A credit agreement in which the monthly instalments are not large enough to repay the loan at the end of the term. As a result the final payment due is the lump sum of the remaining principle.

These types of loan require that the borrower builds up savings alongside the payment of the loan. This can be through investments, pensions, business development or straight savings.

Whatever the repayment vehicle it is important that both the borrower and the lender are responsible in taking out these loans so that there is not the uncomfortable position of a shortfall once the loan term is up.