finance
partially amortized loan
A partially amortized loan has regular payments that cover interest and some principal, but not enough to pay off the loan by the end of its term. The remaining principal is due in one large final payment, called a balloon payment. Payments are often calculated as if the loan ran for a longer period, such as 30 years, while the loan actually matures sooner, such as in 7 years.
- Exam tip
- Partially amortized loans end with a balloon payment. A fully amortized loan pays to zero; an interest-only loan pays no principal at all.
- Example
- A $200,000 loan has payments based on a 30-year schedule but is due in 10 years, leaving a balloon of about $170,000.
Related terms & state variants
Sources
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Last verified: 2026-10-23