A balloon loan calls for repayment of both interest and principal at regular intervals,with the payment levels set so that the loan expires at a preset date.

Question

Quizplus · Accepted Answer

A balloon loan typically involves relatively small payments for a certain period of time followed by a lump sum payment for the remaining amount of the principal at a preset date. Regular payments may only cover interest or a small portion of the principal.

A Balloon Loan Calls for Repayment of Both Interest and Principal