Understanding The Balloon Payment and Residual Value

Financing Your Volkswagen with Confidence

Are you considering financing your dream Volkswagen? It's a fantastic choice! Volkswagen Financial Services South Africa is here to guide you through the ins and outs of vehicle financing. Today, let's delve into a crucial aspect of vehicle finance that often raises questions: the balloon payment and residual value. By the end of this blog, you will have a clear understanding of these concepts and be well prepared to make an informed decision about your Volkswagen purchase.

Balloon Payments Demystified

Now, let's talk about the concept of balloon payments. A balloon payment is an inflated instalment that is due at the end of your credit agreement. It is important to note that the National Credit Act allows for balloon payments in instalment sales agreements. However, you must exercise caution and be aware of this balloon amount, as you will be responsible for paying this lump sum at the end of your finance term.

The balloon amount is typically based on a projected estimated value, influenced by the length of your credit agreement (e.g., 24, 36, 48, 60, or 72 months) and market sentiment towards the financed vehicle. Since the risk associated with a balloon payment falls on you, the customer, you will be liable for the full balloon value upon contract termination.

What You Should Know: 10 Key Points

1. Balloon Payment Basics: It's an inflated instalment due at the end of your credit agreement.
2. National Credit Act: Balloon payments are regulated under the National Credit Act, ensuring consumer protection.
3. Risk Awareness: Be cautious and fully aware of the balloon amount in your agreement.
4. Estimated Value: The balloon amount is based on an estimated value, influenced by your agreement's length and market conditions.
5. Customer Liability: As the customer, it is your responsibility for paying the full balloon value upon contract termination.
6. Refinancing Option: You can apply for balloon refinancing within 60 days of it being due - providing flexibility.
7. Volkswagen Insurance: As a Volkswagen owner, you qualify for comprehensive insurance products, providing peace of mind in unexpected situations.
8. Flexible Finance: Volkswagen Financial Services offers competitive rates, fast approvals and convenient repayment options.
9. Tailored Solutions: Our finance and insurance solutions are specifically designed to meet your needs.

Your Volkswagen Journey: Volkswagen is more than a car; it's a culture, a tradition and a partner for life.

Empowering Your Journey

Understanding balloon payments and residual values is essential when financing your Volkswagen. With this knowledge, you can confidently navigate the financing process and make an informed decision. At Volkswagen Financial Services South Africa, we are here to support your journey, providing informative, authoritative, educational and inspirational content to empower you.

Stay tuned for more valuable insights into Volkswagen financing in our upcoming blogs. Your dream Volkswagen is closer than you think, and we're here to make it a reality.

Stay informed, stay empowered, and let your Volkswagen adventure begin!

Volkswagen Financial Services South Africa (Pty) Ltd. An Authorised Financial Services and Registered Credit Provider (NCRCP: 6635)