2 min read
Definition
A balloon payment is a disproportionately large final instalment at the end of a loan or asset-finance agreement, following a series of smaller regular payments. It's common in vehicle and equipment finance, where it reflects the asset's expected residual value.
In plain terms
You pay less each month, but a big payment lands at the end — which you either fund from cash, refinance, or clear by handing the asset back.
Why it matters for your company
Balloons ease monthly cash flow but demand planning for the final sum — don't let it surprise you. See asset finance and check the total cost with the true cost calculator.
Related reading
Asset finance for UK businesses
Asset finance lets you acquire equipment, vehicles or machinery without paying the full cost up front. This…
Read →Bullet Repayment — Business Finance Glossary
A bullet repayment is the full return of principal in a single lump sum at loan maturity, as opposed to…
Read →True cost of borrowing (APR) calculator
Cut through fees and flat rates: see the total cost and the true annual rate behind any business finance…
Read on Tools →
Balloon payment
A balloon payment is a large lump sum due at the end of a finance agreement, after a run of smaller…
Read →Funding for UK limited companies
Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.