1. What does "equal principal and interest repayment" mean in bank loans?

1. Equal principal and interest repayment, also known as regular interest payment, means that the borrower repays the loan principal and interest in equal amounts every month. The monthly loan interest is calculated based on the remaining loan principal at the beginning of the month and is settled month by month. . Add the total principal and interest of the mortgage and spread it evenly over each month of the repayment term.

2. As a repayer, you repay a fixed amount to the bank every month, but the proportion of principal in the monthly repayment increases month by month, and the proportion of interest decreases month by month. Equal principal and interest repayment is suitable for families whose income is stable and whose financial conditions do not allow excessive initial investment. This method can be chosen, such as civil servants, teachers, bosses and other groups whose income and job opportunities are relatively stable.

3. Since the monthly repayments are equal, after deducting the interest settled monthly in the initial monthly repayment of the loan, the loan principal repaid will be less; and In the later stage of the loan, as the loan principal continues to decrease and the loan interest also decreases in the monthly repayment, the monthly loan principal repayment will be larger.

4. This repayment method actually takes up more bank loans and takes up longer time. At the same time, it also makes it easier for borrowers to reasonably arrange their monthly life and manage their finances.

2. What does it mean for bank loans with equal amounts and equal interest and decreasing principal and interest?

Equal principal and interest: The principal increases month by month, the interest decreases month by month, and the monthly repayment amount remains unchanged.

Equal principal amount: The principal remains the same, the interest decreases month by month, and the monthly repayment amount decreases. Suitable for planned early repayment of loans.

The one with less interest is the repayment method of equal principal amount.

Currently, banks’ repayment methods for personal housing loans mainly include equal principal and interest and equal principal. The equal principal and interest repayment method repays the principal and interest of the loan in the same amount every month. In the monthly repayment, the interest decreases month by month and the principal increases month by month. In the equal principal repayment method, the repayment amount decreases and the principal remains the same amount in the monthly repayment. Interest decreases month by month.

The main difference between the two is that the former has the same repayment amount in each installment, that is, the total monthly principal plus interest is the same, and the customer's loan repayment pressure is balanced, but the interest burden is relatively high; the latter is also called ' Decreasing repayment method', the monthly principal is the same but the interest is different. The early repayment pressure is high, but the repayment amount will gradually decrease in the future, and the total interest burden will be less.

People who know these two methods now almost all think that it is cost-effective to choose equal principal and interest, because choosing equal principal and interest will pay more principal and interest, while equal principal will pay less interest, and they think that once the loan is repaid in advance, You will find that for repayments of equal amounts of principal and interest, it turns out that most of the money you repaid in the early stage is interest, not principal, and you will feel that you are suffering a lot.

Generally speaking, "equal principal and interest" will pay more interest than "decreasing repayment". Taking a 20-year loan of 10,000 yuan as a standard, the former will pay more than 800 yuan more in interest than the latter. For a 20-year loan of RMB 400,000, you will have to pay an additional interest of RMB 800 × 40 = RMB 32,000. It seems that the bank has charged more interest, but in fact, with the equal principal repayment method, as the principal decreases, the bank can accelerate repayment and withdraw funds as soon as possible. Reducing operating risks is conducive to risk prevention at this point.

In actual operation, equal amounts of principal and interest are more conducive to customers' control and convenient for customers to repay. In fact, many customers are still willing to choose the "equal repayment method" after comparison, because this method The monthly repayment amount is fixed, which is easy for customers to remember, the repayment pressure is balanced, and there is not much difference between the actual and the same principal amount. Because these customers have also seen that the use value of funds is different due to time. Simply put, it is the equal principal and interest repayment method. Since they occupy the bank's principal for a long time, they naturally have to pay more interest; the equal principal repayment method As the principal decreases, you occupy the bank's principal for a shorter period of time, and the interest naturally decreases. There is no problem that you suffer a loss while the bank earns more interest.

In essence, the two loan methods are the same, and there is no distinction between them. Only when the needs are different, there are different choices.

Because the equal principal and interest repayment method has a balanced repayment pressure but requires paying more interest, it is suitable for people who have a certain amount of savings, but their income may be flat or declining, their living burdens are increasing, and they have no plans to repay in advance. .

The equal principal repayment method, because the borrower repays the principal quickly, can pay less interest, but the initial repayment amount is large, so it is suitable for those with higher current income or those who expect income in the near future. If there is a substantial growth, it will be more advantageous for those who are prepared to repay their loans in advance.

3. What is the meaning of a loan with equal principal and interest?

What is a loan with equal principal and interest? It seems that there is no authoritative definition. So the best definition comes from its roots: the mathematical formula of equal principal and interest loans. But it is difficult to read its meaning from the mathematical formula, so many people explain what an equal principal and interest loan is based on its characteristics. These characteristics of equal principal and interest loans can be summarized as the following 3 points: Repayment per period (1): The repayment amount per period remains unchanged. The repayment amount of each period is composed of interest and principal, and the interest and principal in the repayment amount of each period are different; early repayment (2): the repayment amount of each period remains unchanged after early repayment ;Interest calculation method (3): Interest is calculated on a loan with equal principal and interest using the compound interest method, that is, the interest also accrues interest, which is referred to as interest compounding.