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What type of loan provides for deferment of certain principal payments during the early years of the loan?

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Final answer:

The type of loan that provides for deferment of certain principal payments during the early years is called an interest-only loan.

Step-by-step explanation:

The type of loan that provides for deferment of certain principal payments during the early years is called an interest-only loan.

With an interest-only loan, the borrower is only required to pay the interest on the loan for a specified period of time, typically the first few years. During this time, the principal balance remains unchanged.

Once the interest-only period ends, the borrower will begin making principal and interest payments to repay the loan.

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