Questions: What is an installment loan? Explain the meaning and use of the loan payment formula. Choose the correct answer below. A. An installment loan is a loan that is paid off with equal regular payments. B. An installment loan is the time you have to pay back a loan in full. C. An installment loan is the amount of money owed at any particular time. D. An installment loan is an amount of money installed electronically into a bank account.

What is an installment loan? Explain the meaning and use of the loan payment formula. Choose the correct answer below. A. An installment loan is a loan that is paid off with equal regular payments. B. An installment loan is the time you have to pay back a loan in full. C. An installment loan is the amount of money owed at any particular time. D. An installment loan is an amount of money installed electronically into a bank account.
Transcript text: What is an installment loan? Explain the meaning and use of the loan payment formula. Choose the correct answer below. A. An installment loan is a loan that is paid off with equal regular payments. B. An installment loan is the time you have to pay back a loan in full. C. An installment loan is the amount of money owed at any particular time. D. An installment loan is an amount of money installed electronically into a bank account.
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Solution

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Solution Steps

Hint

An installment loan is repaid through regular, scheduled payments that cover both principal and interest. The loan payment formula is used to calculate these payments, taking into account the principal amount, interest rate, and number of payments, allowing borrowers and lenders to determine the monthly payment amount and ensure the loan is paid off by the end of the term.

Step 1: Understanding Installment Loans

An installment loan is defined as a loan that is repaid through equal regular payments. This means that the borrower makes fixed payments over a specified period until the loan is fully paid off.

Step 2: Analyzing the Options

Given the options:

  • A: An installment loan is a loan that is paid off with equal regular payments.
  • B: An installment loan is the time you have to pay back a loan in full.
  • C: An installment loan is the amount of money owed at any particular time.
  • D: An installment loan is an amount of money installed electronically into a bank account.

The correct definition aligns with option A.

Step 3: Conclusion

Based on the analysis, the correct answer is option A, which accurately describes an installment loan.

Final Answer

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