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 ?
Upon the maturity of the balloon note, the outstanding principal balance can be repaid from the irrevocable trust to the senior family member.
Balloon notes that provide only for the payment of interest will enhance borrower's liquidity.
In exchange for DMC's shares, Pazoo will provide a USD1.5m (EUR1.2m) two-year balloon note at 3% to the owners of the entity plus a potential earn-out over the next two years.
The IDIT has to pay only interest on the balloon note until maturity.
in Jackson, Miss., is providing a 10-year balloon note that replaces $3.4 million of interim funding through One National Bank in Little Rock.
In exchange for DMCa[euro](tm)s shares, Pazoo will provide a USD1.5m (EUR1.2m) two-year balloon note at 3% to the owners of the entity plus a potential earn-out over the next two years.
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.
Balloon notes that call for the payment of interest only currently are an attractive way to provide liquidity without the immediate burden of substantial loan payments.
Advanced section views and dimensioning types such as datums and balloon notes have also been added.
It also imposes substantive limitations, such as restrictions on short-term balloon notes, on certain home equity loans with rates and fees above a certain percentage or amount.
Loans used to refinance balloon notes and other unamortized debts are grandfathered over the shorter of the old loan term or 30 years.