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Handles the balloon structure common in motorcycle finance. Only the amount above the discounted present value of the balloon is amortised across the monthly payments, which is why a balloon lowers the monthly figure without reducing total interest proportionally.
Amortised principal
Amortised = borrowed - balloon / (1 + r)^n
Monthly payment
Payment = amortised x r / (1 - (1 + r)^-n)
Illustrative only. Actual agreements include documentation fees, option-to-purchase fees, mileage limits on some products and rate variation by credit profile. Check the finance agreement.
It lowers the monthly cost but leaves a large sum due at the end, and you own nothing until it is paid. It only works if you will genuinely have the cash or intend to trade the bike in.
Because the balloon keeps a large principal outstanding for the whole term, accruing interest the entire time rather than amortising away.