NEGOTITATOR

When the entire loan, plus the accumulated interest, is paid off in one “balloon” payment on a specified date, instead of in regular installments.

Lend on balloon terms if you want a large lump sum (the loan plus interest) at some date in the future. You are vulnerable if the borrower does not make provision to repay by the due date accumulated interest.

Borrow on balloon terms if you expect a large sum (or example, inheritance, sale of an asset) by the due date. If you fail to make provision for repayment you put at RISK your assets.