What Increases Your Total Loan Balance?

Find out what increases your total loan balance, including both principal and interest.

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Your total loan balance is the amount you owe on your loan, including any interest and fees that have accrued. It is different from your loan principal, which is the amount you borrowed.

There are a few things that can cause your total loan balance to increase:

-Accrued interest: Interest is charged on your loan from the day you borrow the money until you repay the loan in full. The interest rate is set by your lender and may be fixed or variable. As your balance accrues interest, your total loan balance will increase.
-Fees: Some loans come with fees, such as Origination fees or prepayment penalties. These fees will be added to your total loan balance.
-Missed payments: If you miss a payment, you may be charged a late fee. Your lender may also report the missed payment to the credit bureau, which could hurt your credit score. In addition, if you have a variable interest rate, your rate could increase after a missed payment, leading to an increase in your total loan balance.

The Different Types of Loans

There are a few things that can increase your total loan balance. The first is if you have a variable interest rate. This means that as interest rates go up, so will your monthly payments. The second is if you defer your loans. This means that you are not making any payments on your loans for a period of time. The third is if you have a grace period. This is the time between when you graduate and when you have to start making payments on your loans.

Federal Loans

Federal loans are loans that are provided by the federal government to eligible students to help pay for their education. There are four types of federal loans available to students:
-Direct Subsidized Loans: These loans are awarded on the basis of financial need. The interest on these loans is subsidized, meaning that the government pays the interest while you are in school and during your grace period.
-Direct Unsubsidized Loans: These loans are not awarded on the basis of need. The interest on these loans accrues while you are in school and during your grace period. You can choose to pay the interest while you are in school or allow it to accrue and be capitalized (added to the principal balance of your loan).
-PLUS Loans: PLUS Loans are available to graduate and professional students as well as parents of dependent undergraduate students. The interest rate on PLUS Loans is slightly higher than the interest rate on other federal student loans.
-Consolidation Loans: Consolidation Loans allow you to combine all of your federal student loans into one loan with a single payments. This can make repayment more manageable if you have multiple student loans with different interest rates.

Private Loans

Private Loans – Loans that are not federally guaranteed. The interest rate and fees are set by the lender, not by the government. You may find private loans through banks, credit unions, or other lending institutions. These loans usually require a credit check and may have variable interest rates.

The Various Factors That Increase Your Total Loan Balance

Your total loan balance is the amount of money you owe on your loan. It may be higher than the amount you originally borrowed, due to a number of factors. These include interest, fees, and other charges. In this article, we’ll discuss the various factors that increase your total loan balance.

Interest Rates

Interest rates are one of the most important factors that affect your total loan balance. The higher your interest rate, the more you will pay in interest over the life of your loan.

There are two types of interest rates: fixed and variable. Fixed interest rates stay the same for the life of your loan, while variable interest rates can change over time.

Factors that can affect your interest rate include:
-The type of loan you have (e.g., fixed-rate or adjustable-rate)
-The type of borrower you are (e.g., student or parent)
-The length of your loan term (e.g., 5, 10, or 20 years)
-The size of your loan (e.g., $5,000 or $50,000)
-Your credit history

Loan Origination Fees

Loan origination fees are charged by the lender for processing your loan application. This fee is generally a percentage of your total loan amount, and it can range from 0.5% to 5% of the loan amount. For example, on a $10,000 loan with a 5% origination fee, you would owe an origination fee of $500.

Private Mortgage Insurance (PMI)
If you are borrowing more than 80% of the value of your home, you will likely be required to pay private mortgage insurance (PMI). This insurance protects the lender in case you default on your loan. The cost of PMI varies, but it is typically 0.5% to 1% of your loan amount per year. For example, on a $100,000 loan with a 1% PMI premium, you would pay an annual premium of $1,000.

Interest is charged on your loan balance and is typically calculated monthly. The interest rate on your loan can vary depending on several factors including your credit score, the type of loan you are borrowing, and the current market conditions.

Discount Points
Discount points are a one-time fee that you can choose to pay at closing in exchange for a lower interest rate on your loan. One point typically equals 1% of your total loan amount. So, on a $100,000 loan one point would cost $1,000. Paying points can lower your monthly payments and help you save money over the life of your loan; however, whether or not it makes sense for you to pay points depends on how long you plan to stay in your home and how much money you’re able to afford up front.

Loan Servicing Fees

Loan servicers are the companies that collect your monthly mortgage payments and distribute the money to your lender. They also handle other administrative tasks, such as responding to customer inquiries, sending out tax and insurance escrow information, and more.

Most mortgage loans have servicing fees associated with them. These fees cover the costs of maintaining your loan account and usually range from $30 to $35 per month. They are typically added to your total loan balance, which means you’ll pay interest on them over the life of your loan.


In conclusion, there are a few things that can increase your total loan balance. These include making late payments, missing payments, or having a high interest rate. If you are looking to keep your loan balance low, be sure to make all your payments on time and keep your interest rate as low as possible.

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