The Allocation of Monthly Payments to Principal and Interest: A Caveat for Consumers.

Examines the effect of the practice of allocating monthly payments to principal and interest on the cost of credit in the United States. Impact of the practice on effective interest rates, loan balances, total cash outlay that is required to repay a loan and the present value of the differences in charges; Examination of the conditions under which the practice violates Regulation Z: Truth in Lending; Three methods that can be used to allocate monthly payments to principal and interest.