A balloon payment is a big final payment due at the end of a loan, after a series of smaller regular payments.
A balloon payment is a large, lump-sum payment of remaining principal due at the maturity of a loan that was not fully amortized over its term.
Balloon structures keep regular payments lower but require a plan to cover the large final payment — often by refinancing or selling. That plan matters.
A loan with low payments for several years followed by a large final payoff has a balloon payment at the end.
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