of the seller/financier
    in a nutshell

    or is that a nut bag?
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  19. #35
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    Default Re: You should not do this

    Quote Originally Posted by jelo View Post
    balloon amount = stupid

    done, full stop

    I did that once. Never ever again.
    We all have to learn the balloon payment/residual lesson in our lives.

    There are 2 types of buyers here: those who have done the balloon payment and those who must still do it. Pretty much like the 2 types of developers, those who have done an update in SQL without a where clause and those who is still going to do it. Either way, you learn hard and fast and never do it again.
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  20. #36
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    Default Re: You should not do this

    There is a second benefit for me. I have a car allowance and instead of using the full allowance to pay for a car, I finance with a residual, and have used the saving in terms of a residual to pay off my house quickly. SARS is happy because I utilize my allowance fully and I receive and pay out every year. Only when I can trade the car back and SETTLE the balance do I change cars again. For me it has worked. So a residual can be useful.
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  21. #37
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    Default Re: You should not do this

    So let's assume you buy a Fortuner for R500k @ 10.50% interest rate. A 30% balloon will mean that you will have an outstanding capital balance of R150k at the end of the term. Getting R150k for a 5/6 year old Fortuner is more than plausible.

    Over 60 m, the balloon costs R35k more in interest, but saves R115k in repayments (about R1900 a month).

    Over 72 m, the balloon costs R41k more in interest, but saves R108k in repayments (about R1500 a month).

    Balloons are not bad, when you understand how it works and use it properly.

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  23. #38
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    Default Re: You should not do this

    Balloon finance has it's place, although a very small one in my opinion and not really for private use.

    For the following hypothetical example, a need exist to use multiple vehicles e.g. transport of goods. A business owner can purchase one vehicle without a baloon, or two vehicles, both with baloon. There is enough work to go around for two vehicles and the profit he/she can generate on each vehicle is more than the finance cost as well as depreciation of the individual vehicle. In this instance, I would think a baloon payment is warranted as the profit on two vehicles would be more than the profit on only one.
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  24. #39
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    Default Re: You should not do this

    Well, I think a lot of guys here are generalizing.

    First off, balloons and residuals have their place, if you know what you are doing.

    Secondly, you can up the price you pay, but try to keep it at least in line with insurance. For example, I loaded 60k on the 530d, but it was selling for 250. So in the end I financed 310k + 10k warranty, so 320k. Insurance sits at 340k for that car. Regardless, I also have top up insurance, I always do that.

    Now, in my scenario, it was a matter of doing this, or risking having a total engine failure on a tdv6, which will cost about 130k? Right, so then I would have to borrow 130k, to fix it, plus still pay off the outstanding 170k, so now in total 300k for a car worth only 110 on trade? Maybe book of 150K?

    So misters, that are so clever, tell, why should I not have done that??

    What I should not have done was bought the tdv6.

    You should understand what policies to get when you do certain stuff, that would be my advice. You get policies covering you for whatever you owe the bank after the insurance has paid out. Use them.
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  25. #40
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    Default Re: You should not do this

    Quote Originally Posted by lizardalpha View Post
    First off, balloons and residuals have their place, if you know what you are doing.
    key statement

    add to that "...and aren't buying to keep up with the Joneses ............"
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