Finance provided for buying new or used cars and motorbikes. A maximum duration is defined and the interest rate is usually fixed. Monthly instalments can be fixed or growing; deferred or irregular payments can be foreseen.
In balloon formulas, monthly instalments are lower than in standard finance and a large balloon payment must be paid at the end of the auto loan's term. This final payment must be paid in cash or refinance as a new loan. Some balloon loans are structured much like a lease, in that the customer is allowed to return his vehicle at loan-end in lieu of making the final payment.