Welcome to your “Smart Borrower Quiz: How Much Do You Know About Amortization?”
1. What does “amortization” mean in loan terms?
2. In an amortized loan, what happens to the portion of interest in each payment over time?
3. What part of a loan payment reduces the loan’s balance?
4. If your loan interest rate decreases, what happens to your total interest paid?
5. At the beginning of an amortized loan, which portion of your payment is usually larger?
6. What is a typical payment frequency for an amortized loan?
7. What happens if you make extra payments toward your loan principal?
8. What is an amortization schedule?
9. What does the total of all your payments in an amortized loan represent?
10. Why is understanding amortization important for borrowers?
