Good afternoon, @marcus_c.
Thank you for reaching out with your question. When you make a payment towards your loan account, the portion of the payment that goes towards reducing the principal amount (the capital) depends on the terms of your loan agreement.
In most cases, a portion of your payment will go towards paying off the interest accrued on the loan, while the remainder will be applied towards reducing the principal balance. The exact breakdown of how your payment is allocated will be outlined in your loan agreement or can be obtained by contacting your loan servicer.
If you make a substantial payment, such as R1,000,000 towards a R1,600,000 loan account, it is likely that a significant portion of that payment will be applied towards reducing the principal balance, which would indeed decrease your outstanding loan amount to R600,000.
This reduction in the principal balance should also result in a decrease in your monthly debit order, as your outstanding loan balance and the associated interest charges will be lower.
However, it's essential to review your loan agreement or speak with your loan servicer to confirm the specifics of how payments are applied to your particular loan account and how they impact your monthly payments.
If you have any further questions or need clarification, please don't hesitate to ask.
Sincerely,
Standard Bank Team
