In case of partial early repayment, experts recommend that borrowers reduce the principal debt on the loan. After all, it is on this that the bank charges interest. Therefore, as the amount decreases, the total overpayment will also decrease.
But how do you know what part of the total payment is the principal debt if you have been paying off the loan for several years? What if the original schedule is no longer relevant due to early partial repayment? Let's talk about calculation methods and the most advantageous payment options. We will also tell you what mistakes are important to avoid when making early payments.
Structure of credit debt
Lending involves issuing money to the borrower, which he undertakes to return within a certain period of time, together with the interest accrued under the agreement. As a rule, in equal monthly payments.
The principal debt or "body" of the loan is the amount that northeast mobile number database the borrower receives from the bank or other financial institution under the agreement. But it is not that simple.
Often, the borrower believes that the main debt is only the money he received "in hand". However, when applying for insurance, purchasing paid products and connecting some options, the bank, with the client's consent, can increase the loan amount by their cost. Subsequently, this money is written off from the account as payment and the borrower receives only the funds initially requested. But the "body" of the loan is precisely the amount initially issued - the one specified in the agreement.
What does a typical loan structure look like:
The principal debt or its "body" is the amount approved by the bank and fixed in the contract. The money can be issued in cash or transferred to the client's account. The amount of the principal debt is fixed, it does not change over time.
Accrued interest - its size depends on the interest rate, the "body" of the loan and the term for which it is issued. It is they who usually make up the total overpayment. Moreover, this amount is usually not fixed and can change depending on the debt repayment schedule.