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Q.What is a Balloon Payment?
A.When a repayment schedule calls for an equal monthly payments of principal and interest and at some time during the course of the loan a one-time large payment, this is known as a balloon payment. With a promissory note, a balloon payment may be owed early on, midterm, or just after you make your last payment.
Borrowers tend not to mind a Balloon Payment because if often allows for a lower monthly payment. Lenders like Balloon Payments because they often cause the borrower to default and enable them to seize the collateral.
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