1, advantages
(1) Relieve repayment pressure
Under the repayment mode of principal after interest, the borrower only needs to pay interest and does not need to repay the principal. This way can reduce the repayment pressure of borrowers, especially for those who need large amounts of funds in a short time, it is easier to get funds.
(2) Improve the flexibility of cash flow
Borrowers can use the principal for other capital needs and improve the flexibility of cash flow. If the borrower's capital demand is short-term, then the way of interest first and capital later can better meet its capital demand.
2. Deficiencies
(1) The interest is higher.
Compared with the repayment method of equal principal and interest, the interest of principal first is higher, because the borrower only paid interest during the whole loan period, but the principal was not repaid. This means that borrowers need to pay more interest, which increases the borrowing cost.
(2) The repayment risk is high.
If the borrower does not have enough funds to repay the principal at one time, then the borrower will face the repayment risk. If the borrower's repayment ability is poor, there may be overdue repayment, which will affect his credit history.
Related precautions:
1. Pay interest first, and then don't repay the principal.
Interest before repayment means that the user only repays the interest in the previous period and repays the principal and interest in the last period. If the principal is not returned in the last installment, the system will directly treat the user as overdue. After loans overdue, there will be overdue records and overdue penalty interest. Moreover, due to the early repayment of interest, if the user does not return the principal, the principal will generate more overdue interest.
General lending institutions will only provide two repayment methods: average principal or equal principal and interest. Users can repay the interest first and then the principal, which shows that their credit qualification is excellent. If the user does not return the principal, the user's comprehensive credit score will be greatly reduced. Even if the overdue debts are paid off later, it is difficult for users to apply for loans again, and it is difficult to apply for repayment after interest.
2. You can't repay the mortgage interest.
Its repayment methods are mainly equal principal and interest and average capital. Among them, the matching principal and interest is to repay the same amount of monthly payment every month during the whole repayment period. In the average capital, the loan principal is divided equally, and then the same amount of principal and interest generated by the remaining loans are paid every month during the repayment period, and the monthly supply is getting less and less.