Calculate balloon/residual payment options and understand the trade-offs
Updated October 2026Built and checked by MaverickHow it's calculatedReport an error
Monthly saving
$163/mo
vs no-balloon repayment
Balloon owed
$12,000
due at end of year 5
Extra interest
$2,201
vs no-balloon path
Equity at end
+$6,000
car value $18,000
A balloon shifts cash flow: you pay less each month, in exchange for a lump at the end.
Because the balloon balance sits in the loan the whole term, interest accrues on it month after month, costing more in total.
Principal + interest + balloon stacked. Notice how the balloon shifts dollars from monthly into the final lump.
Higher balloon ⇒ lower monthly. But higher balloon ⇒ more interest paid and bigger end-of-term obligation.
A balloon payment lowers your regular car loan repayments by leaving a lump sum to pay at the end of the loan. Moneysmart notes the lump sum is repaid with interest, so the loan generally costs more in total, and suggests making sure you'll have the money when it falls due. If you plan to sell the car to pay it, the sale price might not cover what you owe. This calculator compares the same loan with and without a balloon: the lower monthly repayment, the extra interest, the lump sum due, and whether your estimate of the car's value at the end covers it.
As of 7 November 2026, the lowest car loan rate from a bank or lender is 5.74%, from Westpac's Car Loan, while the typical best across 42 institutions is 6.99%. The lowest carmaker finance rate is 2.70%, from Chery Motor Finance's Chery 4.46% EV Comparison Rate Offer, while the typical best across 12 institutions is 4.99%.
$35,000 at 8% for 5 years with a 30% balloon ($10,500 final payment).
Without a balloon: $710 a month and $42,580 in total. With the balloon: $567 a month plus the $10,500 lump sum, $44,506 in total. The balloon saves $143 a month but costs $1,926 more in interest.