Is it cost-effective to prepay the portfolio loan?
Because the interest rate of commercial loans is higher than that of provident fund loans, many friends will choose to repay commercial loans in advance. However, banks generally have regulations on the prepayment of portfolio loans, and different banks have different regulations. For example, some banks stipulate that it takes two years for normal repayment not to charge liquidated damages, while others need one year. Most banks stipulate that the prepayment amount of provident fund loans and commercial loans must reach a certain proportion, rather than only repaying one of them.
As we all know, prepayment will result in liquidated damages. Therefore, once the borrower pays off all the loans or most of the principal in advance within the specified time, the borrower will pay liquidated damages. Therefore, whether to repay the loan in advance must carefully check the conditions in the loan contract. If the bank does not charge a lot of liquidated damages for early repayment, you can consider early repayment. For example, some banks prepay within 1 year, and 3% of the bank's lucky prepayment amount is used as liquidated damages. For example, if you repay 500,000 yuan in advance, you need to pay an extra 1.5 million yuan according to the penalty of 3%, which is still not cost-effective.
Therefore, for portfolio repayment, it is necessary to read the loan contract clearly and calculate the liquidated damages according to the contract.
Which method is cost-effective for portfolio loan repayment?
1. Pay off the commercial loan first.
In the process of portfolio loan, the interest rate of commercial loan is higher. Generally speaking, many people pay off some commercial loans first, which can save the loan interest rate.
However, many banks have different regulations on the repayment of individual housing provident fund loans. Some banks stipulate that some loans can be repaid in advance after 6 months of normal repayment or 1 year.
After understanding the bank's requirements for early repayment, you can apply to the bank for early repayment. Banks charge interest according to the loan balance, and the total interest will be reduced at any time when repayment is made in advance.
2. Use the provident fund account for repayment.
In the process of repayment of portfolio loans, part of the repayment of provident fund can use the money in the provident fund account. Specifically, the signing can be carried out according to the monthly transfer and repayment withholding business, and the repayment can be set as the main account by monthly transfer and repayment from the provident fund account, and when the funds are insufficient, you can set up your own savings account for repayment.
In this way, the amount of the provident fund account is fully utilized, and the automatic repayment operation is convenient.
3. Withdraw money from the provident fund account to repay commercial loans.
The funds in the provident fund account can be withdrawn in advance, and these funds are freely used by borrowers. If you want to withdraw the money from the provident fund account to repay the business loan, this is very good.
4. Choice of repayment methods for commercial loans
The repayment methods of commercial loans are generally divided into two ways: equal principal and interest and average capital. General banks will automatically default to equal principal and interest, because this repayment method can reduce the repayment pressure.