B
Loans
Balloon Payment
A large lump-sum payment due at the end of a loan term, commonly used in vehicle finance to reduce monthly instalments. While a balloon payment makes the monthly cost look more affordable, you must pay or refinance the lump sum when the loan ends.
Usage Examples
"His car loan had a 30% balloon payment, meaning he owed R90,000 at the end of the five-year term."
"A balloon payment reduces your monthly instalments but increases the total amount you pay in interest."
"Before agreeing to a balloon payment, make sure you have a plan to cover the lump sum when it comes due."