Finance
An interest-only loan requires the borrower to:
APay only principal for the first several years
BPay only the interest portion of the debt each month, with no reduction of principal✓ Correct
CPay interest and principal in equal monthly amounts
DPay a balloon amount of interest at the end of the loan
Explanation
An interest-only loan requires monthly payments covering only the interest charges. The principal balance remains unchanged unless the borrower makes additional principal payments. Many interest-only loans convert to amortizing loans after an initial period.
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