 In a bullet loan, a large payment (the "bullet" or "balloon") is payable at the end of the loan, as opposed to a capital and interest loan, where the payment pattern incorporates level payments throughout the loan, each containing an element of capital, and no bullet payment at the end.A floating rate loan therefore may or may not incorporate a bullet payment.A customer borrows $25,000 from a bank; the terms of the loan are (six-month) LIBOR + 3.5%.