What increases your total loan balance interest accrual or interest capitalization?

Question: What increases your total loan balance interest accrual or interest capitalization?

Interest accrual increases your total loan balance. Interest accrual is the periodic payment of interest (service charges) on the amount of money that you owe to the lender. It is calculated based on the terms and conditions of the loan and is paid incrementally throughout the course of the loan period.

Interest capitalization, on the other hand, increases your total loan balance by adding the interest payments that you have previously accrued to the principal of your loan balance. Interest capitalization is a process where the lender adds unpaid interest to your loan’s principal balance. This increases the total amount of the loan that you owe.

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