Travis borrowed $10,000 four years ago at an annual interest rate of 7 percent. The loan term is 6 years. Since he borrowed the money, Travis has been making annual payments of $700 to the bank. Which type of loan does he have?

Question

Quizplus · Accepted Answer

Travis is making annual payments equal to the interest on the loan ($10,000 * 7% = $700), which indicates an interest-only loan where the principal is paid at the end of the term.

Travis Borrowed $10,000 Four Years Ago at an Annual Interest