What Makes Your Loan Balance Increase Over Time?

Do you ever wonder why your loan balance continues to increase over time, even if you’re making regular payments? Many people don’t understand how loans work and why their loan balance doesn’t come down as they make their payments. To help demystify the process, this blog post will explain exactly what happens when a loan is taken out and what makes your loan balance increase over time. Whether you have an existing loan or are considering taking one out soon, understanding these principles will help you better control your financial situation.

What Is a Loan Balance?

Your loan balance is the total sum owed to your lender and consists of both principal money borrowed and additional interest or charges. Every payment you make goes towards reducing this amount until it eventually reaches zero when all debt is satisfied. The size of your loan balance has a direct influence on what kind of monthly payments you will be asked to make as well as how much the entire loan will end up costing over its duration, so ensuring that it’s kept in check should be at the forefront of any borrower’s mind!

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