Loans
Balloon payment after n payments
Compound interest on the balance, less the future value of payments already made.
The Formula
B = P x (1 + i)^n - PMT x ((1 + i)^n - 1) / i
Compound interest on the balance, less the future value of payments already made.
| Symbol | Meaning | Unit | Notes |
|---|---|---|---|
| B | Balloon payment | currency | The balance still owed when the loan matures. |
| n | Payments made | months | How many payments fall before the balloon date. |
| i | Period rate | fraction per month | The interest rate per payment period. |
What Each Symbol Means
Bcurrency
Balloon payment
The balance still owed when the loan matures.
nmonths
Payments made
How many payments fall before the balloon date.
ifraction per month
Period rate
The interest rate per payment period.
See It Worked With Real Numbers
A formula on its own does not tell you which number goes where. The how to calculate a balloon payment page applies this equation to a concrete case, shows every intermediate step, and names the mistakes that produce a wrong answer even when the algebra is right.
Where This Formula Appears
This equation is the working core of How To Calculate A Balloon Payment, filed under Finance. Every number the guide produces comes from substituting into this one line.