Question

The balance owed on a loan will decline by the amount of the loan payment. True...

The balance owed on a loan will decline by the amount of the loan payment.

True or False?

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Answer #1

Only the amortized loan has the component of both principal and interest on each installment.

Some loans are are only interest included installments. they donot include any kind of principal repayment so the loan amount would not be decreased until the final payment has been made.

It is assumed that this statement is about all loans which is not true because only a few loans provided with installment of both principal and interest that will reduce the loan component.

So the given statement is FALSE.

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