I have a car payment like most people. I was looking at my payment breakdowns where it tells you how much went towards the principal and how much went towards interest.
Here is how my last 3 payments looked (oldest to most current):
Principal: 262.04, Interest: 37.96
Principal: 260.35, Interest: 39.65
Principal: 258.79, Interest: 41.21
My interest rate is 4.74% and I have automatic pay setup for $300/month. I can't see the logic where the interest amounts get higher with each payment. I would think that the interest portion would decrease with each payment since the overall owed is decreased. How does this work and where am I wrong?
Here is how my last 3 payments looked (oldest to most current):
Principal: 262.04, Interest: 37.96
Principal: 260.35, Interest: 39.65
Principal: 258.79, Interest: 41.21
My interest rate is 4.74% and I have automatic pay setup for $300/month. I can't see the logic where the interest amounts get higher with each payment. I would think that the interest portion would decrease with each payment since the overall owed is decreased. How does this work and where am I wrong?