Balloon Payment Calculator: When to Use & Risks
Our Balloon Payment Calculator shows monthly payments and the final lump sum. Compare total cost with amortizing loans. Plan for payoff or refinance.
What is a Balloon Loan?
Low monthly payments for set period, then large final payment (balloon). Common in commercial real estate, car loans, or short-term financing.
Key Features
- Lower EMI: Amortized over longer term
- Balloon Payment: Remaining balance at end
- Refinance Risk: Need new loan to cover balloon
How It Works
- Enter loan amount, rate, term, balloon timing
- See monthly payment and final balloon
- Compare with standard amortizing loan
- View full schedule
Example: $300K, 5.5%, 30-yr, 7-yr Balloon
| Type | Monthly | Balloon | Total Interest |
|---|---|---|---|
| Balloon | $1,135 | $258,000 | $150,600 |
| Amortizing | $1,703 | $0 | $312,900 |
Balloon saves $567/month but requires $258K at year 7
Pros
- Lower monthly payments
- Cash flow for business/investment
- Short-term ownership
Cons & Risks
- Refinance Risk: Rates may rise
- Sale Risk: Property may not sell
- Default Risk: Can't pay balloon
- Higher total interest if refinanced
When to Use
- Plan to sell before balloon
- Expect large future income
- Commercial flip or bridge loan
Balloon vs Interest-Only
- Balloon: Some principal reduction
- Interest-Only: No principal reduction
Pro Tips
- Plan refinance 6–12 months early
- Build savings for balloon
- Negotiate extension option
- Compare with Interest-Only Loan
Conclusion
Balloon loans offer flexibility but require planning. Use our Balloon Payment Calculator to avoid surprises. Explore more in Finance Calculators.