Balloon and PCP finance
Balloon and PCP finance lower your regular repayments by deferring part of the price to a lump sum at the end of the term. A balloon is that final lump sum. PCP adds a guaranteed future value so you can keep, hand back or trade up. LDM Finance places both across its lender panel.
What is a balloon payment?
A balloon payment is a lump sum deferred to the end of a finance term. Setting part of the price aside for later keeps your regular repayments lower while the vehicle is earning. At term end you settle the balloon by paying it out, refinancing it, or selling the asset to cover it.
What is PCP finance?
PCP, or personal contract purchase, is built around a guaranteed future value set at the start of the term. You finance the difference between the price and that future value, so regular repayments stay low. At term end you keep, hand back or trade up to a new vehicle.
How a balloon changes your repayment
A larger balloon lowers your regular repayment but leaves more to settle at term end, and interest runs on the deferred sum for the whole term. Adjust the balloon below to see the trade-off before you commit.
Indicative, at 12.95% p.a.
Balloon, PCP and standard finance compared
The right structure depends on how you use the vehicle and how you want to manage cashflow.
| Feature | Standard finance | Balloon finance | PCP finance |
|---|---|---|---|
| Regular repayment | Higher, fully pays off the asset | Lower, part deferred to a balloon | Lower, based on a projected future value |
| End of term | You own the asset outright | Pay, refinance or sell to settle the balloon | Keep, hand back or trade up to a new vehicle |
| Total interest | Lowest of the three | Higher, interest runs on the deferred sum | Higher, similar to a balloon structure |
| Deposit | Optional, zero deposit available | Optional, zero deposit available | Optional |
| Best for | Long-term ownership and simplicity | Cashflow-sensitive businesses | Regular vehicle upgrade cycles |
A $55,000 vehicle, standard against a 40% balloon
Indicative only, five-year term, zero deposit, at a representative rate of 12.95% p.a. The balloon of $22,000 is settled at term end. Not an offer of finance.
Balloon and PCP finance questions
Request a tailored finance structure
Tell us the vehicle and how you trade. We will model a balloon or PCP structure around your cashflow and place it with a suitable lender.
LDM Finance works with a panel of lenders and is not a lender. Approvals are subject to responsible lending inquiries. Each lender's eligibility criteria, fees, terms and conditions apply. All figures are indicative only, at a representative rate of 12.95% per annum, and do not constitute an offer of finance. Finance wording follows UDC Finance's standard guidance and remains subject to UDC marketing review.