Finance
An interest-only loan requires the borrower to:
APay both principal and interest equally each month
BPay only the interest portion during the interest-only period, with no reduction in principal✓ Correct
CPay the entire balance within five years
DPay a balloon payment after 30 years
Explanation
During an interest-only payment period, the borrower pays only the interest owed each month — no principal is repaid. The loan balance does not decrease during this period. Once the interest-only period ends, the loan typically resets to fully amortizing payments.
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