Balloon Payment Calculator
Find the monthly payment and final balloon on a loan.
Results update as you type.
This calculator is for illustrative purposes only. Actual rates, fees and terms vary by lender. Consult a qualified financial adviser before making borrowing decisions.
How it works
A balloon loan keeps monthly payments low by calculating them over a long amortisation schedule, but it does not run to the end of that schedule; instead the entire remaining balance becomes due as a single large lump sum, the balloon payment, at an earlier date. This balloon payment calculator returns both the modest monthly instalment and the size of that final balloon. The structure is common in commercial mortgages, some auto loans, and business financing, where a borrower expects to refinance, sell the asset, or come into funds before the balloon falls due. The appeal is affordability in the near term: because the payments are sized for a thirty-year payoff but only five years pass, most of the principal is still outstanding when the balloon arrives. That is also the risk: the borrower must be ready to pay or refinance a substantial sum, and if credit conditions have tightened or the asset has fallen in value, refinancing may be difficult. Enter the loan amount, the interest rate, the amortisation term used to size the payments, and the number of years until the balloon is due, and the calculator shows exactly what you will owe.
M = P·r / (1 − (1+r)^−n); balloon = remaining balance at the balloon date
A balloon loan is paid with regular instalments calculated as if it would amortise over a long term, but the full remaining balance falls due much earlier as a single lump sum. The monthly payment uses the standard amortisation formula over the long term, keeping instalments low. The balloon is the outstanding principal at the shorter balloon date, found by growing the balance at the monthly rate and subtracting the payments made so far.
Source:Standard loan amortization
We review all our tools from time to time to ensure accuracy.
Worked example
How to use this calculator
- 1
Enter your values
Enter loan amount, annual interest rate, amortization term and balloon due after.
- 2
Adjust the options
Fine-tune any options to match your situation.
- 3
Read your result
Monthly payment updates instantly as you type — no button to press.
Frequently asked questions
What is a balloon payment?
A balloon payment is a large, one-time lump sum due at the end of a balloon loan, covering the entire remaining balance. The loan's monthly payments are deliberately kept small by calculating them over a longer amortisation period than the loan actually runs, so most of the principal remains outstanding when the balloon comes due and must be paid or refinanced.
Why choose a balloon loan?
Borrowers choose balloon loans to keep monthly payments low in the short term, freeing up cash flow. They suit situations where the borrower expects to sell the asset, refinance, or receive a lump sum before the balloon is due. Businesses financing equipment and buyers of commercial property often use them, accepting the later lump-sum obligation in exchange for lower interim payments.
What happens when the balloon is due?
When the balloon date arrives, you must pay the entire remaining balance at once. In practice, borrowers usually refinance the balance into a new loan, sell the underlying asset to raise the cash, or pay it from savings. Failing to arrange any of these can lead to default, so planning for the balloon well in advance is essential.
How is the monthly payment calculated?
The monthly payment uses the standard loan amortisation formula applied to the full amortisation term, not the shorter balloon term. That is why payments are low: they are sized as though the loan will run the whole long period. Because it ends early, only a fraction of the principal is repaid through instalments, leaving a large balance as the balloon.
What are the risks of a balloon loan?
The main risk is being unable to cover or refinance the balloon when it comes due. If interest rates have risen, credit has tightened, or the asset's value has dropped, refinancing may be costly or impossible, and selling may not raise enough. Borrowers should have a clear, realistic exit plan and a backup before taking on a balloon structure.