Why is majority of my payment being applied to interest?
Your loan is amortized in order to break your repayment down into equal monthly installments and to account for all interest and principal required to be paid over the life of your loan. Because of this amortization schedule, at the beginning of your loan the disbursement of your payment is going to be interest heavy; however, as your loan matures, that disbursement begins to shift (think of scales gradually changing over time), where your payment is then disbursed heavily towards principal.
Loan Amortization Example
All payments are applied first toward fees (if any), then interest, then principal.
For example: A customer borrowed $21,000, with an APR of 25.95%, an interest rate of 22.26%, and monthly payments of $805.63 that they satisfy each month.
In the customer's first installment, assuming the first month is a 31-day month, $408.34 will be applied toward principal, and $397.02 applied toward interest.
On the loan's final payment, $791.15 will be applied toward the principal, with just $14.48 applied toward interest. Note: This customer would have had an Administration Fee of 4.75%, or $997.50 assessed at the loan's issuance. This example assumes the customer completes the original installment schedule.