Balloon Loan Calculator
Model a loan with a large lump-sum "balloon" due at the end โ see your reduced monthly payment, the final balloon amount, and the true extra interest this structure costs.
๐ Balloon Loan Calculator
Car schemes often 30โ50%
How a Balloon Structure Works
A balloon loan amortises only part of the principal through monthly payments; the remainder falls due as one lump sum at maturity. Because less principal is repaid monthly, the instalment is smaller. The price: the balloon portion stays outstanding, accruing interest throughout.
Where You'll Meet Balloon Loans in India
- Car finance schemes: 30โ50% balloon, marketed as "low EMI" plans
- Commercial & business lending: matched to expected lump-sum cash inflows
- Bullet loans: 100% balloon, interest-only. Gold loans capped at 12-month tenure under RBI's 2026 rules
The Honest Cost Comparison
โน10 lakh over 5 years at 10%: a 40% balloon costs roughly โน90,000 extra interest versus standard EMI, while buys โน5,165 monthly relief. Run your numbers above.
The Three Exits at Maturity
- Pay it โ requires the lump sum actually existing
- Refinance it โ roll into a fresh loan (risky if rates spike)
- Sell the asset โ standard in car schemes, risky if resale undershoots balloon
Frequently Asked Questions
Why are balloon loan rates slightly higher?
Larger average outstanding balance plus end-of-term repayment risk. Expect 0.5โ1.5% above standard.
Can I prepay the balloon portion early?
Usually yes, subject to foreclosure terms. Prepaying early recaptures much of the extra interest cost.