Balloon Loan
A balloon loan is a type of loan of which the vast majority of the balance is not due until the term of the loan is up. In the interim you will usually have the benefit of small interest payments, and even these are not too significant given that you can use the balloon loan however you like. Balloon loans are not particularly suitable for borrowers with a poor credit rating, since they do require strong financial discipline to prepare for the single large payment at the end. In many cases a balloon loan will be used as part of a mortgage – with prudent fiscal arrangement, this can be an excellent type of loan to take out.
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