When a loan is made, the loan sometimes does not have to be paid back in one "lump sum" (all at once). Instead, the borrower makes payments from time to time. The payments from time to time are called "installments." There could be a payment required every month, every six months, every year, or other time periods. Often the loan payments are equal in amount. You loan me $10,000, and I pay you back at the rate of $1,000 per year for ten years. Sometimes, however, the last payment will be A LOT BIGGER than the previous payments. For example, you loan me $10,000. We agree that I will pay you $1,000 per year for four years, and then the next fifth year's installment will be $6,000. The installment, much larger than the previous installments, is called a balloon payment. [To give a simpler example, I used the examples of interest-free loans.]