Legal Question in Credit and Debt Law in Florida
Limit of the amount of interest that can be paid on a loan
If you are making monthly payments just on the interest of a loan, not the principal (for example 7% on a $30,000.00 student loan, the interest = $2100) & lets say your next payment would have paid that $2100.00 interest. Will the interest continue or will the monthly amount you are making now go towards the principal?
Basicly, does the interest continue until the entire loan is paid off, or once the interest has been satisfied, will the monthly payment be applied to the loan? Is there an interest cap? Can the interest exceed the amount of the principal? (I'm refering to repayment of a student loan)
2 Answers from Attorneys
Re: Limit of the amount of interest that can be paid on a loan
Your question is very poorly worded. If all you pay is interest, then there is never a reduction in principal. If the loan is amortized then you will be paying interest and principal.
Re: Limit of the amount of interest that can be paid on a loan
Interest will continue on the outstanding balance of any loan until the entire principle balance is paid in full. If you are only paying interest, then the balance of the loan will never decline and you will end up paying far more than the original amount borrowed.
I suggest that you meet with an attorney who is experienced in debtor/creditor law who can review all of the facts of your problem and give you complete advice. Low cost initial consultations are generally available with many attorneys. If you are unable to locate an attorney, you can telephone the Florida Bar at (800) 342-8060 and ask for a low fee referral. They have a panel of attorneys in many areas of the state who are willing to provide an initial consultation at a greatly reduced fee.
Scott R. Jay, Esq. (305) 249-8000
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