Loans on which the interest is paid in advance are often called ________.
A) premium loans
B) long-term loans
C) term deposits
D) discount loans

Question

Quizplus · Accepted Answer

Loans on which the interest is paid in advance are called discount loans because the interest is deducted from the principal upfront, and the borrower receives the remainder of the loan. The borrower pays interest on the full principal amount, but receives only the discounted, or net, amount.

Loans on Which the Interest Is Paid in Advance Are