A balloon payment loan is any loan for which the final payment in a series of payments is substantially greater than the other payments in the series. Balloon payments are very common in business loans; the expectation is that the final payment will be made either from conversion of assets (such as seasonal inventory) or through refinancing.
Although less common in consumer lending, there are some residential mortgage loans with balloon payments. The estimated amount and date of the final (balloon) payment is required to be disclosed to a consumer under the federal Truth in Lending Act.
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A balloon payment loan is any loan for which the final payment in a series of payments is substantially greater than the other payments in the series. Balloon payments are very common in business loans; the expectation is that the final payment will be made either from conversion of assets (such as seasonal inventory) or through refinancing.
