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Balloon Payment Calculator
The balloon payment is the number PCP adverts don't lead with. It's the lump sum due at the end of your agreement — typically 30–60% of the car's original price. This calculator shows you the full picture.
Your details
PCP result
Total Amount Payable
£29,386.98
This is the total that leaves your account — deposit + all payments + balloon
Representative Example
The balloon payment is why PCP monthly payments look cheap.
On a £30,000 car, a typical PCP balloon is £12,000–£18,000. That's the amount you're deferring — not avoiding. You still pay interest on it every month. When the term ends, you owe it in full if you want to keep the car.
What is a balloon payment?
In PCP finance, the balloon payment is officially called the Optional Final Payment or Guaranteed Minimum Future Value (GMFV). It's the amount the finance company predicts the car will be worth at the end of the agreement.
At the end of the term, you have three options:
- Pay the balloon — and own the car outright.
- Return the car — walk away with nothing further to pay (assuming condition and mileage terms are met).
- Part-exchange — if the car is worth more than the GMFV, use the difference as a deposit on a new PCP deal.
How the balloon size affects your deal
| Balloon as % of OTR | Monthly payment | Total interest | Risk to you |
|---|---|---|---|
| High (50–60%) | Lowest | Highest | Large lump sum due at end; more interest paid on deferred balance |
| Medium (35–45%) | Moderate | Moderate | Balanced — typical for mainstream cars |
| Low (25–35%) | Higher | Lower | Closer to HP; easier to own at end; less interest overall |
The hidden cost: interest on the balloon
This is the part most people miss. With PCP, you pay interest on the full amount of credit — including the balloon — for the entire term. You're not paying the balloon down, but you're paying interest on it every single month.
Example: £25,000 car, £2,500 deposit, £12,000 balloon, 6.9% APR, 48 months. The amount of credit is £22,500. Over 48 months, the balloon alone accrues roughly £3,600 in interest.
Negative equity: when the car is worth less than the balloon
The "Guaranteed" in GMFV protects you in one direction: if the car depreciates faster than predicted, you can hand it back. The lender absorbs the loss. This is a genuine consumer protection.
But if you want to keep the car and it's worth less than the GMFV, you're paying over the odds. And if you want to trade in early, negative equity can mean rolling debt into a new deal — a trap that compounds over time.
Balloon payment vs deposit
Your deposit reduces the amount you borrow (and therefore your interest). The balloon defers part of the borrowing to the end (but you still pay interest on it). A bigger deposit is almost always better value than a bigger balloon. If you have cash to put down, increasing your deposit from 10% to 20% saves more in interest than reducing the balloon by the same amount.