| If you are looking for a loan that allows you to | | | | Affording the balloon |
| borrow a large amount of money over a short | | | | Although lower payments are a great idea, you need |
| amount of time but with low monthly payments, | | | | to remember about the balloon payment at the end |
| then you should consider getting a balloon loan. | | | | of the loan. If you borrow a large amount of money, |
| Balloon loans can be used to reduce your monthly | | | | you will likely have to pay a hefty amount at the end |
| payments whilst still borrowing the amount of money | | | | of the term. Although it might seem enticing now to |
| you require. If you want to know what balloon loans | | | | have low payments, it might be very different when |
| are and when you should use them, then this article | | | | you owe 5,000 or more in one payment. Think |
| can help you to learn more. | | | | carefully before applying for a balloon loan about your |
| What are balloon loans? | | | | ability to afford such a large final payment. |
| Balloon loans are basically loans that are agreed for | | | | Who should consider balloon loans? |
| one term, but are calculated over another term. For | | | | Balloon loans are good for people who know their |
| example, you might take out a five-year balloon loan, | | | | income or monetary situation will greatly improve |
| but it is calculated over 15 years. This means the | | | | within the next few years. If you cannot afford large |
| monthly payments are going to be very low. | | | | payments right now but know that in 2 or 3 years |
| However, at the end of the five-year term, you | | | | you will have a lot more money, then a balloon loan |
| need to pay off the final balance in one large balloon | | | | could work well for you. However, you do need to |
| payment. | | | | be fairly certain that your situation really will improve. |
| Lower payments | | | | Refinancing |
| The main advantage of a balloon loan is that for the | | | | If you come to the end of the loan term and find |
| loan term you get extremely low monthly payments. | | | | that you are unable to afford the balloon payment, |
| If you are looking to borrow a large amount of | | | | you might be able to renegotiate the loan terms and |
| money but cannot afford large monthly payments, | | | | pay off the rest of the loan in the normal way. |
| then a balloon loan might be a good idea. With a | | | | Although terms for this will vary, refinancing at the |
| balloon loan you can borrow large amounts of money | | | | end of a balloon loan is often possible. However, this |
| with the advantage of low monthly payments, yet | | | | will end up costing you more money, so if you are |
| you do not have the extra costs of interest on a | | | | unsure about your ability to afford the balloon loan |
| loan that lasts 10 or 15 years. | | | | go for a regular loan instead. |