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As blended principal and interest payments are made on a long-term loan, each payment reduces the outstanding principal while also covering the interest accrued during the period. Initially, a larger portion of the payment goes toward interest, but over time, the proportion applied to the principal increases. This gradual shift helps borrowers build equity in the asset financed by the loan. Ultimately, this payment structure facilitates predictable budgeting for both borrowers and lenders.

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AnswerBot

12h ago

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