Most Australian truck finance quotes include a balloon, also called a residual: a lump sum you owe at the end of the term. It can cut your repayments a lot, which matters when a new prime mover costs as much as a house deposit. But it isn’t free money.
What a balloon does to the numbers
A $150,000 truck at 8.5% over five years, no deposit:
| Balloon | Monthly repayment | Owed at the end | Total interest |
|---|---|---|---|
| 0% | $3,077.48 | $0 | $34,649 |
| 10% | $2,875.98 | $15,000 | $37,559 |
| 20% | $2,674.48 | $30,000 | $40,469 |
| 30% | $2,472.99 | $45,000 | $43,379 |
| 40% | $2,271.49 | $60,000 | $46,289 |
Each step up lowers the repayment but raises the total interest, because you’re paying interest on the balloon amount for the whole five years.
How big can the balloon be?
Lenders set the maximum by the term and the truck’s age: the longer the term, the smaller the balloon they’ll allow, because the truck will be worth less at the end. A common rule is that the balloon shouldn’t exceed what the truck is likely to be worth when it falls due. Many lenders allow around 20–40% on a 5-year term for a new truck, less for used trucks and longer terms.
Your options when the balloon falls due
- Pay it out from savings and own the truck outright.
- Refinance it over another 1–3 years (the truck must still meet the lender’s age limits).
- Trade the truck in and use its value to clear the balloon, ideally with equity left over.
- Sell the truck privately and pay the balloon from the proceeds.
When a balloon makes sense
- You’ll upgrade the truck at the end of the term anyway.
- Your cash flow is tight early on but improving.
- The truck holds its value well (popular makes, well maintained, sensible kilometres).
It’s riskier if you run very high kilometres, the truck is already old, or you have no plan for the lump sum.
Applying
A balloon doesn’t change the documents you need: ABN and GST details, your licence, BAS or tax returns, bank statements, the tax invoice and insurance. See the full Australian truck finance checklist.
Frequently asked questions
Is a balloon the same as a residual?
Yes. On a chattel mortgage it’s called a balloon; on a lease it’s usually called the residual value.
Can I pay the balloon early?
Usually, but some fixed-rate contracts charge an early payout fee. Check the contract.
Does a balloon affect my GST claim?
No. On a chattel mortgage you claim the GST in the purchase price upfront, whatever the balloon.
