Finance
What is a negative amortization loan?
AA loan where principal payments are forbidden
BA loan where the minimum payment is less than the interest charged, causing the unpaid balance to increase✓ Correct
CA loan where the interest rate exceeds 20%
DA loan where the balance decreases faster than scheduled
Explanation
Negative amortization occurs when the minimum loan payment is insufficient to cover all accrued interest. The unpaid interest is added to the principal balance, causing the loan balance to grow over time.
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