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Loan repayment applied to interest by one side, principal by the other

A 100,000 repayment is applied first to accrued interest by the lender and entirely to principal by the borrower.

What the agent does

  1. Read the application-of-payments clause
  2. Recompute both ledgers under the clause
  3. Draft the correcting entry on the side that applied it differently

What you get back

Loan and interest balances agreed on both sides with the clause cited.

Related
Interest accrued on different day-count conventions
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