A repayment of the outstanding principal sum made at the end of a loan period, interest only having been paid hitherto.
- The required payments are the monthly instalments of principal and interest under the loan, until the balloon payment comes due in March.
- Should the customer decide not to pay the balloon payment at the end of the interest-free period then it is time to renegotiate further monthly payments.
- Ballentine explains how a balloon payment works: ‘After a given time period at a particular rate, the entire remaining amount becomes due on the loan.’
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