The compound interest method is used to calculate the interest of loans with equal principal and interest (that is, both principal and interest generate interest), while the latter uses the simple method to calculate interest (that is, only principal generates interest). In this way, under the same conditions of other loans, loans with equal principal and interest are obviously much more interesting than loans in average capital. In addition, the repayment amount of each installment calculated by matching principal and interest loans is equal.
The repayment amount of each installment calculated by the average capital loan is different. From the early repayment period to the late repayment period, the amount gradually decreases. Calculation formula of matching principal and interest loan: monthly repayment amount (hereinafter referred to as monthly principal and interest) = loan principal x monthly interest rate x[( 1+ monthly interest rate) repayment months]-[calculation formula of average capital loan: monthly repayment amount (hereinafter referred to as monthly principal and interest) = (loan principal/repayment months)+(principal-accumulated amount of repaid principal) x monthly interest rate.