Answer:
Reducing principal at a faster pace increases the overall interest paid on a loan.
Explanation:
When a loan is being repaid a repayment schedule is used. Repayment schedule contains proportion of principal and interest to be paid by the borrower.
In a scenario where principal to be paid reduces at a faster rate, the interest must also reduce. Interest is a function of the principal. The higher the remaining principal the higher interest rate and vice versa.
So the statement - Reducing principal at a faster pace increases the overall interest paid on a loan, is false. Rather interest to be paid will reduce.
