Question at position 25 At the end of a fully amortized loan, there is a final balloon payment to the lender.TrueFalse

Question

BlackTom AI · Accepted Answer

The question presents a statement about loan structure and asks to judge True or False.
Option 1: True. The claim asserts that at the end of a fully amortized loan there is a final balloon payment to the lender. In a fully amortized loan, each periodic payment is calculated so that the loan balance reaches zero at the end of the term, meaning there is no remaining balance or balloon payment due at maturity. Therefore, this statement contradicts the defining feature of a fully amortized loan.
Option 2: False. Since a fully amortized loan is designed so that regular payments cover both interest and principal completely by the end of the term, there is no outstanding balance after the final payment. The concept of a balloon payment arises in partially amortized or non-amortizing loan structures, where the remaining principal is due in a lump sum at the end. This aligns with the standard understanding that fully amortized loans do not require a final balloon payment.
In short, the idea of a final balloon payment is incompatible with the mechanics of a fully amortized loan, because the amortization schedule is constructed to exhaust principal by the term’s end, leaving no balloon amount due.

Question at position 25 At the end of a fully amortized loan, there is a final balloon payment to the lender.TrueFalse

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