Finance
A negative amortization loan is one in which:
AThe borrower makes extra payments to reduce principal faster
BMonthly payments are less than the interest accrued, causing the loan balance to grow✓ Correct
CThe interest rate is below zero (negative)
DPrincipal payments are negative due to tax deductions
Explanation
In a negative amortization loan, if the payment is not sufficient to cover all the interest due, the unpaid interest is added to the loan balance. This causes the outstanding balance to increase over time rather than decrease.
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