Finance
A negative amortization loan is one in which:
AMonthly payments always reduce the loan balance
BMonthly payments are less than the interest owed, causing the unpaid interest to be added to the loan balance✓ Correct
CThe loan has a negative interest rate
DThe buyer receives cash back at closing
Explanation
In a negative amortization loan, minimum monthly payments may be insufficient to cover the interest owed. The unpaid interest is added to the principal balance, causing the loan balance to grow over time.
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