noun A sum of money that is much larger than the other scheduled payments in a loan agreement.
In real estate, a balloon payment is often used in mortgages where the borrower makes smaller monthly payments for a period of time and then must pay off the remaining balance in one large payment.
In finance, a balloon payment refers to a large, lump sum payment that is due at the end of a loan term after a series of smaller periodic payments.
Balloon payments are sometimes used in business loans to lower monthly payments and defer a significant portion of the principal to the end of the loan term.
In automotive financing, a balloon payment may be offered as an option for buyers who want lower monthly payments with a larger final payment due at the end of the loan term.
In a finance-related article, a writer may explain how a balloon payment is a large, lump-sum payment that is typically made at the end of a loan term.
A psychologist may discuss the psychological impact of balloon payments on individuals, such as increased stress and financial pressure.
A real estate agent may advise clients on the option of including a balloon payment in a mortgage to lower monthly payments but be prepared for a large payment at the end.
An accountant may help clients calculate the total cost of a loan with a balloon payment and assess the financial implications of such payment structure.
A financial advisor may recommend strategies to manage a balloon payment, such as saving up for the lump sum or refinancing the loan before the payment is due.