A form of promissory note that calls for the minimum payment of principal and the payment of interest at regular intervals. This type of note requires a substantial final payment, which represents all the principal.
A balloon note is a long-term loan, often a mortgage, that has one large payment (the balloon payment) due upon maturity. In addition, there may be additional smaller payments at regular intervals before and/or after the balloon payment. A balloon note will often have the advantage of very low interest payments, and smaller installments, thus requiring very little capital outlay during the life of the loan.