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 banks also have provisions for 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, the interest expense is the most in the initial repayment period, 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 same amount of loan principal 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 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, general capital is appropriate. The sooner the loan is repaid, the better, but banks generally require repayment for one year before they can repay 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. Try to pay off the loan 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. Prepayment includes full prepayment, partial prepayment with unchanged loan term and partial prepayment with shortened loan term.

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 term should be set as long as possible, and the prepayment should be as little as possible (preferably lower than the determinable repayment amount), 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 capital preservation wealth management products, government bonds, corporate bonds, etc.). ), and you can also choose to repay in advance (if the yield 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 choose the repayment method that suits you, and choose to repay in advance when the funds are abundant. If the expected income in the future decreases gradually 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 with 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 of repayment is actually the same when the interest rate remains unchanged.

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 is not much. And the average capital, the early repayment of principal, late repayment of interest less. Therefore, the average capital is more suitable for early repayment than the equal principal and interest production.

References:

Baidu Encyclopedia: Equal principal and interest