What is true about payments in a fully amortized loan?

In a fully amortized loan, the hallmark characteristic is that the payments remain equal throughout the loan duration. This means that the borrower pays the same amount in each installment, which includes both principal and interest. The design of a fully amortized loan ensures that, by the end of the loan term, the entire balance will have been paid off.

This consistent payment structure allows borrowers to budget effectively since they know exactly what their monthly obligation will be for the life of the loan. It's important to understand that while the overall payment amount is stable, the composition of those payments will shift over time—initially, a larger portion of each payment goes towards interest, and as the loan matures, more of it is applied to reducing the principal.

Other options in this question introduce elements that do not apply to a fully amortized loan. For instance, increasing payments or balloon payments are features typically associated with other types of loans, such as adjustable-rate mortgages or partially amortized loans, but these do not align with the definition of a fully amortized loan.