Asked by Rainn Cline on Jul 17, 2024
Verified
When a loan is amortized,a relatively high percentage of the payment goes to reduce the outstanding principal in the early years,and the principal repayment's percentage declines in the loan's later years.
Amortized
The process of spreading out a loan into a series of fixed payments over time, covering both principal and interest.
Outstanding Principal
The portion of a loan amount that has not yet been repaid to the lender.
Principal Repayment
The process of paying back the original amount of money borrowed, excluding interest, in a loan or bond.
- Grasp the concept of loan amortization and how payments are structured over time.
Verified Answer
JS
James SmithJul 23, 2024
Final Answer :
False
Explanation :
In an amortized loan, the early payments consist mostly of interest, and as time goes on, a higher percentage of the payments goes towards reducing the principal.
Learning Objectives
- Grasp the concept of loan amortization and how payments are structured over time.