05.22.09 | How are loan payments applied to my balance?
It’s always pretty depressing when you look at your monthly statement and see how much of your loan goes straight to the interest. And since I know some of you have been wondering how this works exactly, I figured I’d give you the quick overview on how your money is applied to your outstanding loan.
- The loan holder first applies your payment to late charges or collections costs on your account (if any).
- Then, to the interest that has accumulated (accrued interest).
- The remainder of the payment is then applied to the principle balance.
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Filed under: Federal Loans, Repayment
