Short answer: a balloon lowers your regular repayments, but it leaves a lump sum to pay when the loan ends and adds to the total interest. Whether it suits you depends on what you plan to do with the truck at the end of the term and what the truck is likely to be worth by then.
Without a balloon, the repayments pay the loan down to nothing. With one, they pay it down to an agreed amount, and that amount is due in one payment at the end. Because more of the loan stays owing for longer, you pay interest on it for the whole term.
A balloon is harder to deal with when the truck is worth less than expected by the end of the term, when it has done heavy kilometres, or when the business won't have cash or a sale lined up at the end of the term. Thinking now about which of the three options above you would use makes the end of the loan easier to plan.
Put your quote into the business finance quote checker twice: once with the balloon and once without. Compare the repayment, the total interest and the amount owing at the end.
Weighing up a balloon on a truck loan? Send an enquiry with the truck and the quote you have.
They work the same way: an amount left to pay at the end. Balloon is the usual word on a chattel mortgage or hire purchase, and residual on a lease.
Usually not without the lender's agreement. The balloon is set in the contract, so changing it generally means a variation or a refinance.
If you sell or trade the truck, the sale won't cover the full balloon, and the difference has to come from the business or from new finance.
No. It is a new application, assessed on the truck's age and condition and your business at the time. Starting a few months before the balloon is due gives you time to look at options.
It depends on the lender. Ask which one your quote uses, and ask for the balloon as a dollar amount so there is no doubt.
5-minute enquiry — we will refer your details to an accredited lender from our panel for review.
Business-use finance for ABN holders. We don’t arrange personal or consumer loans.
Capital Hill Finance Pty Ltd (ABN 21 686 296 720), Corporate Credit Representative 569305, authorised under Fintelligence Pty Ltd, Australian Credit Licence 511803.
We’re not a lender. Any credit contract is between you and the lender, and the lender decides every application. Complaints