What is loan installment? How are repayments calculated?
What is loan installment?
Loan installment repayment refers to a bank or other financial institution that provides a certain amount of principal to the borrower. The borrower must repay a fixed amount in installments (monthly, quarterly, yearly) until a certain amount. annual loan.
What are the loan installment repayment methods?
Loan installment repayment is suitable for loan projects with large borrowing amounts and long borrowing periods. According to the specific repayment method, it can be divided into complete equal installment repayment method and partial equal installment repayment method.
1. Complete equal installment repayment method
It means that the principal and interest of the loan are repaid regularly according to a certain same amount, instead of repaying the principal and interest all at once on the maturity date; it can be used The lender reduces the risk that the borrower will be unable to repay the loan when due.
2. Partial installment equal installment method
It refers to the method in which part of the loan is repaid in equal installments, and the remaining part of the loan is paid interest in installments and the principal is repaid in one lump sum upon maturity.
How is the loan installment amount calculated?
1. Calculation of annual repayment amount R
Principal = R×(n-year annuity present value coefficient)
R=principal/(n Annual annuity present value coefficient)
2. Principal part and interest part of annual repayment
Interest part = principal balance at the beginning of the year × interest rate
Principal Fund part = annual repayment amount - interest part
How is the loan repaid?
Bank loan repayment is usually automatically deducted by the bank, and the user deposits the money into the repayment bank card. Banks make deductions regularly. Private loans generally require the borrower to deposit money into the lender's account, which can be repaid in one go or in installments.
Loan repayment method: 1. Equal principal repayment. The borrower distributes the loan amount equally to each installment (month) during the entire repayment period, and at the same time pays off the loan interest from the previous trading day to the current repayment date.
2. Repayment of principal and interest in equal amounts. That is, the sum of the principal and interest of the loan is repaid in equal monthly installments. Housing provident fund loans and commercial personal housing loans from most banks adopt this approach. The monthly repayments are the same this way.
3. Pay monthly interest and repay the principal when due. That is, the borrower repays the loan principal in one lump sum on the loan maturity date (applicable to loans with a term of less than one year (including one year)), the loan interest is calculated on a daily basis, and the interest is repaid monthly.
4. Repay part of the loan in advance. That is, the borrower applies to the bank and can repay part of the loan amount in advance. The general amount is 10,000 or an integral multiple of 10,000. After repayment, the loan bank will issue a new repayment plan, including the repayment amount and repayment period. There has been a change, but the repayment method remains unchanged, and the new repayment period must not exceed the original loan period.
5. Repay all loans in advance. That is, the borrower can apply to the bank to repay the entire loan amount in advance. After repayment, the lending bank will terminate the borrower's loan and handle the corresponding cancellation procedures.
What is loan installment? How to calculate the repayment amount
An installment loan refers to a loan that provides a certain amount of principal to the borrower, and the borrower must repay a fixed amount in installments (monthly, quarterly, yearly) until a certain year.
Usually there are two loan repayment methods:
One is called: equal principal amount. Calculation formula for equal-amount principal loans: monthly repayment amount = (loan principal/number of repayment months) (principal - cumulative amount of repaid principal) × monthly interest rate
One is called: equal-amount The principal and interest is the monthly repayment of the same amount of the loan (including principal and interest) during the repayment period. Monthly repayment amount = [Loan principal × monthly interest rate × (1-month interest rate) ＾ number of repayment months ] ÷ [ (1-month interest rate ) ＾ number of repayment months - 1 ]
Extended information:
The PMT function is used to calculate the payment amount of each installment of the returned loan based on a fixed interest rate and equal installment payment method.
Syntax: =PMT(rate,nper,pv,fv,type)
The meaning of each parameter is as follows:
Rate: loan interest rate, if the loan The annual interest is 0.06, and the monthly repayment interest is 0.06/12.
Nper: The total number of payments for the loan, usually refers to the total number of monthly payments for the loan. If a loan is repaid annually for 15 years, this item is 1512.
The present value of Pv is the total repayment. For example, when the loan is 250,000 yuan, this item should be filled in with 250,000 yuan.
Fv is the future value, which refers to the expected future value or cash balance after the loan is paid off. Usually optional, the default is 0.
Type number 0 or 1, used to specify whether the payment time of each period is at the beginning or end of the period. Type=0 or omitted, represents "end of period", Type=1 represents "beginning of period".