Final answer:
The incorrect statement about installment loans is C) Installment loans are loans on which the interest is paid first and the borrower receives the proceeds, since in installment loans, the borrower repays both principal and interest in regular installments.
Step-by-step explanation:
The statement about installment loans that is not true is: C) Installment loans are loans on which the interest is paid first and the borrower receives the proceeds. Installment loans are a type of loan where the borrower pays back the principal and interest in regular, equal installments over a set period of time. The amount financed is the cash price minus any down payment.
For example, with a mortgage, a common form of installment loan, the borrower typically makes a down payment on the home, and the remaining amount is financed. The down payment is a percentage of the purchase price, which acts as an upfront commitment and reduces the borrowed amount. Over the term of the loan, the borrower pays back both the principal and the interest. The calculation of an auto loan follows a similar pattern, where the down payment is subtracted from the vehicle's purchase price to determine the loan amount, and the loan is then paid off in installments. In both cases, the borrower does not receive the proceeds as suggested in statement C, but instead receives either the home or the car.
Moreover, banks can sell these loans on the secondary loan market, allowing other financial institutions to collect the loan payments, reflecting the ongoing market value of such loans.