The Top 5 Things to Consider with Balloon Payment
When entering into a contract with a lending institution, the details of the payment plan don’t often seem like it’s a priority3 min read
When entering into a contract with a lending institution, the details of the payment plan don’t often seem like it’s a priority. As a business executive in Dallas, TX, it’s important for you to consider how balloon payments will be structured if incorporated in the agreement. Not factoring in the legal aspects of the balloon payment can become a real burden to you and your company, the consequences of which could be extremely severe. Here are the Top 5 Things to Consider with regards to a Balloon Payment.
What is a Balloon Payment?
A balloon payment is a large single payment due at the end of a loan’s repayment period. When this payment is made, the loan is often considered to be fully paid off, as all of the other periodic payments have been made. However, if the borrower is unable to make the balloon payment when it’s due, they may be liable for substantial taxes and having to remarket the loan balance.
Risks of Not Paying the Balloon Payment
The failure to make a balloon payment has dire consequences that could effect the Justices of Peace from Dallas County. You may incur financial difficulties such as having to remarket or renew the loan, and you could end up owing taxes as if the balance had been fully paid off. This could have a long-term impact on your ability to borrow money in the future, as well as your credit score. Additionally, making some of the periodic payments leading up to the balloon payment could become increasingly burdensome to you and your company.
Working with an Experienced Attorney
In order to make the best decisions with regards to your balloon payment, you need to have a Dallas business attorney who can understand your legal needs. Having an attorney experienced in both state laws and the contract negotiation process is essential; you need to be certain that any wording in the contract is to your advantage. Working with an experienced attorney can help you to avoid any pitfalls and give you confidence in the process.
Flexible Payment Options
Flexible payment options are important to consider with regards to balloon payments. When the time comes they need to make the balloon payment, some lenders may be willing to be flexible with the payment terms and extend the loan agreements. This can offer the borrower some breathing room to make the payment and avoid taxes or repaying fees for remarketing the loan. Knowing the negotiation methods to use can be tough, so working with an experienced attorney is important.
Sticking to the Payment Plan
Once all the details have been agreed upon with regards to the balloon payment, it’s essential that you make the payments as agreed as much as possible. The importance of this cannot be overstated; it is essential for avoiding the possible lack of financial
consequences discussed earlier such as having to pay fines or taxes. Consult with your attorney as needed to ensure that you are on track with the payment plan.
It’s essential for any business executive in Dallas, TX to understand the legalities involved in making a balloon payment. The risks of not paying the balloon payment are potentially quite severe, and the consequences could be long-lasting. It’s important for you to be sure that the agreement is enforced as agreed, which is why it’s so important that you have an experienced attorney to help you. Being aware of your options for flexible payments and understanding the actions associated with making a balloon payment are keys to ensuring that the loan is paid off successfully.
Topics:
