Final answer:
The statement is false; on an amortization schedule, the proportion of interest decreases and principal increases with each payment as the loan matures. Making larger or additional payments reduces the total interest paid and the loan's term.
Step-by-step explanation:
According to an amortization schedule, the amount of each payment that goes toward principal increases as the loan matures and the amount that goes toward interest drops. This is because of the way amortization works: interest is based on the remaining balance, which drops over time as more principal is paid off, and payments are determined to guarantee that the loan is paid off in full during its period.
For example, consider a $300,000 loan with a 6% annual interest rate, convertible monthly over 30 years. Initially, a larger portion of the monthly payment covers the interest, due to the large initial principal. However, as you continue to make payments, the principal balance dwindles, which results in lower interest charges each month and thus more of the payment is applied to the principal.
It is also true that paying off debt faster can save money on interest, meaning if you increase your payments, you can reduce both the interest paid over time and the life of the loan, as indicated in the provided example where making 13 payments a year instead of 12 can lead to savings.