How does a balloon payment work? What questions should I ask my dealer? Can I settle my car finance early and what happens if I want to give my car back?
Maya (@mayaonmoney) chats to vehicle financing expert Henry Botha of Absa Vehicle and Asset finance to answer these and other questions related to car finance.
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Afternoon Maya
Please clarify this for me, can I use the advance payment on my car loan to settle the amount that I am currently owing
Technically the advance payment is a reduction in the amount you owe. Different banks/funders treat it differently – but for example some allow you to instruct the advance payment to go towards the principle debt. read this article that explains that “Once the advance payment reaches a sizeable amount, you can contact the bank and ask for a change to the contractual arrangement. You could ask for the advance payment to be capitalised, which reduces the term of the loan, or change your monthly repayment. But you need to contact that bank and make these changes. Changes are not unilaterally applied merely because a loan is paid in advance.” https://mayaonmoney.co.za/2021/01/the-best-way-to-settle-your-car-finance/