I saw a video explaining that principle payments helps save money by paying less interest and paying off your loan faster but I’m still confused as to how.
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The principle is how much you currently owe. The interest payments are calculated based on the principle, specifically as a percentage of the principle. So the larger the principle, the larger the interest payment. If you can make an extra payment or a larger payment here and there, you’re making the principle smaller. A smaller principle means the next round of interest payments will be smaller.
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