LENDING GLOSSARY
Balloon Payment
Balloon Payment
A large remaining balance due at the end of a loan term.
What does Balloon Payment mean?
A large remaining balance due at the end of a loan term. Professionals may calculate, document or apply this concept differently depending on the transaction, accounting method, lender policy and governing documents. Borrowers should confirm the precise definition used in any term sheet or agreement.
Balloon Payment in context
A five-year loan amortized over 25 years leaves a balloon balance at maturity.
Why it matters in financing
Balloon Payment can influence how a lender, investor or advisor evaluates risk, pricing, structure, repayment capacity or transaction economics. It should be considered together with the complete financial picture rather than used alone.
Related lending terms
Educational information only. This definition is general, may not match a particular lender or contract, and is not financial, accounting, tax or legal advice.