At this payment, you cover only the interest. The loan balance never decreases — every dollar goes straight to the lender. You are renting the money indefinitely.
Your payment covers interest and chips away at the balance. As the balance drops each month, so does the interest charge — meaning more of each payment attacks the principal. The schedule below shows this in action.
| MO | PAYMENT | PRINCIPAL | INTEREST | BALANCE |
|---|
⚡ WANT TO SEE COMPOUNDING WEALTH IN ACTION? ⚡
Keep everything the same — and add 10 years to your time horizon. Watch how dramatically the total value accelerates.