A balloon payment is a large, single payment due at the end of some loans, after a series of smaller payments. It is often substantially larger than the regular payments.
A balloon payment is a lump sum due at the maturity of a loan that is not fully amortized, after a period of smaller scheduled payments that do not pay the balance down to zero. Loans with this structure, sometimes called balloon loans, keep the regular payments lower by deferring much of the principal to the final due date. The balloon amount may be paid in cash, refinanced into a new loan, or otherwise settled, depending on your situation and the agreement. A fully amortized loan, by contrast, has no balloon payment because every scheduled payment contributes to retiring the balance by the end of the term.
