What is the difference between loan interest and bank loan repayment?
I would describe loan interest to be the bank’s return on the money it has lent to a borrower. Interest is the amount the bank has earned and charges for the use of the money it has lent.
I would describe a bank loan repayment to be the return of the money that the bank has lent. In other words, I assume that a loan repayment refers to the principal payment (and not the total payment or the interest payment). Not everyone necessarily uses the terminology in the same way.
When a borrower makes a loan payment (as opposed to a loan repayment), it is likely that the bank will first collect the interest it is owed. Any remainder between the total payment and the interest payment will be applied to the loan’s principal balance.
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