Balloon Loan Payment Calculator
Calculate periodic payments for loans with a remaining balance at the end of the term.
The original balance or present value of the loan.
The balance remaining after all periodic payments are made.
Monthly Payment
KES 249.29
Total Interest
KES 2,974.29
Total Payment
KES 13,974.29
This calculation covers 36 installments leaving a remainder of KES 5,000 at the end of the 3-year term.
Financial Insight
Balloon payments lower your periodic installments but require a large cash outlay at the end. This is often used for auto leases or businesses expecting a future windfall to settle the balance.
Periodic Payment on a Balloon Note
The balloon loan payment formula is used to calculate the payments on a loan that has a balance remaining after all periodic payments are made. Examples of loans that may use the balloon loan payment formula would be auto leases, balloon mortgages, and any other form of loan not paid in full at its end date.
The formula for a balloon loan payment could also be used for any form of annuity where a balance is left after all periodic cash flows are made. An annuity is simply a series of periodic payments.
How is it Derived?
The balloon loan payment formula can be found by first separating the two main parts:
- 1
Annuity Payment Factor
Used to calculate the payment on any type of annuity (series of periodic payments).
- 2
Discounted Balloon Amount
The balloon amount is discounted to its present value and subtracted from the original loan balance.
Calculation Example
Suppose a loan of KES 11,000 is taken for 3 years (36 months) with a balloon balance of KES 5,000 and an annual rate of 12%.
Important Note
Actual payments may vary in practice due to rounding, fees, compounding basis, and exact due dates. This formula is primarily for educational and planning purposes.