Balloon Payments

  A balloon payment is a large payment that is due to the loan provider at the end of the loan term. Typically, it is due after several smaller monthly payments. The most common types of loans it is associated with would be car loans. An example would be if you bought a vehicles for £10,000 over a period of 24 months with a “Balloon payment” at the end of the term, you may pay £250.00 a month for 24 months, attached to your last payment would be a balloon of £4,000.00. 

(This example does not include any interest added to the loan.)