Balloon Payment

Large final payment, as when a loan is repaid in installments. For example, (i) most high-quality bond issues establish payments to the sinking fund that are not sufficient to redeem the entire issue. As a consequence, there is the possibility of a large balloon payment at maturity; (ii) if a lease has a schedule of payments that is very high at the start of the lease term and thereafter very low then these early balloon payments would be an evidence that the lease was being used to avoid taxes and not for a legitimate business purpose.