Balloon payment
Cards & borrowingA large final payment due at the end of a loan agreement.
Overview
Balloon payments are common in car finance like PCP.
They reduce monthly payments but increase the final cost.
Why it matters
- You need a plan to cover the final payment.
- It affects the total cost of borrowing.
- It can influence affordability checks.
FAQs
Can I avoid a balloon payment?
Some agreements let you return the asset or refinance instead.
Does a balloon payment affect my credit score?
It is part of the agreement. Missed payments can harm your score.
Related terms
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