Matching principal repayment means that the borrower repays the same principal every month, and the remaining unpaid principal is reduced, so that the interest repaid every month will be reduced; Matching principal and interest refers to a way to repay the same amount every month. Generally speaking, the average capital pays less interest than the equivalent principal and interest, and in the first few years, the monthly repayment amount of the equivalent principal and interest is less than the average capital. Two different repayment methods are suitable for different people. For detailed information about average capital and equal principal and interest, let's take a look at it with a net edge.

1. What is average capital and equal principal and interest?

1, average capital: equal principal repayment means that the borrower repays the same principal every month. With the monthly repayment of the loan, the remaining unpaid principal decreases, so the interest repaid every month will also decrease. Therefore, under the repayment law of average capital, the monthly repayment months of borrowers will be reduced even more.

The repayment of the principal is the same every month, and the interest decreases, that is, the total repayment amount in the first month is the highest, and then decreases in turn. The calculation formula is: monthly repayment amount = (loan principal/repayment months)+(principal-accumulated amount of repaid principal) × monthly interest rate.

2. Matching principal and interest: Matching principal and interest refers to a repayment method with the same monthly repayment amount. The loan principal and total loan interest are added together and then distributed to each repayment month on average. The borrower chooses the repayment method of equal principal and interest, and the monthly repayment amount is the same.

The total amount of monthly repayment remains unchanged, the principal of monthly repayment increases in turn, and the interest decreases. The calculation formula is: monthly repayment amount = [loan principal × monthly interest rate ×( 1+ monthly interest rate) × repayment months ]=[( 1+ monthly interest rate) × repayment months]

2. Which is more cost-effective, average capital or equal principal and interest?

1. Generally speaking, the average capital pays less interest than the equivalent principal and interest, and the monthly repayment amount of the equivalent principal and interest is also less than the average capital in previous years. Two different repayment methods are suitable for different people.

Matching principal and interest repayment method has a balanced repayment pressure but needs to pay more interest, which is suitable for people who have a certain deposit, but their income may be flat or declining, their living burden is increasing day by day, and there is no prepayment plan. If the property buyers are short of funds, considering the economic pressure and the preparation for early repayment, or the monthly supply they can afford is not much, matching the principal and interest is a good choice. This repayment method is suitable for people in need and young people.

The average capital repayment method, because the borrower repays the principal quickly, can pay less interest, but the amount of repayment in advance is large, which is more favorable, because it is suitable for people with higher income at present, or those who expect a substantial increase in income in the near future and are ready to repay in advance. If the purchaser has strong economic strength, the owner pursues profit maximization, or has sufficient funds on hand and no pressure on loans, choosing average capital will pay a lot less interest than matching principal and interest.

2. It is most important to master the following five principles and choose the appropriate repayment method.

(1) Happiness in life: At the initial stage of repayment, the monthly repayment amount of the average capital method is relatively high, and the repayment pressure is greater than the matching principal and interest. Therefore, we should consider the individual's endurance. From the perspective of life, today's happiness is more important than paying tens of thousands of dollars. You can choose not to put too much pressure on yourself at the beginning of repayment.

(2) Considering the time value of money: the average capital means a higher "down payment"-the amount of early repayment is high and the early burden is heavy; Equal principal and interest have higher financial leverage, and larger assets are tilted with less money;

(3) Consider whether to sell the real estate: If the real estate is intended to be held for a short period of time (within the time interval when the total repayment amount of equal principal and interest is less than the average capital), the investment return rate of the equal principal and interest repayment method is often higher after the appreciation is realized;

(4) Consider the age of repayment: With the increase of age, the income will enter the declining range, and the repayment of equal principal conforms to the changing law of the income curve. If your income curve goes up before the age of 20 and 40, there is no need to put too much pressure on yourself today;

(5) Consider whether to prepay: If prepay, it is obviously more cost-effective to pay more principal and less interest on average capital in the early stage.

Which repayment method to choose should be considered comprehensively according to your own situation. If you plan to repay in advance, the average capital method is more cost-effective. I hope the above content can help you. If you have any other questions, you can pay attention to us.