A straight or term loan requires the borrower to pay which of the following?

A straight or term loan typically requires the borrower to make interest-only payments throughout the life of the loan, with the principal amount due at maturity. This structure allows borrowers to manage their cash flow by paying only the interest during the term, rather than making amortizing payments that include both principal and interest.

This type of loan is commonly used in situations where the borrower anticipates being able to repay the entire principal amount as a lump sum at the end of the term. Because the borrower is only responsible for the interest during the loan period, it can result in lower monthly payments compared to loans that require both principal and interest payments.

This feature differentiates straight or term loans from more traditional amortizing loans, where borrowers make regular payments that cover both principal and interest, gradually reducing the principal balance over time.