Balloon payment
A large lump sum owed at the end of some car loans. It keeps your weekly payments lower but leaves a big amount to clear at the finish.
A balloon payment is a big final payment set aside at the start of the loan. Instead of paying the whole car off in even instalments, you pay smaller amounts during the term, then one large sum at the end.
The upside is lower weekly or fortnightly payments. The downside is that lump sum can be thousands of dollars, and interest still builds on it during the loan. If you cannot pay it when it falls due, you may need to refinance, sell the car, or take out another loan.
Balloon payments are more common on newer cars and some dealer deals. Always ask what the balloon amount is and check the total cost of credit before you agree.
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