Encyclopedia of Investment Terminology

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Balloon Loan

A Balloon Loan is a loan which must usually be repaid within a period of three or five years, although its payments are calculated on a longer period of time, usually a term of fifteen years. This means that a loan to be repaid in five years, based on a term of fifteen years will have an outstanding balance at the end of the fifth year, which must either be repaid in full at that time, or refinanced.

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