Balloon Payment Strategy

 

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When it comes to financing a car, one option often gets an unfair reputation, the balloon payment. Many people dismiss it immediately, believing it’s risky or unaffordable. But if approached with the right mindset, it can be a powerful financial tool. In my blog post today, we will learn this blogger Thandi Manaswe used a balloon payment as a powerful strategy to achieve her dream car and dispel the misconception about the balloon payment. Kindly click on HER BLOG to read up more about her unique life experiences and do follow her please.  

Gems From Thandi Manaswe’s Experience

‘After losing my old car in an accident, written off, I went shopping for a new set of wheels from two dealerships, as I already had an idea of the kind of car I would drive next. This is where I obtained quotations for my monthly repayment instalments. I made a choice and settled EXTRAS cash, since I had already saved up some money. After receiving the quotation from the dealership, I called the bank directly to apply for a vehicle financing. This is where the consultant introduced me to two vehicle loan options namely the balloon payment and the normal repayment plan. He provided me with quotes for both options and explained further that taking balloon option meant I’d still have to settle the balloon segment once I had finished making all monthly repayments according to the contract. I then opted for a balloon payment.

Reasons I Opted For a Balloon Payment

I chose the balloon option because it lowered my monthly repayment instalments, giving me more flexibility with my finances. It gave me a breathing room which I could still save, invest and cover other life expenses without feeling tied down by heavy car repayments.

But, Have a Strategy and Discipline

My approach was simple, whenever I had extra money or a lump sum available, I directed it towards the balloon segment. I would make the extra payment, call the bank and ask them to allocate the extra payment towards the balloon segment. By doing this consistently, I paid off the balloon segment in three years while keeping my regular payments manageable over four years. Just like that, I had settled the balloon amount in three years and paid off my car in 4 years, a year after settling the balloon.

The Outcome

I had a car financed in a way that didn’t strangle my budget, with the balloon settled comfortably ahead of time. I got this right because I was disciplined and I have a healthy relationship with my money. So, you too can! no matter how far you are or how wrong you may have started off with your vehicle finance.

Take Home

The truth is that people often associate the balloon payments with a lack of affordability, but I have a different view. Balloon payments aren’t a trap if you understand how to use them. They’re only a problem when there’s no plan in place. But with discipline, they allow you to reduce your monthly repayments, free up cash flow for other priorities, so given that choice again, I’d take it.’

Advice From the Blogger

To everyone who wants to buy a car but are hesitant about the balloon option, instead of fearing the balloon option, consider it as a strategic choice. The smartest financial decisions are sometimes the ones people avoid because they don’t fully understand them, but with discipline and foresight, a balloon payment can be manageable and liberating.

Needing Further Guidance? 

If you require further clarity or assistance in structuring your debts to give you financial freedom you can Call or WhatsApp me on 0614379639 to book an online consultation where I'll give you a customized solutions fit for your needs.

Thank you for stopping by. Please leave us a comment and share with us your experiences if you've had to deal with a balloon payment, are currently in the process or have been skeptical about it before.  

Disclaimer: I'm not a financial advisor. This is based on personal experience and for educational purposes only.

~Revive Your Credit, Revive Your Life