What Increases your Total Loan Balance

Interest Accumulation - If you don't pay loan interest regularly, that can cause increase in loan balance

Author - Coinfinancemoney (Tushar Mistari) Image Source - Canva & Google

Late Payment - If you don't pay the loan EMI on time then companies can add late fees and penalties into your account which increase overall debt

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How much principal amount you have borrowed initially can increase your total repayment amount

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Loan Extension - the loan duration may reduce monthly payments, but it can increase the overall cost due to extra interest

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Loan Consolidation - if you combine more than one loan that can might extend the repayment period but also increase the total interest paid

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Variable Interest Rates: Fluctuating interest rates (decided by central bank) can cause your balance to rise if rates increase

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Deferred Interest: Some loans accrue interest during deferment or forbearance, adding to your balance

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Fees and Charges: Loan companies also add Origination fees, service charges, and other fees contribute to the loan balance

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Loan Capitalization: Unpaid interest may get added to your principal amount you have borrowed, which increases the total amount owed

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Negative Amortization: With certain loans, if payments aren't enough to cover the interest, the unpaid interest gets added to the balance

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Payment Allocation: If payments aren't properly allocated, interest might not be covered, causing the balance to grow

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