Balloon Loan

(redirected from Balloon note)
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Related to Balloon note: balloon mortgage, balloon payment, balloon loan

Balloon Loan

A loan or bond in which the borrower makes only interest payments for a set period of time. At the end of the term, the borrower repays the entire principal at once. A balloon loan may be useful when the borrower expects interest rates to be low at the end of the term, allowing him/her simply to refinance the loan. However, there is a high risk of default because not all borrowers actually have the cash to repay an entire loan in one payment. See also: Balloon Mortgage.
References in periodicals archive ?
Alternatively, it may be possible for the terms of the promissory note to be renegotiated into a new balloon note.
Balloon notes that provide only for the payment of interest will enhance borrower's liquidity.
The IDIT has to pay only interest on the balloon note until maturity.
is providing a 10-year balloon note that replaces $3.
But sometimes balloon payments can ruin borrowers who do not have a rising stream of income and who are unduly influenced by the lower short-term cost of a balloon note.
The redemption was mandatory, but the company had the option of a lump-sum payment or a cash down payment accompanied by a five-year balloon note at 10% interest.