You sign a contract to pay back all of the interest and principal of a loan at the maturity date.This is an example of an interest-only loan.

Question

Quizplus · Accepted Answer

A loan where you are required to pay back both the interest and principal at the maturity date is not an example of an interest-only loan. An interest-only loan would require you to only pay the interest at regular intervals, with the principal being due at a later date or through a separate repayment plan.

You Sign a Contract to Pay Back All of the Interest