balloon loan
Final lump payment
A balloon loan is a loan that requires a large final payment—the "balloon"—after a series of smaller regular payments.
The borrower might pay only interest for several years, then owe the entire principal at once: They refinanced before the balloon loan came due.
Common in mortgages and auto financing, balloon loans offer lower monthly payments but carry significant risk if the borrower can't pay or refinance when the balloon matures.
- amortizationGradual debt reduction schedule
- lump sumEntire amount at once
- final paymentLast sum owed
- principalChief school administrator
- interestAttention, stake, or fee
interest rate · refinance · due date · maturity · ticking clock · payment · mortgage · bullet · debt · borrower · lender · term · financial risk · risk · subprime lending · equity · credit · repayment
- debtscredit card debt, medical debt, student debt, mortgage, debt
- loanslend, borrow, borrower, lender, microloan
- mortgagesfixed-rate mortgage, mortgage broker, adjustable-rate mortgage, mortgage payment, mortgage insurance
- financial agreementscredit agreement, promissory note, line of credit, credit line, HELOC
- financial instrumentspromissory notes, check, bond fund, cheque, checks
balloon, loan, balloons, ballooned, ballooning, balloonist, loans, loaned, loaning