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Balloon Payment or Payments
Balloon payments refer to a situation in which larger dollar amounts are due in the later years during which a debt is being retired. A balloon payment refers the manner in which a debt obligation is structured. Under a balloon payment arrangement the debtor or borrower owes a significant portion of the amount owed as the past payment. An example of a balloon payment would be one in which the borrower paid interest only on the debt until its maturity at which point the entire borrowed amount becomes due and payable. From the credit professional's perspective, it is important to know customers' debt repayment schedules especially if the debt has an upcoming balloon payment due.
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