Balloon LoanFinancial Dictionary -> Loans -> Balloon Loan
We say that the loan does not fully amortize (get paid off) over its term, so therefore the bulk must be paid at the end.
A balloon loan can be very attractive to a borrower or somebody desperately wanting their own home, although they need to be very disciplined in making sure they have that bulk of money at the end of the term. Most people are drawn to balloon loan mortgages because they have generally low interest rates and they offer flexibility. For example one month you may want to splash out on a new TV, so the month after you cut back on other costs to keep you savings on track for the final payment. If you were paying back the loan on strict monthly terms you wouldn't be able to splash out on a whim.
Sometimes a balloon loan will allow negotiation of new terms at the end if there is a problem with paying it off. This usually results in a resetting of the interest rate if the interest rate was fixed to begin with.