Interest-only balloon loan calculator
On an interest-only plan the borrower pays the monthly interest and nothing else, then repays the entire principal in one balloon payment at the end. The monthly cost is the lowest of any plan and the total cost is among the highest, because the balance never falls.
Interest-only balloon calculator
Nothing is sent anywhere — the whole calculation runs in your browser.
1 to 360 months.
Monthly, not annual. Leave empty for an interest-free loan.
- First payment
- $200.00
- Last payment
- $10,200.00
- Total interest
- $2,400.00
- Total repaid
- $12,400.00
| Month | Payment | Interest | Balance after |
|---|---|---|---|
| 1 | $200.00 | $200.00 | $10,000.00 |
| 2 | $200.00 | $200.00 | $10,000.00 |
| 3 | $200.00 | $200.00 | $10,000.00 |
| 4 | $200.00 | $200.00 | $10,000.00 |
| 5 | $200.00 | $200.00 | $10,000.00 |
| 6 | $200.00 | $200.00 | $10,000.00 |
| 7 | $200.00 | $200.00 | $10,000.00 |
| 8 | $200.00 | $200.00 | $10,000.00 |
| 9 | $200.00 | $200.00 | $10,000.00 |
| 10 | $200.00 | $200.00 | $10,000.00 |
| 11 | $200.00 | $200.00 | $10,000.00 |
| 12 | $10,200.00 | $200.00 | $0.00 |
Where the money goes
Each monthly payment is the rate applied to the original principal, and it is the same every month because the principal never moves. Then the final month carries both the last interest payment and the whole amount lent.
$10,000 over 12 months at 2% per month
- Months 1 to 11: $200.00 each — interest only.
- Month 12: $10,200.00 — the balloon, which is the full $10,000.00 plus that month's interest.
- Total interest $2,400.00, total repaid $12,400.00 — against $1,347.15 in interest on an amortizing plan, which is $1,052.85 less for the same money over the same year.
The balloon is the whole risk
Eleven easy months followed by one payment fifty-one times their size is a structure that fails in a specific way: it gives you no early warning. A borrower who cannot manage the balloon will usually make every interest payment on time and look perfectly reliable right up until the month it matters.
The question to ask before agreeing to one is not “can you afford $200.00 a month?” but “where is the $10,000.00 coming from, and on what date?” If the answer is a named event — a property sale, a maturing policy, a contract payment, a harvest — an interest-only plan fits the situation honestly. If the answer is that they will find it somehow, the plan is a way of postponing a problem while paying interest for the privilege.
The common ending is that the balloon cannot be met and the loan is refinanced — which in a private arrangement means extending the term, and starting the interest clock again on a principal that has not moved in a year.
When it genuinely fits
- Bridging a known date. Money needed now against a payment already contracted for later.
- Seasonal income. Farming, fishing, construction — where nothing meaningful arrives until the season ends.
- Short bridges. Over two or three months the interest premium is small and the simplicity is worth it.
Bullet loans are the stricter version
A bullet plan removes the monthly interest payments too: nothing at all is due until maturity, when principal and all the interest fall due together — $12,400.00 on these terms, in one payment. Same total cost, even less warning. It suits very short informal loans where a schedule would be theatre, and little else.
If the borrower can pay something every month, a plan that reduces principal will cost them less and tell you more. Compare all six plans.
Keep reading
- Amortization calculatorEqual monthly payments, interest on the declining balance. The plan most bank-style loans use.
- Diminishing balance calculatorA fixed slice of principal each month plus interest on what is left. Payments start high and fall.
- Flat rate vs reducing balanceThe same quoted rate priced both ways, side by side, with the real cost of the difference.
Stop recalculating this by hand
LoanCompass keeps the schedule, the repayments and the running balance for every loan you have made, so the figures on this page stay current without you rebuilding them. It is free while in early access, and no money moves through it.