Will a balloon payment really make the car cheaper?
Compare a standard secured-car-loan style calculation with a residual or balloon payment. Keep the upfront cost, repayment schedule, final lump sum and true borrowing cost in view.
Vehicle cost and loan assumptions
Simplified constant nominal annual rate / 12 car-loan math, not a lender offer, comparison rate, guaranteed future value or novated lease. Financed on-road charges are entered manually; state stamp duty, registration, mandatory fees, insurance and effective APR/establishment fees are not auto-checked. A balloon must be funded at term end.
Illustration only: A$42,000 vehicle, A$5,000 cash, A$3,000 trade equity, A$1,500 separately financed on-road charges and A$13,000 balloon over 60 months. Try other interest assumptions yourself.
Full car loan borrowing cost
Standard repayments vs residual balloon
Loan balance month by month
| Month | Interest | Principal repaid | Balance owed |
|---|---|---|---|
| 1 | $236.67 | $306.22 | $35,193.78 |
| 2 | $234.63 | $308.26 | $34,885.52 |
| 3 | $232.57 | $310.32 | $34,575.21 |
| 4 | $230.50 | $312.38 | $34,262.82 |
| 5 | $228.42 | $314.47 | $33,948.35 |
| 6 | $226.32 | $316.56 | $33,631.79 |
| 12 | $213.45 | $329.44 | $31,687.60 |
| 24 | $186.10 | $356.78 | $27,558.77 |
| 36 | $156.49 | $386.39 | $23,087.25 |
| 48 | $124.42 | $418.47 | $18,244.59 |
| 60 | $89.69 | $453.20 | $13,000.00* |
* Final month instalment and balloon combined: $13,542.89 · All loan repayments including balloon: $45,573.13
How to calculate Australian car loan repayments
- 01
Enter the dealer's agreed drive-away or purchase price, separately adding only costs not already included that you will actually finance. Do not double count on-road charges.
- 02
Enter a cash deposit and your net trade-in equity after any existing car loan has been settled. Negative equity and novated-lease packaging require their own calculations.
- 03
Choose the nominal borrowing rate and number of months. If the contract has a balloon/residual amount, enter the value payable at the end. It is not deducted from the interest-bearing amount borrowed.
- 04
Compare total lifetime interest and the final cash payment. ASIC MoneySmart advises that lower instalments with a balloon can mean a higher overall cost. GFV products and end-of-lease options have contract conditions not shown here.
Important ASIC MoneySmart guidance
Simplified constant nominal annual rate / 12 car-loan math, not a lender offer, comparison rate, guaranteed future value or novated lease. Financed on-road charges are entered manually; state stamp duty, registration, mandatory fees, insurance and effective APR/establishment fees are not auto-checked. A balloon must be funded at term end.
Car loan questions
Is a balloon payment the same as a car loan deposit?
No. A deposit is paid up front and reduces borrowing. A balloon is owed at the END and generally attracts interest until then.
Does this work for a novated lease?
No. Novated leases can include tax, employer payroll and fringe benefits rules that this loan-only tool does not calculate.
Does the figure include registration and comprehensive insurance?
Only if you enter relevant financed costs or a monthly running-cost estimate. Compulsory and optional expenses differ between states and individual vehicles.
ASIC MoneySmart — Car loans and balloon payments
Balloon means a final lump sum — it is not free · Simplified constant nominal annual rate / 12 car-loan math, not a lender offer, comparison rate, guaranteed future value or novated lease. Financed on-road charges are entered manually; state stamp duty, registration, mandatory fees, insurance and effective APR/establishment fees are not auto-checked. A balloon must be funded at term end.