What are unpaid balances and how do they benefit from paying a loan?

If you are going to ask for a loan, we tell you what the outstanding balances are and how they benefit from paying your credit.

You must know this concept to make better decisions


Let’s start by establishing that when acquiring financing, the institution or company that grants it to us charges a percentage for it, the known interest. With this when paying, you cover the agreed monthly payment to which the interest is added.

We also have to understand that the amount requested is your original debt. When you make your payments, in the established periodicity, that debt is reduced. With one part of the monthly payment, the capital is covered and with another part the interest.

The amount remaining once each payment is discounted is called an unpaid balance. When it is said that in a loan you will pay interest on outstanding balances, it means that the interest you are being charged will be charged on the remainder of your debt, not on the amount originally received.

Why is it important to know what are outstanding balances?

Why is it important to know what are outstanding balances?

Simple, when requesting a loan in which you pay interest on the outstanding balances, you will have the advantage that the more advanced in the timely payment of your credit, the less interest you will pay, this is because every month paid the amount of interest you will pay is recalculated.

When you do not pay your credits on time, you run the risk of not benefiting from being charged interest on unpaid balances, this because delays generate commissions and this causes your credit instead of being reduced, to increase.

In some institutions they allow you to make advance payments without having a penalty, so when you have extra money you can use it well to pay and reduce your balance and therefore also the interest.

When choosing a loan


You can ask your advisor if the payment you make will be on your original debt or on unpaid balances, and from that, you can determine whether or not you should commit to that institution with a personal loan.

If you apply for a loan in Easy Loan you will pay interest on outstanding balances, in addition, the platform has the option to pay the credit in full without any penalty, you just have to notify the platform team in advance.

Here is a table where you can see how interest is reduced with each of the payments you make to your credit, and we also invite you to read the article on how to make a payment simulator in Excel, where it is also possible to observe this factor.


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