A balloon car loan works like a lease with a title: the lender guarantees the car's future value, and your monthly payment only covers the difference between the price and that guaranteed value - not the whole loan. That is genuinely a lower payment, but it is not a lower cost: because a bigger balance sits there earning interest for longer, the same loan typically costs more in total interest than a standard one, even though the payment itself looks better. This shows both numbers. Balloon (residual-value) structures are especially common in Australian car loans and novated leases, and appear in the UK as PCP - less so in standard US auto loans.
A balloon mortgage typically works by calculating your payment as if you were amortizing the full loan over a longer term than you're actually committing to. A balloon car loan works differently: the lender sets a guaranteed future value for the vehicle up front (based on standard depreciation tables), and your payment is calculated to cover only the gap between the loan amount and that value, with interest - so the loan balance lands exactly on the residual by the end of the term, not zero. A number of online calculators blur these two into one formula - this one keeps the residual-value model, because that is what car finance companies actually use, not a mortgage calculator wearing a different label.
That's also why the guaranteed future value matters so much: it's not just an estimate, it's the number the lender is contractually promising the car will be worth. A higher guaranteed value means a lower monthly payment now, but a bigger lump sum - or a bigger risk if you want to keep the car - later.