BUSINESS ADMINISTRATION
FINANCIAL MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The extra portion of the payment does not go to the principal.
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You can significantly increase the number of payments needed to pay off the loan.
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The extra portion of the payment increases the principal.
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You can significantly reduce the number of payments needed to pay off the loan.
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Detailed explanation-1: -Compare your loan term options In general, the longer your loan term, the more interest you will pay. Loans with shorter terms usually have lower interest costs but higher monthly payments than loans with longer terms.
Detailed explanation-2: -A bullet repayment is a lump sum payment made for the entirety of an outstanding loan amount, usually at maturity. It can also be a single payment of principal on a bond. In terms of banking and real estate, loans with bullet repayments are also referred to as balloon loans.
Detailed explanation-3: -Longer repayment terms on personal loans will lower your monthly payment and a long-term loan might make you feel as though you’re under less pressure to get the loan paid back quickly. However, longer repayment terms on personal loans also make those loans more expensive.
Detailed explanation-4: -A loan arrangement in which the borrower is allowed to start making payments at some specified time in the future. Deferred payment arrangements are often used in retail settings where a person buys and receives an item with a commitment to begin making payments at a future date.