How it works
Part of the borrowing is deferred as a balloon. You pay interest on the whole amount but repay less capital each month.
At the end you pay the balloon, refinance it, or sell the caravan and settle from the proceeds.
Worked example
£30,000 at 8.9% over 7 years with a £9,000 balloon costs £397.33 a month. Total repaid is £42,376.06, of which £12,376.06 is interest.
Without the balloon the payment would be £475.95, so the balloon saves £78.62 a month.
Plan for the balloon
Caravans depreciate, so the balloon may exceed the value at the end. Have a plan to pay or refinance it.
Ask about early settlement terms before signing.
Inputs for the caravan loan balloon payment calculator
Amount borrowed
How much you are financing after any deposit.
Interest rate (APR)
The rate on the agreement.
Term
How long until the balloon is due.
Balloon payment
The lump sum you will owe at the end.
CALCULATOR QUESTIONS
Caravan loan calculator with balloon payment questions
Is a balloon cheaper overall?
No. The payment is lower but total interest is higher.
What if the caravan is worth less than the balloon?
You cover the shortfall when you sell or refinance.
Can I pay the balloon early?
Check the agreement for settlement terms and charges.
Is a balloon suitable for a first caravan?
Only with a clear plan to pay it at the end.