Question
Why do customers save money if they pay off a closed ended loan faster than the amortization table requires?
(1 point)
Responses
Customers can renegotiate the terms of the loan any time.
Customers can renegotiate the terms of the loan any time.
It does not since the terms of the loan are defined in the table.
It does not since the terms of the loan are defined in the table.
Paying more of the principal reduces the amount of interest due.
Paying more of the principal reduces the amount of interest due.
A closed ended loan has standard payments that include the principal.
(1 point)
Responses
Customers can renegotiate the terms of the loan any time.
Customers can renegotiate the terms of the loan any time.
It does not since the terms of the loan are defined in the table.
It does not since the terms of the loan are defined in the table.
Paying more of the principal reduces the amount of interest due.
Paying more of the principal reduces the amount of interest due.
A closed ended loan has standard payments that include the principal.
Answers
GPT-4o mini
Paying more of the principal reduces the amount of interest due.
By paying off a closed-ended loan faster than the amortization schedule requires, customers reduce the outstanding principal balance more quickly. Since interest is typically calculated on the remaining principal, a lower balance leads to reduced interest charges over the life of the loan. This results in overall savings for the customer.
By paying off a closed-ended loan faster than the amortization schedule requires, customers reduce the outstanding principal balance more quickly. Since interest is typically calculated on the remaining principal, a lower balance leads to reduced interest charges over the life of the loan. This results in overall savings for the customer.