Balloon payment calculator
Understand how a balloon payment affects your repayments and total cost.
Balloon Payment Lab
Balloon payment calculator
Compare car loan repayments with and without a balloon payment to understand the trade-offs.
Comparison
Monthly without balloon
$594Monthly with balloon
$475Monthly saving
$119Balloon due at end
$6,000Total cost without balloon
$35,642Total cost with balloon
$36,614A balloon payment lowers your regular repayments by $119/mo, but costs $972 more over the loan term due to interest on the deferred amount. You will also owe $6,000 at the end of the term.
A balloon payment lowers your regular repayments by deferring a percentage of the loan to the end of the term. Typical balloon amounts range from 10% to 30% of the vehicle price. While this improves short-term cash flow, you will pay more in total interest and face a lump sum at the end.
Balloon payments are common on novated leases and some dealer finance packages. Always compare the total cost with and without a balloon to make an informed decision about your car financing.
Frequently Asked Questions
- What is a balloon payment?
- A balloon payment is a lump sum due at the end of your car loan term. It reduces your regular repayments but means you owe a large amount at the end of the loan.
- How does a balloon payment affect total cost?
- While it lowers monthly repayments, a balloon payment increases the total interest paid because you are deferring principal repayment. The interest on the deferred amount accumulates over the full loan term.
- What happens if I cannot pay the balloon amount?
- You may need to refinance the balloon amount into a new loan, sell the vehicle, or negotiate with your lender. It is important to plan ahead for this lump sum.