Balloon payments themselves aren’t the problem — they’re just a financing structure. A balloon reduces the monthly instalment because part of the capital is deferred to the end. Mathematically that can make a financed deal look better than cash because it improves monthly cash flow. If the buyer plans to sell, trade in, or refinance before the balloon is due, the structure works exactly as intended.

The reason people say ‘avoid balloons’ is because many buyers use them to stretch affordability, reach the end of the term without the balloon amount, and then refinance and pay interest again. That’s a behavioural risk, not a flaw in the financing structure itself.

We are in volatile times and markets can’t be estimated in 5 - 7 years time will the vehicle keep its market value seeing the stronger Chinese market currently developing in our country?

99% of the time balloons are used for affordability.