What Is a Balloon Payment on a Caravan Loan?

When you take out a traditional caravan loan, you usually make regular payments until the loan is finished. Over the course of the loan, these payments cover the money you borrowed and its interest. However, this isn't the only type of loan available to help you buy a caravan, and you may have come across loans that have balloon payments built into their schedule. How do these loans work, and are they a good option?