Finance
A Nebraska lender offers a loan with negative amortization. This means:
AThe loan balance decreases faster than scheduled
BMonthly payments are less than the interest accruing, causing the loan balance to increase✓ Correct
CThe interest rate is below market rate
DThe loan is forgiven after a set period
Explanation
Negative amortization occurs when monthly payments are insufficient to cover accruing interest, causing the outstanding loan balance to increase. This is risky for borrowers as they owe more over time.
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