diff --git a/src/test/app/Loan_test.cpp b/src/test/app/Loan_test.cpp
index 4617050388..9fd0f8541a 100644
--- a/src/test/app/Loan_test.cpp
+++ b/src/test/app/Loan_test.cpp
@@ -594,7 +594,7 @@ class Loan_test : public beast::unit_test::suite
         {
             // Need to account for fees if the loan is in XRP
             PrettyAmount adjustment = broker.asset(0);
-            if (broker.asset.raw().native())
+            if (broker.asset.native())
             {
                 adjustment = 2 * env.current()->fees().base;
             }
@@ -757,7 +757,7 @@ class Loan_test : public beast::unit_test::suite
         if (deleter == borrower)
         {
             // Need to account for fees if the loan is in XRP
-            if (broker.asset.raw().native())
+            if (broker.asset.native())
             {
                 adjustment = env.current()->fees().base;
             }
@@ -1061,12 +1061,12 @@ class Loan_test : public beast::unit_test::suite
                           TER> {
                 // Freeze / lock the asset
                 std::function<void(Account const& holder)> empty;
-                if (broker.asset.raw().native())
+                if (broker.asset.native())
                 {
                     // XRP can't be frozen
                     return std::make_tuple(empty, empty, empty, tesSUCCESS);
                 }
-                else if (broker.asset.raw().holds<Issue>())
+                else if (broker.asset.holds<Issue>())
                 {
                     auto freeze = [&](Account const& holder) {
                         env(trust(issuer, holder[iouCurrency](0), tfSetFreeze));
@@ -1365,15 +1365,24 @@ class Loan_test : public beast::unit_test::suite
             // taken
             auto const transactionAmount = payoffAmount + broker.asset(10);
 
+            // Send a transaction that tries to pay more than the borrowers's
+            // balance
+            env(pay(borrower,
+                    loanKeylet.key,
+                    STAmount{
+                        broker.asset,
+                        borrowerBalanceBeforePayment.number() * 2}),
+                ter(tecINSUFFICIENT_FUNDS));
+
             env(pay(borrower, loanKeylet.key, transactionAmount));
 
             env.close();
 
             // Need to account for fees if the loan is in XRP
             PrettyAmount adjustment = broker.asset(0);
-            if (broker.asset.raw().native())
+            if (broker.asset.native())
             {
-                adjustment = env.current()->fees().base;
+                adjustment = env.current()->fees().base * 2;
             }
 
             state.paymentRemaining = 0;
@@ -1814,7 +1823,7 @@ class Loan_test : public beast::unit_test::suite
 
                     // Need to account for fees if the loan is in XRP
                     PrettyAmount adjustment = broker.asset(0);
-                    if (broker.asset.raw().native())
+                    if (broker.asset.native())
                     {
                         adjustment = env.current()->fees().base;
                     }
@@ -2730,7 +2739,6 @@ class Loan_test : public beast::unit_test::suite
 
             env(trust(broker, IOU(20'000'000)));
             env(pay(issuer, broker, IOU(10'000'000)));
-            env(trust(borrower, IOU(20'000'000)));
             env.close();
 
             auto const brokerInfo = createVaultAndBroker(env, IOU, broker);
@@ -2745,6 +2753,13 @@ class Loan_test : public beast::unit_test::suite
                 paymentInterval(100),
                 fee(XRP(100)));
             env.close();
+
+            env(trust(borrower, IOU(20'000'000)));
+            // The borrower increases their limit and acquires some IOU so they
+            // can pay interest
+            env(pay(issuer, borrower, IOU(500)));
+            env.close();
+
             if (auto const le = env.le(keylet::loan(keylet.key));
                 BEAST_EXPECT(le))
             {
diff --git a/src/xrpld/app/tx/detail/LoanPay.cpp b/src/xrpld/app/tx/detail/LoanPay.cpp
index 54e79a2cb7..64d7f8f518 100644
--- a/src/xrpld/app/tx/detail/LoanPay.cpp
+++ b/src/xrpld/app/tx/detail/LoanPay.cpp
@@ -22,6 +22,8 @@
 #include <xrpld/app/misc/LendingHelpers.h>
 #include <xrpld/app/tx/detail/LoanManage.h>
 
+#include <xrpl/json/to_string.h>
+
 namespace ripple {
 
 bool
@@ -203,6 +205,27 @@ LoanPay::preclaim(PreclaimContext const& ctx)
             << "Vault pseudo-account can not receive funds (deep frozen).";
         return ret;
     }
+    // Make sure the borrower has enough funds to make the payment!
+    // Do not support "partial payments" - if the transaction says to pay X,
+    // then the account must have X available, even if the loan payment takes
+    // less.
+    // Also assume that anybody taking loans is not using "community credit",
+    // which would let an IOU balance go negative up to the other side's limit.
+    // This may change in a later version.
+    if (auto const balance = accountHolds(
+            ctx.view,
+            account,
+            asset,
+            fhZERO_IF_FROZEN,
+            ahZERO_IF_UNAUTHORIZED,
+            ctx.j);
+        balance < amount)
+    {
+        JLOG(ctx.j.warn()) << "Payment amount too large. Amount: "
+                           << to_string(amount.getJson())
+                           << ". Balance: " << to_string(balance.getJson());
+        return tecINSUFFICIENT_FUNDS;
+    }
 
     return tesSUCCESS;
 }
@@ -480,20 +503,36 @@ LoanPay::doApply()
         : accountHolds(
               view, brokerPayee, asset, fhIGNORE_FREEZE, ahIGNORE_AUTH, j_);
 
-    /*
-    auto const balanceScale = std::max(
-        {accountBalanceBefore.exponent(),
-         vaultBalanceBefore.exponent(),
-         brokerBalanceBefore.exponent(),
-         accountBalanceAfter.exponent(),
-         vaultBalanceAfter.exponent(),
-         brokerBalanceAfter.exponent()});
-         */
     XRPL_ASSERT_PARTS(
         accountBalanceBefore + vaultBalanceBefore + brokerBalanceBefore ==
             accountBalanceAfter + vaultBalanceAfter + brokerBalanceAfter,
         "ripple::LoanPay::doApply",
         "funds are conserved (with rounding)");
+    XRPL_ASSERT_PARTS(
+        accountBalanceAfter >= beast::zero,
+        "ripple::LoanPay::doApply",
+        "positive account balance");
+    XRPL_ASSERT_PARTS(
+        accountBalanceAfter < accountBalanceBefore,
+        "ripple::LoanPay::doApply",
+        "account balance decreased");
+    XRPL_ASSERT_PARTS(
+        vaultBalanceAfter >= beast::zero && brokerBalanceAfter >= beast::zero,
+        "ripple::LoanPay::doApply",
+        "positive vault and broker balances");
+    XRPL_ASSERT_PARTS(
+        vaultBalanceAfter >= vaultBalanceBefore,
+        "ripple::LoanPay::doApply",
+        "vault balance did not decrease");
+    XRPL_ASSERT_PARTS(
+        brokerBalanceAfter >= brokerBalanceBefore,
+        "ripple::LoanPay::doApply",
+        "broker balance did not decrease");
+    XRPL_ASSERT_PARTS(
+        vaultBalanceAfter > vaultBalanceBefore ||
+            brokerBalanceAfter > brokerBalanceBefore,
+        "ripple::LoanPay::doApply",
+        "vault and/or broker balance increased");
 #endif
 
     return tesSUCCESS;