What is a final balloon payment on a car payment?

Answer 1

A "balloon payment" is a final, usually quite large, payment on a loan. Essentially what you're doing in such a loan is taking a (slightly) smaller monthly payment in exchange for having to come up with a large lump sum of cash at the end.

Generally speaking these aren't such a good idea for a typical borrower. The question to ask is "If I don't have the balloon payment sitting in my account right now, what reason do I have to think I will have it when it comes due?" If you can think of a very good reason (such as "By the time the balloon payment comes due my house will have sold/my bonds will have matured/I can use the money from my Certificates of Deposit without the Substantial Penalty for Early Withdrawal") then maybe the balloon payment loan does make sense. Otherwise you're probably better off avoiding them.