Which of the following is NOT true of a fixed payment loan?
A)The borrower is required to make regular periodic payments to the lender.
B)The payments made by the borrower include both interest and principal.
C)The borrower is left with a substantial unpaid principal at the maturity of the loan.
D)A home mortgage is an example of fixed payment loan.

Question

Quizplus · Accepted Answer

A fixed payment loan requires regular periodic payments that include both interest and principal. However, the borrower is not left with a substantial unpaid principal at the maturity of the loan. In fact, the principal balance should be fully paid off by the end of the loan term. A home mortgage is an example of a fixed payment loan. Therefore, the statement that is not true of a fixed payment loan is C.

Which of the Following Is NOT True of a Fixed