Which statement about interest payments on a fixed-rate loan is correct?

When dealing with a fixed-rate loan, interest payments are generally calculated based on the original loan amount, also known as the principal. This means that regardless of how many payments have been made or how many years have passed, the interest for each payment period is determined by the size of the initial loan. This is a key characteristic of fixed-rate loans, providing borrowers with a predictable payment amount over the life of the loan.

In fixed-rate mortgages, the total payment amount remains consistent over time, but the portion that goes to interest versus principal changes. Initially, a larger portion of this payment goes towards interest. Over time, as the principal balance decreases, the interest portion of each payment decreases while the portion going towards principal increases. This makes the statement about the interest being calculated solely based on the original loan amount correct, reflecting how interest payments are structured in fixed-rate loans.

The other options do not accurately represent the nature of interest on a fixed-rate loan. While the first payment does include a high interest portion, it is not always necessarily the highest payment overall, as the total payment remains fixed throughout the loan's term. Therefore, stating that interest is calculated based on the original loan amount highlights an essential aspect of how fixed-rate loans function, making it