How are Return Premium (RP) payments applied to outstanding loan balances?

Last updated: February 21, 2025

When a Return Premium (RP) payment is received from a carrier, it is applied to the overall loan balance rather than to specific outstanding payments. This process affects all remaining loan payments. Here's how it works:

Application of Return Premium

  1. The RP is applied to the total loan balance.

  2. This reduces the overall amount owed on the loan.

  3. All remaining monthly payment amounts are recalculated and adjusted accordingly.

Effect on Monthly Payments

After the RP is applied:

  • All future monthly payments will be reduced to reflect the new loan balance.

Important Notes

  • The adjustment process is dependent on the receipt of funds and may not be completed on the same day the RP is received.