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About Paying Back More on a Loan

If you pay a month in advance on your regularly scheduled payment, will this put more to the principle instead of interest?


In most cases, yes, but it does depend on the lender and the terms of your loan. They may not be obligated to accept partial payments and the terms of your loan should indicate how payments are applied. It is common for it to say payments will be applied first to interest owed, then to principle and then to fees due.

Published on BankingQuestions.com 2/26/09