What term is used to describe a structured payback plan over time?

What term is used to describe a structured payback plan over time?

• A. Repayment Schedule
• B. Amortization Schedule
• C. Payment Plan
• D. Loan Agreement

Answer: (B)

The term "Amortization Schedule" refers specifically to a structured payback plan that outlines how much of each payment goes toward the principal and how much goes toward interest over the life of a loan. This schedule illustrates the breakdown of payments over time, showing the total payment amount, interest, and the remaining balance after each payment. It provides borrowers with a clear view of their loan repayment process and helps them understand how long it will take to pay off the loan. While a "Repayment Schedule" might seem relevant, it generally refers to the overall terms of repayment rather than the detailed breakdown provided in an amortization schedule. A "Payment Plan" can be more informal and does not necessarily include detailed calculations. Finally, a "Loan Agreement" is a document that outlines the terms and conditions of the loan itself but does not specifically focus on the repayment details or schedule. Thus, the best fit for a structured payback plan is the amortization schedule.

The term "Amortization Schedule" refers specifically to a structured payback plan that outlines how much of each payment goes toward the principal and how much goes toward interest over the life of a loan. This schedule illustrates the breakdown of payments over time, showing the total payment amount, interest, and the remaining balance after each payment. It provides borrowers with a clear view of their loan repayment process and helps them understand how long it will take to pay off the loan.

While a "Repayment Schedule" might seem relevant, it generally refers to the overall terms of repayment rather than the detailed breakdown provided in an amortization schedule. A "Payment Plan" can be more informal and does not necessarily include detailed calculations. Finally, a "Loan Agreement" is a document that outlines the terms and conditions of the loan itself but does not specifically focus on the repayment details or schedule. Thus, the best fit for a structured payback plan is the amortization schedule.