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.