Balloon Loan

A balloon loan is a loan which is only partially amortized throughout the loan term, with the outstanding debt being amortized in full through a lump-sum payment at the end of the term. Balloon loans typically have lower interest rates than loans which are fully amortized throughout a loan term.

In Switzerland, repayments of personal loans are calculated by dividing the total repayment due (including principal, interest and fees) by the number of months in the loan term – as per the Swiss consumer credit law. For this reason, balloon loans cannot be offered as personal loans in Switzerland. However, borrowers have the right to repay personal loans ahead of schedule either by making larger amortization payments or by repaying the loan in one or more lump sums.

More on this topic:
Swiss mortgage comparison
Swiss personal loan comparison

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