Discussion about loan P&I
Not that I am using the new loan features I have some questions about my loan. Is it normal for the loan interest payments to fluctuate up and down over the months? I assumed the percentage of principal to interest goes up and interest potion goes down on a pretty linear trend. I have noticed going back through my statements the interest potion for be X and then the months following it drops, but then it jumps back up to X. Something seems off?
Maybe because the compound daily and those months with 31 days seem to throw off the trend line?
There are a couple of different ways that loan interest can fluctuate. One is when the interest calculated is based on the number of days in the statement period and the interest then accrues monthly and may or may not compound. The other is when the interest accrues daily and is paid off with the next payment, in which case the number of days between payments makes a difference and the day the payment posts is critical.
On the surface these two calculations seem identical but they are not, because in the first case it doesn't matter when the payment is made. For the latter case, when the payment is made can make a huge impact.
The first type is more common with some non-US mortgages. The latter is often seen in student loans and car loans.