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Hi Lukasz,
there are two problems with 'repay overdue interest first' option.
First: if payment date is a due date of installment then current interest is not repaid as first. Applied payment is used to repay overdue fees, penalties and principals.
Second: There is a problem in Declining Balance - Interest Recalculation interest rate. Overdue interests (except first one) are not repaid to the end. See attached file.