What type of schedule addresses the principal and interest payments due on a loan?

What type of schedule addresses the principal and interest payments due on a loan?

• A. Amortization schedule
• B. Payment schedule
• C. Loan schedule
• D. Repayment plan

Answer: (A)

An amortization schedule is specifically designed to outline the principal and interest payments that are due on a loan over time. It provides a detailed breakdown of each payment, showing how much of each payment goes toward paying off the interest versus the principal balance. This schedule illustrates the way in which the loan balance decreases over time as the borrower makes payments. It is particularly useful for borrowers to understand how their payments will impact the overall balance of the loan. This type of schedule typically includes the loan amount, interest rate, loan term, and details for each payment period, making it an essential tool in mortgage financing. The clarity it provides allows borrowers to see the total cost of borrowing and plan their finances accordingly. Other types of schedules, such as a payment schedule or a loan schedule, might provide general payment dates or amounts without the same level of detail regarding principal versus interest. Meanwhile, a repayment plan typically refers to the strategy for paying back debt, which may not focus solely on the mortgage's amortization specifics.

An amortization schedule is specifically designed to outline the principal and interest payments that are due on a loan over time. It provides a detailed breakdown of each payment, showing how much of each payment goes toward paying off the interest versus the principal balance. This schedule illustrates the way in which the loan balance decreases over time as the borrower makes payments.

It is particularly useful for borrowers to understand how their payments will impact the overall balance of the loan. This type of schedule typically includes the loan amount, interest rate, loan term, and details for each payment period, making it an essential tool in mortgage financing. The clarity it provides allows borrowers to see the total cost of borrowing and plan their finances accordingly.

Other types of schedules, such as a payment schedule or a loan schedule, might provide general payment dates or amounts without the same level of detail regarding principal versus interest. Meanwhile, a repayment plan typically refers to the strategy for paying back debt, which may not focus solely on the mortgage's amortization specifics.