Balloon payment calculator
The dealer shows you the lower instalment. This shows you the rest of the deal.
Dealers commonly offer 20 to 40 percent
The two deals, side by side
| With 35% balloon | No balloon | |
|---|---|---|
| Monthly instalment | R 5 643 | R 6 991 |
| Owed after final instalment | R 140 000 | R 0 |
| Total interest | R 186 320 | R 143 377 |
| Total cost of the car | R 586 320 | R 543 377 |
The balloon saves you R 1 348 a month, but you pay R 42 943 more in interest and still owe R 140 000 when the term ends. That lump sum usually means refinancing, trading in, or selling the car to settle it. A balloon is a tool for cash flow, not a discount.
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How a balloon changes the shape of your deal
With a normal loan, every instalment chips away at the full amount you borrowed. With a balloon, the bank splits your debt in two: the part you amortise monthly, and the balloon that waits at the end. You pay interest on both, every month, for the whole term. That is why the total interest on a balloon deal is always higher even though the instalment is lower.
The risk is the gap between the balloon and what the car is worth when it lands. A 35 percent balloon after 72 months often exceeds the trade-in value of a fast depreciating car, which means paying in to exit your own vehicle. Pair this calculator with the car value calculator to see whether your car outruns its balloon.
Common questions
What is a balloon payment?
A balloon, or residual, is a slice of the car price that you do not pay off monthly. It sits to one side accruing interest and falls due as a lump sum after your final instalment. A 35 percent balloon on a R400 000 car leaves R140 000 owing at the end.
What happens when the balloon comes due?
You have four options: pay it in cash, refinance it into a new loan, trade the car in and use its value to settle, or sell privately. Most South Africans refinance or trade in, which is how one balloon quietly rolls into the next deal.
Can I pay off a balloon early?
Usually yes. Extra payments can be directed at the balloon depending on the bank, and settling early cuts the interest that accrues on it. Our extra payment calculator shows the effect month by month.
Is a balloon payment ever a good idea?
It can be, if the lower instalment funds something that earns more than the extra interest costs, or if you are disciplined about saving toward the lump sum. It goes wrong when the balloon is the only way to afford the car. Then you are financing a car above your budget.