The analysis is as follows:

1, depending on the repayment method, the interest will vary greatly. Of course, if you want to reduce interest, you can choose to repay in advance, but the bank also has regulations on prepayment. It is not that the earlier the repayment, the less interest.

2. Matching principal and interest repayment method, that is, the borrower repays the loan principal and interest with the same amount every month. In this way, at the initial stage of repayment, the interest expense is the most, and the principal is relatively small. In the future, with the gradual reduction of monthly interest expenses, the returned principal will gradually increase.

3. Average capital repayment method, that is, the borrower repays the loan principal with the same amount every month, and the interest decreases month by month with the principal, and the monthly repayment amount also decreases month by month.

When you have enough funds, you can choose to repay the loan in advance. The earlier the loan, the better, so that the interest will be less. Don't repay the loan in advance within one year, so the interest will be higher. The sooner you repay the loan after one year, the more cost-effective it will be for you.

5. From the perspective of savings interest, the average capital is appropriate. The sooner the loan is repaid in advance, the better, but banks generally require repayment for one year before repayment in advance.

6. Under the condition of the same loan time, the interest paid by the equal principal and interest repayment method is higher than that by the average capital repayment method. Therefore, if you plan to repay in advance, you'd better choose the average capital repayment method.

7. Repaying the loan in advance is mainly to reduce interest, especially in the first few years of the loan, the principal base is large and the interest is correspondingly high. Therefore, financial experts suggest that in the first few years of the loan, especially in the first five years, we must strive for more repayment, so as to reduce the principal base of the total loan and reduce the interest burden in the remaining loans.

8. In short, the most fundamental purpose of choosing to repay the loan in advance is to reduce the interest as much as possible. Therefore, it is necessary to calculate the time of prepayment. The earlier the repayment, the less interest, and pay off the loan as much as possible during this period.

Extended data:

Early repayment

Early repayment refers to the behavior of the borrower to repay the loan before the repayment period. In some cases, prepayment is beneficial to the borrower and unfavorable to the lender, so whether prepayment is allowed and the conditions for prepayment should be clearly stipulated. Early repayment includes three situations: full repayment in advance, partial repayment in advance with the loan term unchanged, and partial repayment in advance with the loan term shortened.

When choosing the loan term and repayment method, we should fully consider the operation of funds and the subsequent sources of funds. In the case of uncertain expectations, we suggest that the longer the term is, the better, and the less the prepayment is (preferably lower than the amount of repayment funds that can be determined), so as to increase flexibility and prevent bad credit records or financial difficulties caused by insufficient repayment funds.

At the same time, when the funds are abundant, you can choose to use these funds for investment (it is recommended to choose low-risk products, such as guaranteed financial products, government bonds, corporate bonds, etc.). ), and you can also choose to repay in advance (if the return rate of low-risk investment is lower than the bank loan interest rate, you will generally choose to repay in advance). However, it is necessary to agree with the bank not to charge liquidated damages for early repayment (agreed in the loan contract).

In short, so we should choose the repayment method that suits us, and choose to repay in advance when the funds are abundant. If the income is expected to decrease gradually in the future and you want to save interest, then my suggestion is to choose the repayment method of average capital. The final repayment interest of this repayment method will be less than that of the repayment method of equal principal and interest, because whether the interest is reduced or increased, the repayment interest is related to the loan principal and is not affected by other variables. It should be noted that the total amount repaid under the condition of constant interest rate is actually the same.

Because the interest generated by equal principal and interest is more than the interest generated by average capital, the interest repaid in the early stage accounts for a relatively large proportion, but the principal has not been repaid. On the other hand, the average capital repays more principal in the early stage and less interest in the later stage. Therefore, the average capital is more suitable for prepayment than equal principal and interest production.

Equal principal and interest have been paid for 4 years. Is it suitable to repay the loan in advance?

After borrowing from the bank, how to repay it is more cost-effective?

It depends on your return on capital and the bank's loan interest rate.

If the money you earn with funds (rate of return on capital) is higher than the bank's loan interest rate (loan interest rate), you can choose the repayment method with the longest term as much as possible; Otherwise, you should choose the repayment method with the shortest term possible.

For example, suppose the interest rate of a loan from a bank is 10%. Now, you have 6,543,800 yuan to decide whether to prepay.

You have two choices:

(1) Prepayment. Your "income" is equivalent to less interest paid to the bank;

65438+ ten thousand yuan × 10% = 65438+ ten thousand yuan.

(2) Use this 6,543,800 yuan for financial management: financial management income = 6,543,800 yuan × rate of return on capital.

If the money you can earn with this 65438+ ten thousand yuan is greater than the interest you pay to the bank and less than 10000 yuan, for example, you can earn 1. 10000 yuan (return on capital = 1 1%), after deducting the bank interest, you can

If the money you earn is 654.38+0,000 yuan less than the interest you pay to the bank, for example, if you can earn 9,000 yuan (return on capital = 9%), then after deducting the bank interest, you will lose 654.38+0,000 yuan, so you should pay off the bank loan as soon as possible.

(If prepayment requires payment of liquidated damages, the liquidated damages shall be deducted from the "income" of prepayment during the above calculation period. )

It should be noted that your earning power, income and expenditure, and bank interest rate may change. Therefore, we must fully estimate all kinds of risks and carefully decide to borrow from banks.

It is the most cost-effective to pay off the 30-year mortgage a few years in advance.

Mortgage for 30 years. If you want to repay in advance, the more suitable repayment date is within 4-5 years after the loan. When buying a house by mortgage, many buyers choose equal principal and interest by default. The interest rate of this kind of loan was higher in previous years, and then decreased year by year. When the lender wants to prepay, the loan interest has actually been repaid by more than half, so prepayment is not very worthwhile.

When is the right time to repay the 30-year mortgage in advance?

Mortgage for 30 years. If you want to repay in advance, the more suitable repayment date is within 4-5 years after the loan. When buying a house by mortgage, many buyers choose equal principal and interest by default. The interest rate of this kind of loan was higher in previous years, and then decreased year by year. When the lender wants to prepay, the loan interest has actually been repaid by more than half, so prepayment is not very worthwhile.

Precautions for prepayment of mortgage loan

1, make an appointment in advance

After the repayment period expires one year, if the bank agrees, it can apply in writing for early repayment. Generally speaking, it takes 2-7 working days for banks to handle this business. Banks have different regulations on early repayment of loans, so lenders must understand the operating procedures of loan banks before deciding to repay loans in advance.

2. The loan documents should be ready.

If you want to repay the loan in advance, you usually need to bring your relevant information to the bank to go through the relevant examination and approval procedures after you apply by phone or in writing. If you are a borrower who has settled all the remaining loans, after the bank calculates the remaining loan amount, the borrower can conveniently deposit enough funds to repay the loan in advance. If it is a customer and owner of the sub-mortgage business, it is best to find a professional guarantee institution to do entrusted notarization.

3. Calculation method of interest rate after interest rate reduction

As we all know, the new interest standard is usually calculated at the beginning of the new year, so if you want to repay the loan in advance, you must seize the opportunity and try to repay the loan in advance before the new interest takes effect at the end of the year. In addition, after paying off all loans in advance, the lender should remember to surrender to the insurance company and other departments.