A balloon payment lowers your monthly vehicle repayment by deferring part of the loan to the end. Here’s how to use one wisely.
How a balloon works
A balloon (or residual) is a lump sum owed at the end of the term. By pushing part of the loan to the end, your regular repayments drop — helpful for cash flow. At term end you pay it out, refinance it, or trade the vehicle in.
The trade-off
Lower repayments mean you pay a little more interest overall, and you need a plan for the balloon at the end. Balloons suit operators who refresh vehicles every few years; if you’ll keep the vehicle long-term, a smaller or no balloon can cost less.
Use our calculator to see the difference a balloon makes, then get an obligation-free quote for your exact structure.
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