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With some loans, you don’t pay down the balance gradually. Instead, you only pay interest costs or pay off a small portion of your loan balance during the loan’s term. In those cases, you often need to make a large balloon payment (or refinance the loan with another large loan) at some point. Prepare for a balloon payment by arranging financing (or earmarking liquid assets) several months or weeks before the payment is dueWith some loans, you don’t pay down the balance gradually. Instead, you only pay interest costs or pay off a small portion of your loan balance during the loan’s term. In those cases, you often need to make a large balloon payment (or refinance the loan with another large loan) at some point. Prepare for a balloon payment by arranging financing (or earmarking liquid assets) several months or weeks before the payment is due