Bullet Loan

DEFINITION of 'Bullet Loan'

Any loan that requires a balloon payment at the end of the term and anticipates that the loan will be refinanced in order to meet the balloon payment obligation.

BREAKING DOWN 'Bullet Loan'

These loans are riskier because the homeowner''s equity in the property doesn''t increase over time.

RELATED TERMS
  1. Balloon Loan

    A type of loan which does not fully amortize over its term. Since ...
  2. Balloon Payment

    An oversized payment due at the end of a mortgage, commercial ...
  3. Balloon Mortgage

    A type of short-term mortgage. Balloon mortgages require borrowers ...
  4. Balloon Maturity

    1. A repayment schedule for a bond issue where a large number ...
  5. Non-Amortizing Loan

    A type of loan in which payments on the principal are not made, ...
  6. Refinance

    1. When a business or person revises a payment schedule for repaying ...
Related Articles
  1. Personal Finance

    How Balloon Payments Work

    30-year mortgage borrowers will typically make equal payments over 30 years until the loan’s principal and interest have been paid. A loan’s interest rates will likely be lower if it includes ...
  2. Investing

    Understanding Term Loans

    A loan from a bank for a specific amount that has a specified repayment schedule and a floating interest rate.
  3. Managing Wealth

    Student Loan Refinancing: The Pros and Cons

    To refinance your student loan or not? Here are the top pros and cons to consider.
  4. Personal Finance

    Time To Consolidate Your Student Loans?

    Use these strategies to decide whether consolidating your student loans makes sense for you – and what to do next if it does.
  5. Markets

    An Introduction to Government Loans

    Government loans further policymakers' efforts to create positive social outcomes by offering timely access to capital for qualified candidates.
  6. Personal Finance

    Student Loans: Federal Loan Consolidation

    Federal loan consolidation is a helpful tool for converting an unmanageable payment into a manageable payment by combining multiple semester loans into one loan and extending your repayment schedule. ...
  7. Personal Finance

    Personal Loans: To Lend Or Not To Lend?

    Attempting to help a loved one with a cash loan can put a strain on your relationship - and your bank account.
  8. Retirement

    Business Owners: A Guide To Qualified Retirement Plan Loans

    Thinking of adding a loan feature to your company's plan? Here's what you need to know.
  9. Managing Wealth

    When Are Personal Loans a Good Idea?

    You never want to borrow money for frivolous reasons, but these five circumstances might warrant it.
  10. Personal Finance

    Student Loans: Private Loans

    While federal loans should always be your first borrowing choice, they may not cover your full tuition – never mind lab fees, books, and room and board. That's where private loans come ...
RELATED FAQS
  1. What is the amortization schedule for my land contract?

    I need a schedule for a land contract. The loan is for $46,900. The payments are $400 a month with a 7% interest rate. How ... Read Answer >>
  2. What are the differences between delinquency and default?

    Find out more about loan delinquency, loan default, and the difference between a loan borrower defaulting and being delinquent ... Read Answer >>
  3. Which is better, a fixed or variable rate loan?

    A variable interest rate loan is a loan in which the interest rate charged on the outstanding balance varies as market interest ... Read Answer >>
  4. Are secured personal loans better than unsecured loans?

    Read about the differences between secured loans and unsecured loans and how they are used. Learn about forms of collateral ... Read Answer >>
  5. What are the pros and cons of life insurance policy loans?

    Find out the pros and cons of borrowing against your life insurance policy to help you decide if this loan type is the right ... Read Answer >>
  6. What are the pros and cons of consolidating my student loans?

    Read about the possible advantages and disadvantages of consolidating your student loan debts, and find out how to determine ... Read Answer >>
Trading Center