Understanding Financing — Quiz

Question 5 • Financial Algebra/Mathematics

Which is the best example of a deferred payment plan?

Answer

A student borrows money to pay for their education, and the lender postpones all payments until after the student graduates.

A borrower's payments are calculated based on their income and family size, and the payments can change as these factors change.

A borrower makes low monthly payments for a set period, then makes a large payment for the remaining balance at the end of the term.

A buyer makes regular payments to a seller for an item they want to purchase, then receives the item once all the payments are made.

Explanation

A deferred payment plan postpones payments until a later time. In choice A, the lender waits until the student graduates before requiring any payments, so it is the best example. Choice C describes a balloon payment plan, which has a large final payment after smaller payments.

AI-written and checked against the verified answer.

More from this Course

Quiz

Quiz

Quiz