A disadvantage of a partially amortized or balloon payment loan for a buyer is?

A partially amortized or balloon payment loan typically requires the borrower to make regular payments that cover only a portion of the total loan balance during the loan term, leading to a significant remaining balance at its conclusion. This remaining balance is due as a lump sum payment, known as a balloon payment, at the end of the loan's term.

The disadvantage identified here revolves around this requirement for a large payment to cover the remaining principal when the loan term expires. Buyers may face financial hurdles when the time comes to make this large payment, as it can be a substantial amount that was not fully accounted for during the initial borrowing process. Financial planning can become complicated, particularly if market conditions or personal finances change by the time that balloon payment is due.

In contrast, the other options do not align directly with the specific disadvantages of partially amortized loans. For example, while interest rates may indeed fluctuate during the term of most loans, this risk is not unique to balloon loans. The inability to make early repayments could apply to certain loans but is not a general characteristic of balloon payment loans. Lastly, negative amortization typically happens in scenarios where payments do not fully cover the interest accruing, which does not accurately describe the structure of partial amortization.

Therefore, the