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Car Loan Balloon Payments

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5 Reasons to consider a Balloon Payment for your next car loan

Written by

Shaun McGowan

A balloon payment is an optional amount you can choose to pay at the end of your loan term. They’re commonly found in car loans and highly common in business loans.

A balloon payment can be significant in size (up to 40% or more of your loan amount) which can make that final payment a bit of a shock for the unprepared.

However, there are a bunch of reasons a balloon payment can be a great idea - here are a few of the times when getting one could help you out in the short term.

1. To reduce regular payments

Number one on our list is a biggie - helping you save loads of money.

This is the main reason to get a balloon payment; allocating a large amount of your loan into a single, final payment means all of your regular payments will be drastically reduced.

For example, let’s say you get a $30k car loan with a balloon of $10k.

Now, instead of calculating your regular payments at $30k, you’re calculating your payments at $20k. Use our calculator to instantly see how much you’d save.

2. To get the car you need

Particularly in business finance but not uncommon with personal car loans, a balloon payment can reduce your monthly repayments and free up your budget to live a little.

In the case of buying a car, this might mean you could afford to get the super-safe family vehicle you’ve been wanting to get, or find a slightly more expensive (but newer!) vehicle that will ultimately give you a better deal on your loan overall.

3. When you want to trade-in regularly

Besides various ways to save money, a balloon payment can also be a useful option if you plan to regularly upgrade your vehicle. If you’re planning to salary package a vehicle using a novated lease, you’ll find this a very common situation.

Balloon payment trade-ins are generally done by adjusting the balloon amount to match the assessed depreciation of the car.

Basically, this means that the balloon payment will adjust to make sure that - at the end of your term - you will:

  • Repay the balloon by trading in the vehicle
  • Find a new vehicle and start a new car loan arrangement with or without a balloon

This can be extremely helpful if you plan to keep upgrading to newer vehicles every few years.

4. When you plan to refinance

Balloon payments are the final payment on your loan agreement, but this doesn’t mean you still don’t have options.

Many people who have taken on a balloon payment to get cheaper repayments may also choose to refinance their balloon at the end of the term.

As we looked at above, this can be done if you plan to upgrade your car, but it can also be a chance to refinance your remaining debt into a new loan at a better rate.

In this instance, you might consider consolidating your balloon payment with other existing debts. Learn more about debt consolidation and how this can work for you.

5. When it works best for you

Finding the best car loan or the best deal isn’t always easy. But it can be, and the easiest way to find a competitive car loan that lets you add on a balloon payment is to simply use our Money Matchmaker™ engine.

We’ll compare the best car loans we can find from our available pool of lenders, personalised entirely based on a few simple questions, and you can see exactly how much you’ll pay with each lender.

If you’re ready to see the best car loans you can get approved for, get started today.

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The right car loan can save you $1,000s


About the Author

Shaun McGowan from



Shaun McGowan

Shaun is the founder of and is determined to help people pay as little as possible for financial products. Through education and building world class technology. Previously Shaun co-founded and Lend.

*Information about comparison rates Comparison rates are designed to allow borrowers to understand the true cost of a loan by taking into account fees and charges, the loan amount and the term of the loan. The comparison rate is based on an unsecured fixed rate personal loan of $30,000 over 5 years. WARNING: Comparison rates are true only for the examples provided and may not include all fees and charges. Different terms, fees or loan amounts might result in a different comparison rate.


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Money Pty Ltd (trading as provides information about credit products and is authorised to do so as the holder of Australian Credit Licence 528698. does not compare every Lender in Australia. We are not a broker or credit provider and when we provide information via this website, we are not providing you with a recommendation or suggestion about a particular credit product. When you apply for a credit product via the website, you are not applying with us, you are applying directly with a Lender Partner. Before entering into any credit product from one of our Lender Partners, you should confirm the rates and product information with the Lender. All information on this website is general advice only and does not take into account your objectives, financial situation or needs. You should consider whether this advice is right for you and we encourage you to seek independent financial advice.