Balloon Payments Create Problems For Banks Around The World
The 2nd hand car market is falling, which puts the banks at large risk, especially when it comes to balloon payments.
If the world's 2nd hand car market heads for a collapse, experts say banks could loose tons of money in the future.
Balloon payments, in short, allow people to drive a fancy car and pay a small amount, by leaving a large amount at the end of the term.
Either you pay this amount, which is normally about half the cost of the vehicle, or re-finance it, or the finance company takes the car back.
So the crux of the matter is, if the finance company takes it back, that's when they are going to loose because the value of 2nd hand cars is deteriorating at a greater rate than in previous years.
The loss of the manufacturers factory warranty, or motor plan, also devalues the car tremendously because the cost to replace computers and parts in today's vehicles is exorbitant.
In South Africa most of the cars come standard with Klingshield Smash and Grab film to ensure a safe and cool drive, for car owners and their family.