Definition
A large, one-time payment due at the end of a loan term after making smaller periodic payments.
What to consider
- Plan ahead for that big final payment at the end of your loan.
- Consider setting aside savings or exploring refinancing options.
- Ensure you’re prepared for the lump sum when it’s due.
Real world scenarios
- After years of making low monthly payments on his car loan, Nathan was preparing for a large balloon payment due at the end of the term, so he started saving early.
Related terms
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