Quote:
Originally Posted by zoomzoomers
You never heard of a negative amortized loan?
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Sure, I've heard of neg. am. loans.. I've written them.. But they are still simple interest loans. You still incur interest in the same fashion as any other simple interest loan.. The difference in a neg. am. loan is that you are not required to pay the full interest amount each month. Rather, you can choose to pay less than the full interest due and have the unpaid interest amount added to the principle amount. This causes your principle amount to increase.. hence it's a negative amortization.
Once again, the theory of upfront or front-loaded interest is a common misconception.