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Friends and balloon payments

Jan 16 2013 11:33
A Fin24 user wants to know if it is legal for a friend to take out vehicle finance on his behalf. He writes:

I have two questions. Firstly, I have a vehicle with a balloon payment amount of R27 000. The last instalment must be paid in March 2014. Can I sell the car now?

Also, can I ask a friend to buy me a used car and make arrangements with him on the payment, in a way that ensures the whole process is done legally? Would a lawyer have to be involved?

Chris de Kock of WesBank responds:

Regarding your first question, you have three practical options to choose from when dealing with a balloon payment.

Firstly, if you have the cash available you can simply settle the amount, once settled ownership of the car has been passed to you.

Secondly, you may apply to refinance the balloon amount. You will then enter into a new credit agreement and when this agreement expires the ownership will pass to you.

If you do not want to keep the car, you have the option to trade it in and then to finance a new car. This is an everyday occurrence and any reputable dealership with a finance and insurance manager will be able to facilitate the end-to-end process for you.

About your second question, WesBank does not recommend that you buy a car in someone else’s name as it just carries too much risk, both for yourself and the other person.

Any form of credit application must be done in your name. You are allowed to have co-debtors where the other person can co-sign the credit agreement.

 - Fin24

Disclaimer: Fin24 cannot be held liable for any investment decisions made based on the advice given by independent financial service providers.

Under the ECT Act and to the fullest extent possible under the applicable law, Fin24 disclaims all responsibility or liability for any damages whatsoever resulting from the use of this site in any manner.

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wesbank  |  money clinic  |  vehicle finance

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