Finance
What is a negative amortization loan?
AA loan with decreasing monthly payments
BA loan where minimum payments are less than interest due, causing the principal balance to increase✓ Correct
CA loan that allows skipping payments
DA loan with a reducing interest rate
Explanation
Negative amortization occurs when loan payments are insufficient to cover all the interest due. The unpaid interest is added to the principal, causing the loan balance to grow over time despite making payments.
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