How is my loan payment applied?
Your loan payment is made up of two main parts:
- Principal: The amount you borrowed that you are paying back
- Interest: The cost of borrowing the money
Depending on your situation, some loans may also include fees.
How your payment is applied:
Each payment is applied to your loan in a specific order, targeting the oldest outstanding amounts first:
- Accrued and unpaid interest.
- Fees and any out-of-pocket expenses incurred by the lender.
- The remaining amount is applied to your principal balance.
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