Balloon Payment Car Loans. Lower Your Monthly Repayments
A balloon payment (or residual value) lets you defer a lump sum to the end of your loan term, significantly reducing your monthly repayments. Ideal for business use or those wanting maximum cash flow flexibility.
Why choose Simple Loans.
Lower Monthly Repayments
Defer a percentage of the loan to the end, reducing what you pay each month.
Business Tax Benefits
Balloon payments on chattel mortgages may offer tax advantages for business owners.
Flexible End-of-Term Options
Pay the balloon, refinance it, trade in the vehicle, or sell, you have options.
New & Used Vehicles
Balloon payment structures available across new cars, used cars, utes, and commercial vehicles.
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Understanding Balloon Payment Car Finance
Balloon payment car loans are one of the most popular finance structures in Australia, particularly for business owners using chattel mortgages. The concept is simple: instead of paying off the entire vehicle cost equally over the loan term, you defer a portion, the 'balloon' or 'residual value', to a single payment at the end.
For example, on a $40,000 car loan over 5 years with a 30% balloon, you'd only make regular repayments on $28,000. The remaining $12,000 would be due as a lump sum at the end of the 5-year term. This can reduce your monthly repayments by hundreds of dollars.
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Frequently asked questions.
What is a balloon payment on a car loan?
A balloon payment (also called a residual value) is a lump sum due at the end of your car loan term. By deferring this amount, your regular monthly repayments are lower throughout the loan. Typical balloon payments range from 10% to 50% of the vehicle's purchase price.
What happens when the balloon payment is due?
When your balloon payment is due at the end of the loan term, you have several options: pay the lump sum outright, refinance the balloon amount into a new loan, trade in the vehicle and use the equity, or sell the vehicle and pay out the balloon.
Are balloon payments a good idea?
Balloon payments can be beneficial if you want lower monthly repayments, plan to trade in or sell the vehicle before the balloon is due, or are using the vehicle for business purposes where tax deductions apply. However, you'll pay more total interest over the life of the loan.
Can I make extra payments on a balloon car loan?
Most lenders allow additional repayments on balloon car loans, which can reduce the balloon amount due at the end. Check with your lender about any early repayment fees.
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Simple Loans is a finance comparison tool. Holder of Australian Credit Licence No. 509582. All applications are subject to lender approval. Terms, conditions, fees and charges apply. This information is general in nature.