Your New Car Is Waiting — and So Is the Balloon Payment
Riyad Bank’s offer begins with a sentence designed to make the open road feel one click away: “Your new car is waiting for you”, supported by flexible repayment plans and what the bank calls instant approval.
But the car is not the only thing waiting. A long contract, recurring insurance costs, administrative fees, and a substantial balloon payment remain at the other end of the road.
The advertisement drives the customer toward the car. The disclosure figures drive the customer toward the real obligation.
This is not an argument against auto leasing as a financial product. It is an examination of whether material costs are presented as prominently as the promotional promises used to sell them.
“Instant approval” followed by preliminary approval
The headline promises instant approval. The same product page later tells customers how to obtain preliminary approval through an adviser, approved dealership, or branch.
The customer may then need to provide a salary certificate, identification, a driving licence, bank statements in some cases, salary-transfer documentation, an approved dealer quotation, and a completed application. Credit assessment and verification still determine the outcome.
There is a meaningful difference between an instant eligibility indication and a final, binding approval. A more precise description would tell the customer exactly which decision is immediate and which conditions remain outstanding.
The product page sells the monthly payment; the disclosure page reveals the cost
The main page highlights a term of up to 60 months, comprehensive insurance, customer offers, and driver-authorization options. The Annual Percentage Rate is not displayed beside those benefits. Customers are directed instead to Riyad Bank’s broader financing and savings disclosure page.
There, the bank provides the following examples:
| Structure | Finance amount | APR | Monthly payment | Balloon payment |
|---|---|---|---|---|
| Salary transfer | SAR 87,630 | 12.66% | SAR 1,452.35 | SAR 39,433.50 |
| No salary transfer | SAR 135,698 | 13.22% | SAR 2,290.98 | SAR 61,064.10 |
In both examples, the final payment is approximately 45% of the disclosed financing amount. That is not a footnote. It is a large financial obligation deferred until the end of the agreement.
A lower monthly payment does not mean a lower total cost
In the salary-transfer example, 60 monthly payments amount to SAR 87,141. Adding the balloon payment produces scheduled monthly and final payments of SAR 126,574.50.
In the non-salary-transfer example, the monthly payments total SAR 137,458.80. With the balloon payment, the result becomes SAR 198,522.90.
It would be inaccurate to describe the entire difference as bank profit; insurance and other components may be included. But the customer’s practical question is simpler: how much will leave their pocket before ownership can transfer?
The balloon payment: the guest who arrives after the party
After five years of monthly deductions, a customer may reasonably feel that the financial journey is almost complete. The vehicle may also have lost a substantial share of its market value. Then the final payment arrives: more than SAR 39,000 in one example and more than SAR 61,000 in the other.
The customer must then use savings, seek new financing, request restructuring if available, transfer the lease, sell the vehicle subject to the contractual structure, or settle early according to the bank’s calculation.
A balloon payment can reduce the visible instalment today while becoming the gateway to another financing decision tomorrow.
The “50/50” plan: equal halves, unequal burden
Riyad Bank describes a program in which the customer pays half of the vehicle amount together with financing profit and insurance as the initial payment, then pays the other half of the vehicle amount after two years.
The vehicle’s price may be divided into two nominal halves, but the cash burden is not. The first payment includes more than 50% of the vehicle price once profit and insurance are added.
A customer should therefore ask: fifty per cent of what—only the vehicle price, or the total amount that will ultimately be paid?
“Your car” remains the bank’s asset during the lease
The product is an auto lease. During the agreement, the lessor owns the vehicle and the customer is its authorized user. Ownership may transfer only after the contractual obligations and applicable procedures are completed.
This legal structure explains the charges for authorizing drivers, permission to travel outside Saudi Arabia, ownership transfer, replacement plates, and the recovery and storage of the vehicle.
The more precise description is less romantic but more informative: a bank-owned vehicle that the customer may use during the lease and may ultimately own after fulfilling the agreement.
Comprehensive insurance is protection—and a cost
The page presents comprehensive insurance as a feature. Yet the vehicle remains an asset owned by the lessor, and the disclosure examples calculate insurance using average rates of 3.91% and 3.10%.
Customers need more than confirmation that insurance exists. They need to know its annual cost, whether it changes as the vehicle depreciates, the applicable deductible, how a total-loss payment is allocated, and whether unused amounts are returned after early settlement.
What Saudi advertising rules are designed to protect
Saudi Central Bank rules governing financial-product advertising call on institutions to avoid misleading, inaccurate, or exaggerated promotional methods. Financing advertisements are expected to present the financing term and APR clearly.
This article does not make a final regulatory determination about whether a link to a separate disclosure page satisfies that obligation. It asks a professional question: is an APR truly clear when “instant approval” occupies the main product page while the percentage itself must be found elsewhere?
Before clicking “Apply now”
A customer should request a written offer that answers, in numbers:
- What is the vehicle’s cash price?
- What is the actual financing amount and APR?
- What are the initial and final payments?
- What is the total amount payable?
- How much will insurance cost each year?
- Which charges are outside the APR?
- What will early settlement cost at different stages?
- When, precisely, will legal ownership transfer?
- Is the advertised approval final or preliminary?
The road paved with advertising
Responsible financing does not require the truth to be hidden. It requires the truth to be organized: cash price, financing amount, APR, monthly payment, insurance, balloon payment, and total amount payable in one accessible view.
The car may indeed be close. But ownership is not immediate, the cost is not limited to the monthly instalment, and the balloon payment is not a minor detail.
The road to the car may begin with an “Apply Now” button—but it ends with a number that was never written on the button.