Loan Repayment Question

[Aimster]

Total Loan taken out $50,000
Interest Accumulated: $5,000

If the monthly payment is $150 and I pay $1,000 does the entire $1,000 go towards the accumulated Interest?

I am asking for tax reasons. I start student loan repayment in November and the govt will deduct $2,000/year for student interest off of my gross salary to calculate tax return.

 

[EagleKeeper]

Much depends on how the loan is structured.

If the interest is based on amount owed, then you would hope that the extra payment would go against the principal; reducing the interest owed.

If everything is fixed, then there is a percentage of the payment that goes against the principal and a percentage against the interest.