Question

With an interest-only loan the principal is: Multiple Choice Ο forgiven over the loan period; thus it does not have to be repaid. Ο repaid in decreasing increments and included in each loan payment. Ο repaid in one lump sum at the end of the loan period. Ο repaid in equal annual payments. Ο repaid in increasing increments through regular monthly payments.

Answer 1

With an interest-only loan, the principal is repaid in one lump sum at the end of the loan period.

Step-by-step explanation:

An interest-only loan is a type of loan where the borrower is only required to pay the interest on the loan amount for a certain period of time, typically for a few years. The principal, which is the original amount of money borrowed, is repaid in one lump sum at the end of the loan period. This means that during the interest-only period, the borrower does not have to make any payments towards the principal. After the interest-only period ends, the borrower will have to start making regular payments that include both the principal and the interest.