Car Loan Calculator
Calculate your monthly car loan repayments — with or without a balloon payment.
| Total Interest | $0 |
| Total Cost | $0 |
| Balloon at Maturity | $0 |
How Car Loan Repayments Work
Car loans use the standard amortisation formula to calculate a fixed monthly repayment. Each payment covers the month's interest on the remaining balance, with the rest reducing the principal.
A worked example
$35,000 borrowed over five years at 8.5% with no balloon is $718 a month. Interest adds $8,085, so the $35,000 car costs $43,085 by the time it is paid off.
What is a Balloon Payment?
A balloon payment is a lump sum deferred to the end of the loan. By not paying down all the principal monthly, your repayments are lower. At maturity you must settle the balloon — by paying cash, refinancing, or trading in the car. Balloons are popular for business vehicle finance (novated leases, chattel mortgages) but increase total interest paid.
How the Balloon Calculation Works
When a balloon is present, we subtract its present value from the loan amount to find the "effective principal" being amortised monthly. The present value of the balloon is: PV = Balloon / (1 + monthly rate)^n. The monthly PMT is then calculated on the effective principal only.
Novated Leases vs Car Loans
A novated lease is arranged through your employer and lets you pay for a car using pre-tax salary, potentially saving GST and reducing your taxable income. For employees in higher tax brackets, a novated lease can be significantly cheaper than a standard car loan. Use our calculator to compare the net cost.