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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.


The loan balance remaining at the time the loan contract calls for full repayment.

References in periodicals archive ?
Mike O'Neal, contemplating the mural, recalls that the picture re-creates the bar at the Baloon. After closing that restaurant, he eventually moved the mural to its present site in O'Neals' Restaurant, just a short distance away.
Police said that some persons were standing in a street close to a vender's cart when a gas cylinder used to inflate baloons exploded.