This is a misunderstood finance option: the balloon amount is subtracted from the total, the interest over the agreed period is applied to the new (lower) amount and then you pay. The last payment - the balloon - is not included in interest charges. This works very well if taken over 5 years, and many cars these dyas have 5 year warranty periods. So you pay less and sell the car at the end of its warranty, usually at at profit sufficient enough for you to start all over again. Works less well with smallr (sub R180k) cars but really well with the marques.
31 mths ago