Car loan calculator
Estimate secured vehicle finance repayments, including optional balloon (residual) payment.
Calculator loansLogic updated April 2026
This calculator estimates the regular repayment and total interest on a secured car loan, with optional balloon (residual) payment due at the end of the term. A balloon defers part of the principal as a lump sum, which lowers your periodic repayments but leaves a large bill to settle at maturity — and you pay interest on that deferred balance the whole time.
How this is calculated
Formula
PMT = (PV × (1+r)^n − FV) × r / ((1+r)^n − 1)Step-by-step
- Add the establishment fee to the principal — this is the financed amount the schedule runs against
- Convert the annual rate to a periodic rate by dividing by the number of repayments per year
- Calculate the total number of repayments (term × frequency)
- Apply the future-value annuity formula above, where PV is the financed amount, FV is the balloon, and PMT is the periodic payment that amortises the loan down to the balloon
- When the rate is zero, the formula simplifies to PMT = (PV − FV) ÷ n
- At the end of the term, the balloon is repaid as a lump sum on top of the final periodic payment
- Rounding mode
- ROUND_HALF_UP
- Precision
- 20-digit internal precision (Decimal.js), rounded to 2 decimal places for display
- Logic last reviewed
Assumptions & limitations
What this calculator assumes
- Fixed interest rate for the loan term
- Repayments are made at the end of each period
- Establishment fee is financed into the loan principal
- Balloon payment is a lump sum due at the end of the term
- Secured loan — vehicle is used as collateral
What this calculator doesn’t account for
- Does not include comprehensive insurance, registration, fuel, or maintenance costs
- Does not model the vehicle's depreciation against the outstanding loan balance
- Does not include early-payout penalties or break costs
- Does not compare dealer-finance package deals (cash-back, discounted rates) against bank-loan economics
- Does not include any GAP insurance or extended warranty products often bundled with car finance
Worked example
A borrower takes a 5-year secured car loan for $35,000 at 7.5% with a $400 establishment fee and a $10,000 balloon, paid monthly.
| Input | Value |
|---|---|
| Principal | $35,000 |
| Establishment fee | $400 |
| Interest rate | 7.5% |
| Loan term | 5 years |
| Balloon payment | $10,000 |
Monthly repayment: ~$574 — Balloon due at month 60: $10,000
The financed amount is $35,400. The schedule amortises that down to $10,000 over 60 months at 7.5%, yielding monthly repayments of about $574. The balloon settles at maturity. Compared to a non-balloon equivalent (~$709/month), the balloon lowers the periodic payment by roughly $135 — but you carry the deferred balance the whole time, so total interest is higher and you'll need a plan to settle the balloon.
Frequently asked questions
How does a balloon payment work?
A balloon is a lump sum of principal that you don't pay off through your regular repayments — it falls due in one hit at the end of the term. This calculator amortises the loan down to the balloon balance, so your periodic payment is lower than a fully amortising loan. At maturity you either pay the balloon in cash, refinance it, or sell the asset to clear it.
Should I get a longer or shorter loan term?
Longer terms reduce the monthly payment but mean you owe more than the car is worth for longer (negative equity), pay more total interest, and finish the loan around the time the car needs significant maintenance. Shorter terms cost more monthly but build equity faster and limit total interest. A common rule is to keep car loans to 5 years or less.
Dealer finance vs bank loan?
Dealer finance can offer subsidised rates that are genuinely competitive, but the headline rate sometimes hides higher fees, mandatory insurance products, or a higher purchase price. Banks tend to offer transparent secured-vehicle rates with clear fee disclosure. Compare both options on the comparison rate (which includes fees) before deciding — this calculator handles either.
How does car depreciation affect my loan?
Cars depreciate fastest in the first few years, while loan balances reduce slowly at the start of an amortisation schedule. That mismatch creates a window — sometimes 12–24 months — where you owe more than the car is worth. A balloon loan extends that window. This calculator doesn't model depreciation; pair it with a vehicle depreciation calculator for the full picture.
Can I refinance the balloon at the end?
Often yes, but you're starting a new loan on a depreciated asset, often at a higher rate than the original because lenders see used-car finance as riskier. Plan to clear the balloon from savings or sale proceeds rather than rolling it forward — refinancing balloons can lock you into perpetually paying interest on the same car.
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