A monthly amount is transferred punctually to the loan. Nevertheless, the stated balance can increase in a particular model. To understand this, the payment must be compared with the interest actually charged and other postings. Punctuality and sufficient debt reduction are different matters.
Consider the capitalisation only as a model
For this learning case we invent the following rule: At the start of a month exactly 0,5 per cent interest is charged on the opening balance. Afterwards a payment of 500 euros is received. Any unpaid interest remainder is added to the debt in the model and bears interest in the following month. There are no fees or other transactions.
This is not a statement about permissible interest capitalisation or the terms of your contract. For a real loan postings, contractual basis and where applicable legal limits must be examined separately. A mere self-reduced payment is not recommended here.
Calculate two months
The opening balance is 120.000 euros. In the first month 600 euros model interest arise. The payment of 500 euros only covers them partially. The balance increases by 100 euros to 120.100 euros.
In the second month 0,5 per cent is charged on 120.100 euros: 600,50 euros. After a further payment of 500 euros the balance is 120.200,50 euros. Although a total of 1.000 euros was transferred, the debt is now 200.50 euros above the starting amount. In the model 1.200,50 euros of interest were charged.
The calculation is thus fully explained: 120.000 plus 1.200,50 minus 1.000 equals 120.200,50. A instalment without its posting components does not reveal this process.
Examine a genuinely rising balance concretely
Place the time-appropriate statements and the contractual payment schedule side by side. Distinguish actual payments received, interest charges, fees, further disbursements and corrections. A rising debt can have causes other than the capitalisation invented here; the cause cannot be inferred from a similar numerical pattern.
Please ask the financing institution to explain the specific difference and have a disputed charge examined appropriately. If agreed payments are not sustainable, early suitable individual advice and coordination are required. The model calculation does not provide an admissible personal amendment plan.
The learning step is achieved when you can explain the debt development from opening balance, actual charges and actual payments. Only thereafter can it be dealt with factually whether there is an error, an inadequate payment structure or another contractual issue.