To what is the Dryer Vent Squad borrower's payment first credited?

According to the 2024 Dryer Vent Squad Franchise Disclosure Document, when a borrower makes a payment, the payment is first applied to any outstanding late fees. After late fees are covered, the remaining amount is then credited towards any interest due. Finally, any remaining portion of the payment is credited towards the principal balance of the loan.

This allocation of payments is a standard practice in lending agreements. By prioritizing late fees and interest, Dryer Vent Squad ensures that these charges are addressed before reducing the principal amount of the loan. This can impact the overall repayment timeline and the total cost of borrowing for the franchisee.

For a prospective Dryer Vent Squad franchisee, understanding this allocation is crucial for managing their loan obligations. If a franchisee anticipates difficulty in making timely payments, they should be aware that late fees will accrue and that payments will first be applied to these fees and any accrued interest, potentially delaying the reduction of the principal balance. Franchisees should aim to make timely payments to avoid late fees and ensure that their payments are effectively reducing the principal amount owed.