'balloon-payment' is a modern English compound combining 'balloon' and 'payment'. 'balloon' originates from French 'ballon' (from Italian 'ballone'), where the root referred to a 'large ball' or something 'inflated'; 'payment' originates from Old French 'paiement' (from Latin 'pagare') meaning 'to pay'.

The element 'balloon' entered English from French 'ballon' (via 17th–18th century use for inflated objects) and was later used metaphorically to indicate something large or swelling; 'payment' comes from Old French 'paiement' and Middle English 'payement'. The compound phrase 'balloon payment' arose in modern financial English (19th–20th century) to describe a large terminal payment.

Initially, 'balloon' literally meant 'an inflated ball' or 'a large rounded object'; over time the sense of 'large' or 'suddenly large' was applied metaphorically to money, giving 'balloon-payment' the meaning 'a comparatively large final sum due'.