What are Balloon Payments in the world of Asset and Car Finance

Buying a car or a piece of machinery for your business involves diving into the world of Asset Finance.  When talking to banks or finance brokers, you’ll often hear them use the term ‘balloon payment’, or ‘residual’ when describing the arrangements at the end of a loan term.  The terms can seem confusing, but what do they mean?

​Firstly, asset Finance is a broad term describing the range of financing options used to acquire vehicles, boats, caravans, machinery, office equipment and household items like TV’s and computers.  

​Balloon or residual payments are used to reduce the normal monthly repayment amount by deferring part of the loan to the end of the term.  

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