Consider that you are paying back a fully amortized loan.Which of the following statements is most correct?
A)Later loan payments involve larger amounts of principal repayment.
B)The actual loan payments vary from year to year.
C)After the last loan payment is made,there is still a large principal repayment remaining.
D)Early loan payments include smaller amounts of interest payments.
E)None of the above statements are true.

Question

Quizplus · Accepted Answer

In a fully amortized loan, each payment made includes both principal and interest payments. However, the amount of principal and interest paid changes with each payment. At the beginning of the loan term, a larger portion of the payment goes towards interest, while towards the end of the loan term, a larger portion goes towards principal repayment. Therefore, later loan payments involve larger amounts of principal repayment.

Consider That You Are Paying Back a Fully Amortized Loan