Balloon Loan Calculator
See your regular payment, the lump you will owe when the balloon falls due, and how much more it costs than a normal loan.
The payments are worked out as if the loan ran this long.
Taken off the amount above.
Schedule and chart
How your balloon loan is worked out
Smaller regular payments now, then one big payment clears what is left.
- 1
Rate per payment
6% ÷ 12= 0.5%
- 2
Each payment
₹2,00,000 over 360payments= ₹1,199.10
- 3
Paid along the way
84 × ₹1,199.10= ₹1,00,724
- 4
Balloon at the end
Owed after 84= ₹1,79,278.77Interest ₹80,003
Read more: the formula, a worked example, car final payments and refinancing
A balloon loan splits the loan in two. The regular payments repay only part of it, and the rest is left as one big payment, the balloon, on a set date. The smaller the payments, the bigger the balloon.
The formula
i = yearly rate ÷ payments a year
payment (from an amortization term of N payments) = loan × i ÷ (1 − (1 + i)^−N)
balloon after n payments = loan × (1 + i)^n − payment × ((1 + i)^n − 1) ÷ i
payment that leaves a set balloon B = (loan − B ÷ (1 + i)^n) × i ÷ (1 − (1 + i)^−n)
interest only: payment = loan × i, balloon = loan
payments at the start of each period: divide the payment by (1 + i)
total interest = payments × n + balloon − loan
Worked example
A 200,000 loan at 6% a year, with payments worked out over 30 years and the balloon due after 7 years. The rate per month is i = 6 ÷ 12 ÷ 100 = 0.005, so N = 360 and n = 84.
(1.005)−360 = 0.166042, so the payment is 200,000 × 0.005 ÷ 0.833958 = 1,199.1011, or 1,199.10 a month.
(1.005)84 = 1.520370. The loan has grown to 200,000 × 1.520370 = 304,073.93, and the payments have built up to 1,199.1011 × (1.520370 − 1) ÷ 0.005 = 1,199.1011 × 104.0739 = 124,795.16. The balloon is 304,073.93 − 124,795.16 = 179,278.77.
The 84 payments add up to 84 × 1,199.1011 = 100,724.49, so the total interest is 100,724.49 + 179,278.77 − 200,000 = 80,003.26. A normal loan fully repaid over the same 7 years would cost 2,921.71 a month and 45,423.72 in interest, so the balloon saves 1,722.61 a month but costs 34,579.54 more interest.
Setting the balloon yourself (car final payments)
Car finance such as PCP or GMFV sets the final payment first, often 30–50% of the price. A 30,000 car loan at 7% over 5 years leaving 10,000: i = 0.07 ÷ 12 = 0.0058333 and (1 + i)−60 = 0.705405, so the payment is (30,000 − 10,000 × 0.705405) × 0.0058333 ÷ 0.294595 = 22,945.95 × 0.0058333 ÷ 0.294595 = 454.36 a month, then 10,000 at the end.
Refinancing the balloon
If you can't pay the balloon in cash, you can usually refinance it into a new loan or sell the asset. Refinancing 179,278.77 at the same 6% over the remaining 23 years gives the same 1,199.10 a month, but at 7% over 5 years it would be 3,549.93 a month. Rates on the balloon date may be higher than today, and a new loan may bring new fees, so plan for it early.
Payments at the start
Some leases and car loans take each payment at the start of the period. The payment is then the end-of-period payment divided by (1 + i): 1,199.10 ÷ 1.005 = 1,193.14 in the example, and the balloon is due one period after the last regular payment.
Assumes a fixed interest rate for the whole term. Your lender may round payments, charge fees for early repayment or set the balloon from the asset's expected value. Check your loan agreement.
Common questions
What is a balloon loan?
A balloon loan has smaller regular payments than a normal loan, and leaves a big lump, the balloon, to pay at the end. A 200,000 loan at 6% with payments worked out over 30 years costs 1,199.10 a month, but if the balloon is due after 7 years you then owe 179,278.77 in one go.
How is the balloon payment worked out?
It is the balance still owed on the balloon date: loan × (1 + i)^n − payment × ((1 + i)^n − 1) ÷ i, where i is the rate per payment and n is the number of payments made. If you set the balloon yourself, the payment that leaves it is (loan − balloon ÷ (1 + i)^n) × i ÷ (1 − (1 + i)^−n).
Does a balloon loan cost more interest?
Yes, usually much more. Because most of the loan is never paid down, interest keeps being charged on it. On the 200,000 example, 7 years of payments plus the balloon cost 80,003.26 in interest, against 45,423.72 for a normal loan fully repaid over the same 7 years.
What is a car finance final payment (PCP or GMFV)?
With PCP and similar car finance, the lender sets a final payment, often 30–50% of the car's price, based on what it expects the car to be worth. You pay smaller monthly amounts, then either pay the final payment and keep the car, hand it back, or trade it in. Choose 'Balloon amount' in Advanced and enter it as a % of the price.
What if I can't pay the balloon?
Most people refinance it into a new loan or sell the asset. Refinancing means a new rate, new fees and more years of payments, and rates may be higher by then. The calculator shows the payment if you refinance the balloon at the rate and term you choose.
Is interest-only the same as a balloon loan?
It is the extreme case: you pay only the interest, so the balance never falls and the whole loan is the balloon. On 200,000 at 6% that is 1,000 a month, with 200,000 still owed at the end.
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