A balloon payment may be suitable for some lenders looking to secure a car loan. The borrower will likely pay a higher interest compared to other loans, and the borrower may have difficulty converting or refinancing the loan to a different type towards the end of the loan term. However, a balloon payment will allow a borrower to have a lower monthly car payment as the borrower will only pay interest for many of the payments. This also buys the borrower time to save money if they urgently need a car but may not be able to afford a higher monthly payment.