Calculation method of equal principal and interest repayment:
[loan principal × monthly interest rate ×( 1+ monthly interest rate) repayment months ]=[( 1+ monthly interest rate) repayment months-1]
2. average capital repayment method is that the borrower repays the principal in equal amount every month, and the loan interest decreases month by month with the principal, and the repayment amount also decreases month by month, so it is also called the diminishing method.
Calculation formula of equal principal repayment:
Monthly repayment amount = (loan principal/repayment months)+(principal-accumulated amount of repaid principal) × monthly interest rate.
The characteristic of equal principal and interest repayment is that the principal and interest of monthly repayment are the same. Although this repayment method is easy to budget and the initial repayment pressure is reduced, the interest of initial repayment accounts for most of the monthly repayment, and the proportion of principal in repayment gradually increases and the proportion of interest gradually decreases, thus achieving a relative balance. The interest paid by this repayment method is high, but the pressure of prepayment is not great. This repayment method is suitable for ordinary wage earners.
The repayment method in average capital is characterized by monthly repayment of principal and daily calculation of interest according to the loan principal amount. The early repayment is large, and the monthly repayment is gradually reduced. The interest paid by this repayment method is low, but the pressure of prepayment is great. Therefore, this repayment method is suitable for families with better economic income.