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Estimates for informational purposes only — not financial advice.
What is a Balloon Loan?
A balloon loan is a type of financing that features lower monthly payments for a set period, followed by a single, large "balloon" payment at the end of the loan term. These loans are often used in business or real estate when the borrower expects a large sum of money in the future to pay off the balance. Our calculator shows you what your monthly payments will be and the size of the final balloon payment you'll need to prepare for.
Term Definitions
Loan Amount
This is the principal amount of the loan. It is the total amount of money you borrow from a lender and are obligated to pay back, excluding any interest.
Interest Rate
The interest rate is the percentage of the principal that a lender charges for borrowing money. It is typically expressed as an annual rate. A lower interest rate will result in lower monthly payments and less total interest paid over the life of the loan.
Amortization Period (Years)
The amortization period is the full timespan over which a loan's principal and interest are scheduled to be paid off. For balloon loans, this period is used to calculate your monthly payments, even though the loan term itself is shorter.
Loan Term (Years)
In a balloon loan, the loan term is the specific period of time after which the large, final "balloon" payment is due. This term is typically shorter than the amortization period used to calculate the regular monthly payments.
Extra Monthly Payment
Making an extra payment each month, in addition to your required monthly payment, can significantly reduce your loan's total cost. This extra amount is applied directly to the principal, which helps you pay off the loan sooner and save on interest.