Balloon Payment Calculator
A balloon payment is a large lump sum due at the end of a finance agreement (common in PCP and some HP deals). Enter your figures to see how the balloon amount affects your monthly payments and total cost.
Frequently asked questions
What is a balloon payment?
A balloon payment is a large lump sum due at the end of a finance agreement. It defers part of the cost, reducing monthly payments but increasing the total interest paid. PCP deals use a balloon called the guaranteed future value (GFV).
Do I have to pay the balloon payment?
On a PCP deal, no — you can hand the car back instead. On other balloon finance arrangements, the balloon is mandatory and you must pay it, refinance it, or sell the car to cover it. Always check your agreement terms.
How does a larger balloon reduce monthly payments?
A larger balloon means less of the loan is repaid through monthly instalments. However, interest still accrues on the full amount financed, so the total cost is higher. A larger balloon means lower monthly payments but more interest.
Can I refinance a balloon payment?
Yes, many people take a new loan to cover the balloon payment. However, this extends the total borrowing period and increases the overall interest paid. Consider whether it would be cheaper to sell the car and buy a new one.
These calculations are estimates based on 2026/27 HMRC and DVLA rates. Speak to a lender or qualified financial adviser for a personalised quote.