When you pay off the principal and all of the interest at one time at the maturity date of the loan,we call this type of loan a/an ________.
A)amortized loan
B)interest-only loan
C)discount loan
D)compound loan

Question

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A discount loan is a short-term loan where the interest is calculated by deducting the interest from the principal, and the borrower receives the difference as the loan amount. The borrower pays off the entire principal and accrued interest in one lump sum on the maturity date. This type of loan is different from an amortized loan where the borrower makes equal payments over the entire loan term to pay off the principal and interest. It is also different from an interest-only loan where the borrower only pays the interest and not the principal. A compound loan is a loan where the interest is added to the principal, and interest is calculated on the new total.

When You Pay Off the Principal and All of the Interest