When your company repays a Credicorp loan, each payment is usually split into two parts: capital and interest. Understanding the split makes your statement far easier to read and helps you judge how quickly the debt is actually reducing.
Capital versus interest
Capital is the amount your company borrowed and still owes. Interest is the cost of borrowing that capital, charged at the rate set out in your offer. As you repay, the capital portion of your balance falls; interest is calculated on whatever capital remains outstanding.
- Capital reduces your underlying debt
- Interest is the charge for borrowing, applied to the outstanding capital
Why early payments look interest-heavy
Because interest is charged on the capital still owed, more of an early payment can go towards interest, with the capital share growing as the balance shrinks. This is normal and is reflected on your statement, where each payment is itemised.
Where to find your split
Your statement and dashboard show how each payment has been applied. If anything is unclear, our support team can walk you through a specific line.
These articles are general guidance for UK limited companies and LLPs and are not advice. Always read your own agreement, which governs your facility.
See also: Why has my balance changed when I have not borrowed more?, How is interest charged on my loan?, What happens as my loan approaches the end of its term?.