A large lump sum due at the end of a loan that wasn’t fully amortized.
Balloon loans keep payments low by amortizing over a long schedule but coming due early. Common in commercial lending and seller financing — always have a refinance or sale plan before the balloon hits.
Example: A $300,000 loan amortized over 30 years but due in 7 leaves a ~$271,000 balloon.
FAQ
What is Balloon Payment in simple terms?
Balloon loans keep payments low by amortizing over a long schedule but coming due early. Common in commercial lending and seller financing — always have a refinance or sale plan before the balloon hits.