There are two main repayment methods for provident fund loans: equal principal and interest repayment and equal principal repayment. Matching principal and interest repayment will distribute the loan principal and total interest evenly to each month, and the monthly repayment amount will be fixed; Under the repayment method in average capital, the monthly repayment principal is fixed, and the interest decreases with the decrease of the loan balance, so the total monthly repayment gradually decreases. Choosing which repayment method is more cost-effective depends on the individual's asset status and income level. In addition, provident fund loans allow early repayment, which can save some interest expenses and will not generate handling fees and liquidated damages. Considering the individual's repayment ability and risk tolerance, it is the key to choose the appropriate loan term and repayment method.
Rules for the use of provident fund:
1. Establishment of provident fund account: After the employee signs a labor contract with the unit, the unit shall open a personal provident fund account for the employee in the local provident fund management center;
2. Deposit ratio and amount: the deposit ratio of provident fund is usually stipulated by the local authorities, and the deposit amount is linked to the wages of employees;
3. Restrictions on use: The provident fund is mainly used for housing-related expenses such as buying houses, renting houses and repaying loans.
4. Withdrawal conditions: The withdrawal of provident fund must meet certain conditions, such as buying a house, retiring, leaving, etc. ;
5, loan concessions: using provident fund loans to buy a house can usually enjoy a lower interest rate;
6. Account inquiry: Employees can inquire account information through official website, mobile APP or provident fund management center.
To sum up, to choose the most cost-effective repayment method of provident fund, we should comprehensively consider personal assets, income status, repayment ability and risk tolerance, weigh the advantages and disadvantages of the two repayment methods of equal principal and interest and average principal, and consider early repayment to save interest expenses, so as to determine the repayment strategy that is most suitable for our own economic situation.
Legal basis:
Regulations on the administration of housing provident fund
Article 24
Under any of the following circumstances, employees can withdraw the storage balance in the employee housing provident fund account: (1) purchasing, building, renovating or overhauling their own houses; (2) retirement; (three) completely lose the ability to work, and terminate the labor relationship with the unit; (4) Having left the country to settle down; (5) Repaying the principal and interest of the house purchase loan; (six) the rent exceeds the prescribed proportion of family wage income. In accordance with the provisions of items (2), (3) and (4) of the preceding paragraph, the employee housing provident fund account shall be cancelled at the same time. If an employee dies or is declared dead, the employee's heirs and legatees may withdraw the storage balance in the employee's housing provident fund account; If there is no heir or legatee, the storage balance in the employee housing provident fund account shall be included in the value-added income of the housing provident fund.