Balloon Payment

A `balloon payment` is a large payment that is normally made at the end of a finance agreement.

It is also referred to as a lump sum and is a portion of the capital cost/value of the vehicle that the customer is not paying for within the regular payments that they make to the finance company.

The benefit of a balloon payment is that, because a lump sum is deferred to the end of the agreement, the customer enjoys lower monthly payments or a shorter term.

Finance repayment cycle:

  • Deposit
  • Fees
  • Regular Payments
  • Balloon Payment