Loan repayment.
Loan repayment, "equal principal and interest, average capital, interest first, principal later, and loan repayment" are common repayment methods in loans. But which repayment method is better? Below, let's analyze the advantages and disadvantages of the current repayment methods.
1. Equal principal and interest
Determine the monthly repayment amount, calculate the interest payable in the current month, and then subtract the interest payable in the current month from the determined repayment amount, which is the repayment amount of the principal, and calculate the interest for the next month according to the remaining principal. This loan can be repaid in advance.
1. Scope of application: it is used for industries and borrowers with continuous cash inflow, and the cash is basically uniform, mainly used to supplement working capital and increase inventory. Such as commodity circulation, service industry, processing and manufacturing industry, etc.
2. Advantages:
(1) The loan is repaid on a monthly basis, and the loan balance is constantly decreasing, thus reducing the loan risk;
(2) For the borrower, the monthly repayment pressure is small and easy to repay, which can avoid a one-time huge pressure.
3. Disadvantages:
(1) For borrowers, the available funds are getting less and less, and the utilization rate of funds is not high.
Second, the average capital
The average capital refers to the loan principal divided by the number of repayment months, and the fixed principal is returned every month, and the interest on the remaining principal is paid. The loan interest decreases with the decrease of loan principal, and the total repayment amount decreases with the decrease of interest. This loan can be repaid in advance.
1. Scope of application: It is suitable for industries and borrowers with continuous cash inflow, and the cash inflow in the early stage decreases after it is large. For example, when a new car is put into production, the maintenance fee is low and the income is high. Then, with the operation of the vehicle, the cost will increase and the income will decrease, which is consistent with the repayment method in the average capital. This method is also suitable for commodity circulation industry, service industry and processing manufacturing industry.
2. Advantages:
(1) The loan is repaid on a monthly basis, and the loan balance is constantly decreasing, thus reducing the loan risk;
(2) For the borrower, the monthly repayment pressure is small and easy to repay, which can avoid a one-time huge pressure.
3. Disadvantages:
(1) If the borrower is a quality customer, the loan will be reduced and the interest will be reduced, which will reduce the income of the lending institution;
(2) For borrowers, the available funds are getting less and less, and the utilization rate of funds is not high.
Third, interest comes before capital.
Only pay interest every month, and return the loan principal in one lump sum when the loan expires.
1. Scope of application: suitable for short-term loans such as enterprise management, engineering, planting and aquaculture, and borrowers who usually have no cash inflow or little cash flow.
2. Advantages: For the borrower, there is no repayment pressure at ordinary times, and the funds can be fully used for business projects.
3. Disadvantages: For the borrower, there is great pressure to repay the principal in one lump sum in the later period. If the capital chain is broken, it is likely to affect personal credit.
Fourth, you can borrow and pay back.
In a period of time, lending institutions give borrowers the highest credit line. During this period, the borrower can get the loan at any time within the maximum credit limit, and can also return it at any time.
1. Scope of application: applicable to borrowers with uncertain or irregular cash flow in the future.
2. Advantages: The borrower can borrow and repay at any time according to his own needs, which is convenient and flexible and simplifies the procedures.
3. Disadvantages: Because the loan risk assessment is generally not done during the credit period, when the borrower's situation changes, the lending institution will still give the loan without knowing it, which increases the risk of the loan. Therefore, this kind of loan needs to do a post-loan inspection or make a simplified evaluation before each loan.
Each repayment method has advantages and disadvantages. When choosing, you can arrange according to your actual funds. If there is no optimum, what is suitable is the best.