What type of loan requires both principal and interest payments as you go by making equal payments each period?
A)Amortized loan
B)Interest-only loan
C)Discount loan
D)Compound loan

Question

Quizplus · Accepted Answer

An amortized loan requires both principal and interest payments as you go by making equal payments each period. This means that the loan will be fully paid off over the loan term. Option B is incorrect because an interest-only loan only requires interest payments during the loan term and the principal must be repaid in a lump sum at the end of the term. Option C is incorrect because a discount loan does not require payments of principal or interest during the loan term, instead, the borrower receives the loan amount less the interest upfront and repays the full amount at the end of the term. Option D is not a commonly used term for a type of loan.

What Type of Loan Requires Both Principal and Interest Payments