Daniel Chen agrees to accept monthly payments from Olivia Bell over time and carry back part of the purchase price instead of requiring a bank loan for the full amount. What financing method is this?
Correct Answer
D) Seller financing
Seller financing is correct because the facts match a transaction in which the seller extends credit to the buyer instead of the buyer obtaining all financing from a traditional institutional lender. That is the best description of the relationship, right, or legal concept tested here.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Usury is the practice of charging an interest rate that exceeds the maximum rate permitted by state law. Usury laws protect borrowers from excessive interest charges on loans.
A VA loan is a mortgage guaranteed by the Department of Veterans Affairs available to eligible veterans, active-duty service members, and surviving spouses. It offers no down payment and no private mortgage insurance requirements.
An adjustable-rate mortgage (ARM) has an interest rate that changes periodically based on market conditions, typically after an initial fixed-rate period. The rate adjustment is tied to a financial index plus a margin.
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