Disclaimer: loan-calculator.co.za provides this balloon calculator for informational purposes only. We give no warranty, express or implied, as to the accuracy, reliability and completeness of any information, formulae or calculations provided through its use. We do not accept any liability for loss or damage of any nature, including indirect or consequential loss, which may be attributable to the reliance on and use of the calculators.
Balloon Payment Calculator Explanation
First, let’s explain what a balloon payment is. A balloon payment is a final amount due at the end of a loan’s term. This amount is mostly larger than all the payments made before it (e.g. your monthly installments are R 1000,00, but at the end of the loan term you still have to pay R10000,00. )
On installment loans without a balloon payment, your loan will be paid in full at the end of the terms.
Balloon payments allow borrowers to reduce monthly payments by making a larger payment at the end of the loan’s term.
So it is important that you can pay the final amount due at the end of your loan term.
After the loan term has finished, a balloon payment option always works out more expensive.
Why do people go for the balloon payment option? Basically, to reduce their monthly payments, or to buy a more expensive asset/car which they under normal circumstances could not afford.
What if I can’t pay my last balloon payment? You either have to refinance the residual, or for example in the case of a car, dispose of the car and use the funds to pay your residual.
The balloon payment calculator will calculate your monthly payments with and without a balloon payment option. It will also show you your total payments you would have made for both options.
There is a once of compulsory initiation fee, of R 1207,50. You can either add this fee to your total finance amount or not. There are also compulsory monthly admin fees. We have pre populated this with the current amount of R69,00.
The monthly admin fees will not make a difference to compare the payments without or with balloon payment, but including them will give you a more accurate amount of what your repayments will be.