Most first mortgage loans are term loans and have a fixed monthly payment. These loans are typically amortized loans where the interest accrual is based on a set schedule. For instance, a July 1 payment covers June’s interest and principal payment. The July 1 payment will have the same amount applied to principal and interest if you make your loan payment on June 30 or July 2.
Auto and Consumer Loans
Most other non-revolving loans are simple-interest loans. This means that the payment is applied first to the interest that has accrued since the previous payment was made and the rest to the principal balance as of the date the payment is received. Based upon the number of days between payments, the amount that is applied to interest each month fluctuates.
Credit card (and other line of credit loans)
The Interest Charges for a billing cycle are computed by applying the Daily Periodic Rate to the Average Daily Balance of Purchases, multiplied by the number of days in the cycle. The Daily Periodic Rate is determined by dividing the Annual Percentage Rate (APR) by 365 and will change when the Annual Percentage Rate (APR) changes.