An amortizing loan is one in which:
A)Payments are made monthly
B)Accrued interest is paid regularly
C)The maturity of the loan is known
D)The principal balance is reduced with each payment

Question

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An amortizing loan is a loan in which the principal balance is reduced with each payment. This means that each payment not only covers the interest on the loan for that period but also contributes towards reducing the principal balance of the loan. Over time, the loan is paid off in full through a series of regular payments that include both principal and interest. Options A, B, and C may also be true for many loans but do not define an amortizing loan.

An Amortizing Loan Is One in Which