Choosing a loan plan can definitely cause a headache. What is the difference between a fully and partially amortized loan? What is a balloon payment? You can learn all about it below.
You probably know what is a fully amortized loan. Let's assume you want a loan of $1,000,000 with a 10% annual interest to be paid back during 10 years (120 months). You will have to repay this loan in 120 equal monthly payments.
In an partially amortized loan, only a part of the sum must be returned in monthly payments. An additional lump sum, called a balloon payment, is paid to the bank at the end date of the loan. For example, imagine you want a loan of $1,000,000 with a 10% interest. The bank agrees for a 10-year maturity with 30 years amortization schedule. That means that you will have to pay 10-year worth of payments in monthly payments, and the rest aften 10 years in one balloon payment.
You need to know what all the terms used in our calculator mean:
Type the values of full loan, interest rate, amortization time and payment period to find out how high the balloon payment will be.