Balloon payment calculator
A balloon loan has payments calculated as if it ran for a long period, such as 30 years, but the whole remaining balance is due earlier. Enter the amount, rate, the amortization period and when the balloon is due. The calculator shows the monthly payment, the balloon amount and the total interest.
Runs in your browser: nothing you enter is sent anywhere.
How to use it
- Enter the loan amount and yearly rate.
- Enter the amortization period the payments are based on, in years.
- Enter after how many years the balloon is due, which must be earlier.
How it works
The monthly payment is P × r ÷ (1 − (1 + r)^−n) for the full amortization period of n months. After k payments the remaining balance is the balloon: P × (1 + r)^k − payment × ((1 + r)^k − 1) ÷ r. Total paid is payment × k plus the balloon.
Worked example
Borrow 120,000 at 0% amortized over 10 years: the payment is 1,000.00. If the balloon is due after 5 years, 60 payments of 1,000 have been made, and 60,000.00 is left as the balloon. With interest the same layout applies: 200,000 at 6% amortized over 30 years has a payment of 1,199.10, and after 7 years the balloon is about 179,278.77.
Tips
- Have a plan for the balloon before you sign.
- Compare the total cost with a normal loan using the loan calculator.
- Fees are not included.
Frequently asked questions
What is a balloon payment?
It is a large final payment that clears the balance left after a series of smaller regular payments. The regular payments are sized as if the loan ran longer, so they do not repay the whole amount.
How is the balloon amount calculated?
It is the balance after k payments: P × (1 + r)^k − payment × ((1 + r)^k − 1) ÷ r, with r the monthly rate. Equivalently, it is the present value of the payments you have not yet made.
Is the balloon paid in addition to the last monthly payment?
Here the balloon is the balance remaining after the last regular payment shown, so it comes due together with that payment. Check how your contract words it.
At 0% interest, how much is the balloon?
Payments are the amount divided by the amortization months, so the balloon is the amount minus the payments made. For 120,000 over 10 years, due after 5 years, it is 60,000.
How can I deal with the balloon?
Common choices are paying it from savings, selling the asset or refinancing the balance. Refinancing depends on future rates and approval, so it is not guaranteed.