There is not a clear understanding of the advantages and disadvantages of negatively amortized loans amongst consumers. The money for most 11th district loans comes from deposits made by customers. The interest rate on these loans have an initial teaser rate of 3-6 months, after which time the interest rate on these loans adjust monthly.
Most loans have a lifetime interest-rate cap, which is the maximum the interest rate can go to.
The lifetime cap is the actual maximum interest rate. Some people have a misconception that the maximum interest rate can go higher than the lifecap, however this is not true. In addition, there are no monthly or annual caps on the interest rate. However, the customer can always pay a fully amortizing payment based on the current interest rate to keep the loan non-negative. This fully amortizing payment is exactly the same payment that would be made in the case of a non-negative loan at the same interest rate.