Final answer:
A single payment loan is a short-term loan that requires a lump sum payment at the end of the loan term to repay the entire loan amount.
Step-by-step explanation:
A Single Payment Loan is a short-term loan that does not fully amortize over its time. This statement is true. A single payment loan, also known as a balloon loan, is a type of loan in which the borrower makes a single payment at the end of the loan term to repay the entire loan amount.
Unlike traditional loans where the borrower makes periodic payments of principal and interest, a single payment loan does not fully amortize over its time. Instead, the borrower pays only the interest over the loan term and makes a final balloon payment to settle the remaining principal balance.
For example, let's say a borrower takes out a single payment loan for $10,000 with a one-year term and an interest rate of 5%. At the end of the year, the borrower would make a payment of $10,000 to repay the principal amount in full.