The Balloon Payment Trap

When buying a new car, a balloon payment might sound like something festive, but for Sthembiso Bokleni, it was anything but. After diligently paying R2, 637 per month for 59 months on his 2012 VW Polo 1.4 Comfortline, Bokleni thought he was in the clear. But then came the unexpected twist: an outstanding balloon payment of R52, 148, which he couldn’t afford. Cue the deflated dreams.

Bokleni, convinced he’d crossed the finish line, was baffled when repo agents rolled up to his workplace. “No one mentioned a balloon!” he protested, arguing in the Grahamstown High Court that the bank had sprung this financial whopper on him like an unwelcome party guest. His defence? Pure ignorance. He claimed the term was never explained, no summons arrived, and he’d assumed the bank’s silence meant “job done.”

The bank disagreed, stating that the terms were crystal clear in the contract he signed. It also argued that he had been reminded multiple times about the outstanding amount. Bokleni, however, insisted he never received a summons and assumed his debt was settled when the monthly debits stopped.

His attorney later uncovered that a summons had, in fact, been issued, and a repayment plan was suggested. Bokleni’s offer to pay R2, 500 per month towards the balloon, half of the R5, 269.92 the bank demanded, was met with the financial equivalent of a financial eye-roll. With that, negotiations fell apart.

The court had little sympathy, pointing out that while consumer protection is vital, creditors also have rights. Acting Judge Cengani-Mbakaza ruled that Bokleni’s claim of ignorance had no merit, as he had signed the agreement and was responsible for the final payment.

Here’s some very trite advice for you dear reader: when financing a car or anything else for that matter, always read the fine print. Otherwise, your dream ride might not be yours for as long as you think. Especially when you realise that in finance, “balloon” doesn’t mean fun. It means “pop!”

You can read the full Bokleni v First Rand Bank Limited t/a Wesbank judgement here.

Written by Theo Tembo