Balloon Payment Calculator

Often used on auto loans, the below balloon payment calculator will help you estimate the lump-sum amount you will pay at the end of your credit period, to close off the loan account.

What Is a Balloon Payment?

A balloon payment is a lump sum paid at the end of a loan term, often larger than the preceding monthly payments. This structure allows for smaller monthly payments during the loan term but requires careful planning to manage the final balloon amount. Balloon payments are common in auto loans, mortgages, and some business loans.

How the Balloon Payment Calculator Works

Our calculator simplifies the process of determining:

  • Monthly Payments: The consistent amount you need to pay each month.
  • Balloon Payment: A percentage of the loan amount due at the end of the loan term.

Inputs You Need:

  1. Loan Amount: The total amount you plan to borrow.
  2. Annual Interest Rate: The yearly interest rate as a percentage.
  3. Loan Term: The total duration of the loan in years.
  4. Balloon Payment Percentage: The percentage of the loan amount reserved for the final balloon payment.

Outputs:

  • Monthly Payment: Calculated based on the loan amount, interest rate, and loan term minus the balloon payment.
  • Balloon Payment: A percentage of the loan amount, displayed as a lump sum.

Why Use the Balloon Payment Calculator?

  • Easy to Use: Enter the values, and the calculator does the math for you.
  • Plan Your Finances: Understand how much you’ll owe monthly and at the end of the loan.
  • Make Informed Decisions: Explore different balloon payment percentages to see what works best for your budget.

Example Scenario

Imagine you’re taking out a R50,000 loan with an annual interest rate of 5% over 5 years. You decide that 20% of the loan amount will be set aside as a balloon payment. Here’s what the calculator will show you:

  • Balloon Payment: R10,000 (20% of R50,000)
  • Monthly Payment: The calculated amount based on the remaining R40,000 amortized over the loan term