If you're trying to pay down some debt, you might be wondering what the impact would be if you simply increased your monthly payment each month by just a little, or even a lot. When you increase your monthly payment, the amount of the increase gets applied directly to reducing the amount owed, or principle. Reducing the amount of money you owe may reduce your interest charges each month, as the interest rate will be applied only to the outstanding loan balance. An increase in your monthly payment may lessen the amount of interest charges you may pay over the repayment period and shorten the number of months it may take to pay off the loan.