What is a Balloon Payment Loan?

A balloon loan is a type of loan with small regular payments, followed by a large final lump (balloon) payment at end of the term.

For example, a property management company takes a 3-year balloon payment loan to purchase a commercial van, making small monthly payments of $600 during the term and then paying off the remaining $28,000 balance when the lease renewal brings in a large lump sum.

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