A balloon payment is a large lump-sum payment made at the maturity of a debt. It is typically used in situations where the borrower has made smaller payments over the course of the loan but is unable to make the final payment in full. The balloon payment helps to reduce the monthly payments during the term of the loan but can result in a large payment due at the end.

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A Balloon Payment Is

Question 18

Multiple Choice

A balloon payment is

A) payment made on circus debt.
B) a large front-end debt payment, followed by smaller payments.
C) a large lump-sum payment at maturity of a debt.
D) none of the above.

Correct Answer: