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This type of loan can further be broken into bullet loans and full bullet loans. A full bullet loan is a type of loan in which the borrower makes no payments, or interest only payments, during the term of the loan, and then repays the full principal balance in a single lump sum payment at the end of the loan term.

Also known as a ?balloon payment? or ?bullet repayment,? a bullet payment is a lump sum payment made for the entirety of the outstanding balance on a loan. Bullet payments are most common at the end of the loan term. Some bullet payments are large relative to the cash held by a company.

A bullet loan does not fully amortize over the term of the note, thus leaving a large principal balance due at maturity. The term "bullet" refers to the large lump sum payment, usually the full value of the principal, due at the loan's maturity.

The difference is the amount. A bullet is the full principal amount of the loan; no principal is paid off prior to the date of the bullet. By contrast, a balloon payment is normally less than the full loan amount and some of the loan principal is paid back prior to the date of the balloon payment.

For example, say a borrower took out a $200,000 bullet loan with a 15-year repayment term that required only interest payments. At the end of 15 years, the borrower would be required to pay back the entire $200,000 in principal in one lump sum.

A bullet loan is a type of loan in which the principal that is borrowed is paid back at the end of the loan term. In some cases, the interest expense is added to the principal (accrued) and it is all paid back at the end of the loan. This type of loan provides flexibility to the borrower but it is also risky.

In banking and finance, a bullet loan is a loan where a payment of the entire principal of the loan, and sometimes the principal and interest, is due at the end of the loan term.

Loans structured with bullet repayments, also known as ?balloon? loans, are when the repayment of the original principal is fully made at the end of the lending term. Throughout the borrowing period, the only loan-related payment is the interest expense, with no required principal amortization.