Balloon Loan

What is a balloon loan?

Balloon Loan Definition: A balloon loan is an arrangement that allows a borrower to pay a certain amount of the principal at the end of a loan term, where the interest is paid monthly without any portion of the principal. This amount is paid in a lump sum on the maturity date or when it is due.

In this arrangement, only interest payments are made as part of the installments, and the entire principal is paid at the end of the term. Balloon loans are typically ideal for companies that want a flexible repayment plan that’s predictable, so they can better manage cash flow and future expenses.

Jul 30 - Comparewise Business Loan Banner

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