A large, lump-sum payment is due at the end of a loan term after smaller periodic payments.

Mortgage Context:
“John was able to secure a lower monthly payment on his mortgage by opting for a balloon payment loan. However, he’ll need to pay a large balloon payment at the end of the 7-year term to settle the remaining balance.”

Auto Loan:
“The car dealership offered a financing plan with low monthly payments, but it includes a balloon payment of $10,000 after five years.”

Business Loan:
“The company took out a business loan with a balloon payment, allowing them to make smaller payments over the loan term but requiring a substantial final payment when the loan matures.”

Personal Loan:
“Sarah chose a loan structure with a balloon payment, knowing she’d have a lump sum available from an upcoming inheritance to cover the final large payment.”

Real Estate Development:
“The developer secured a construction loan with a balloon payment, providing them with manageable payments during the project, with a large lump sum due once the property was sold.”