Finance
In South Carolina, what is 'negative amortization'?
AWhen the loan balance decreases faster than scheduled
BWhen minimum payments don't cover the interest owed, causing the loan balance to increase✓ Correct
CWhen the interest rate decreases over time
DWhen the borrower pays off the loan early
Explanation
Negative amortization occurs when the scheduled minimum payment is less than the interest accruing on the loan, causing the unpaid interest to be added to the principal balance. The borrower ends up owing more than they originally borrowed.
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