Using the balloon payment option to buy a car you can't afford might look tempting, but it carries much risk that can hurt your finances in the long run.
While many South Africans are turning to balloon payments when financing a new car to reduce their monthly repayments, its wise to consider the long-term implications before putting pen to paper.
Ernest North, co-founder of Naked, said the increase in the balloon payment option is due to rising costs of living, including the higher costs of car purchases and ownership. Unfortunately, many consumers go for the balloon option without understanding that they could get caught in a debt trap four or five years down the line.