Amortisation
Where each rand of the monthly payment goes
Balance vs Resale Value
When you owe more than the car is worth — the shaded gap is the "balloon trap"
End of term reality
What month 72 looks like in cash terms — and where the balloon really costs you
After 6 years you've paid off 80% of the principal but still owe the 20% balloon. The car has depreciated to roughly 38% of its original price — sell it to clear the balloon and you walk away with R70 859,81 in cash.
Most people don't have R80 000,00 sitting in cash at month 72.
If you can't write that cheque, your four options all hurt:
- Refinance the balloon as a new loan — more years of interest payments at then-current rates, on a car that's already half its original value.
- Sell the car to clear the balloon — leaves you with just R70 859,81 and no car.
- Trade in for a new car with a new loan and a new balloon — the dealer settles your balloon, but the cost rolls into the next deal at a fresh rate. Same trap, bigger numbers. You never own a car outright.
- Borrow elsewhere — personal loan or credit card, usually at higher rates. Debt to service debt.
Plan for the lump sum from month one, or expect to be stuck.
You're paying interest on the balloon too.
R26 773,15 of your R204 907,38 interest bill exists purely because you carried the R80 000,00 balloon for the full term — pure rental cost for deferring it. A no-balloon loan with the same deposit and rate would have cost R178 134,23 in interest.
Sell at the end
Sale price R150 859,81 clears the R80 000,00 balloon — you walk away with R70 859,81 cash and no car. You literally just rented one for 6 years.
Settle the balloon and keep it
R611 082,88 spent in total — you own a R150 859,81 car that keeps depreciating each year you hold it. Same effective cost, but the loss is illiquid.