What Is the Principal Amount?

Equal principal repayment means that the lender allocates the principal to each month and pays off the interest between the previous trading day and the current repayment date. Compared with the equal principal and interest, this type of repayment method has a lower total interest expense, but the principal and interest paid in the previous period are more, and the repayment burden decreases monthly.

Equal principal repayment method

The same is a loan of 200,000 yuan from the bank, the repayment period is 15 years, choose

When you deposit money in a bank, you have one day of interest. The more you save, the more interest you get. The same is true for loans. If the bank's loan is used for another day, it will pay an additional day of interest. The larger the loan amount, the more interest will be paid to the bank.

The formula for calculating bank interest is: interest = amount of funds × interest rate × occupied time.

Therefore, when the interest rate is constant, the determining factor can only be the actual occupation time of the funds and the size of the occupation amount, not the type of repayment method. This is the truth!

Different repayment methods are just to meet different incomes, different ages, different

When you deposit money in a bank, you have one day of interest. The more you save, the more interest you get. The same is true for loans. If the bank's loan is used for another day, it will pay an additional day of interest. The larger the loan amount, the more interest will be paid to the bank.

The formula for calculating bank interest is: interest = amount of funds × interest rate × occupied time.

Therefore, when the interest rate is constant, the determining factor can only be the actual occupation time of the funds and the size of the occupation amount, not the type of repayment method. This is the truth!

Different repayment methods are just to meet different incomes, different ages, different

Although the equal principal repayment method has been hyped up, many citizens still do not know exactly which repayment method they are suitable for. From the results of the calculations, the equal principal repayment method is definitely less than the interest paid by the equal principal and interest method. The two repayment methods are calculated based on how much principal is used to return the corresponding proportion of interest. The difference between the two is not great. Comparing the two methods of repayment, in a sense, the method of repaying a house loan, the equal principal method (decreasing method) may not be better than the equal principal method (equal method), and what kind of repayment method to choose depends on the person. . The "equal principal and interest repayment method" is that the borrower always repays the principal and interest of the loan at the same amount every month. The initial interest expense is the largest, and the principal is still small. In the future, as the monthly interest expense gradually decreases, the principal is returned. The amount of funds gradually increases; the "equal principal repayment method" (decreasing method) means that the borrower repays the loan principal at an equal amount each month, and the interest decreases with each month, and the monthly repayment amount also decreases with each month.

Repayment comparison table

Comparison table of equal principal and interest and principal repayment (Taking a loan of 10,000 yuan for a one-year monthly interest rate of 3.45 as an example)

Both methods of repayment are as the remaining principal decreases month by month, and the interest will decrease month by month, both based on the time value of the customer's occupation of the management center's funds. Since the "equal principal repayment method" returns more loan principal in the same period than the "equal principal and interest repayment method", the base for calculating interest in the subsequent periods when determining loan interest becomes smaller, and the total interest returned is relatively Less. For example, both A and B apply for a personal housing provident fund loan of 100,000 yuan for a period of 10 years, and the contract will take effect on June 20, 2005. A chooses the equal principal and interest repayment method, and B chooses the equal principal and repayment method. If we do not take into account the country's adjustments in interest rates, A's monthly repayment amount is the same, which is 1032.05 yuan. After the maturity period, a total of 123,846 yuan must be repaid. The first month's repayment amount is 1200.83 yuan, and the monthly repayment amount will be reduced monthly as the balance of the monthly loan period decreases. The last month's repayment amount is 836.40 yuan. After the maturity period, a total of 122,233.90 yuan will need to be repaid (Note: When calculating the repayment amount of B, it is assumed that each month is 30 days, and the actual repayment should be calculated based on the actual number of days per month). Therefore, under the conditions of the same loan amount, interest rate and loan life, the total interest of the "equal principal repayment method" is less than the "equal principal and interest repayment method". Taking a loan of 100,000 for 10 years as an example, B is more expensive than A Pay less interest 1621.10 yuan.

What suits you best

Which repayment method is used, experts suggest that it should be determined according to the actual situation of the individual. The "equivalent principal and interest repayment method" has the same monthly repayment amount. For young people who have not worked recently, it is better to choose the "equal principal and interest repayment method", which can reduce the pressure of repayment in the early period. For middle-aged people who already have economic strength, the "equal principal repayment method" is more effective. Repayments during peak income periods can reduce the pressure on future repayments, and reduce interest expenses through means such as early repayment. In addition, the equal principal and interest repayment method is relatively simple to operate, and the monthly amount is fixed, so there is no need to calculate it. In short, the equal principal and interest repayment method is applicable to borrowers who have low current income and a small burden on the population, and are expected to increase their income steadily, such as some young people. The equal principal repayment method is suitable for some savings, but the burden on the family will increase Borrowers, such as the elderly.