There are two repayment methods commonly used by commercial banks, namely, equal principal repayment and equal principal and interest repayment, as follows:

I. Average capital

Definition: Average capital is also called interest repayment with principal and average capital and unequal interest. The lender will allocate the principal to each month and pay off the interest from the previous trading day to the repayment date.

Features: the monthly repayment amount is different, showing a state of decreasing month by month; It divides the loan principal equally according to the total repayment months, plus the interest of the remaining principal in the previous period, thus forming the monthly repayment amount, so the repayment amount of the average capital method is the largest in the first month, and then decreases month by month, and the less the more.

2. Equal principal and interest

Definition: Matching principal and interest is also called regular interest payment, that is, the borrower repays the loan principal and interest in equal amount every month, and the monthly loan interest is calculated according to the remaining loan principal at the beginning of the month and settled every month.

The characteristic is that the monthly repayment amount remains unchanged. In essence, the proportion of principal increases month by month, the proportion of interest decreases month by month, and the number of monthly repayments remains unchanged. That is to say, in the "principal and interest" distribution ratio of monthly payment, the interest ratio paid in the first half is large and the principal ratio is small, and it gradually turns into the principal ratio and the interest ratio is small after the repayment period is over half.

3. Average capital and appropriate amount of principal and interest.

The average repayment amount of capital in the early stage is large, and then decreases month by month, which is more suitable for lenders with strong repayment ability in the early stage. Of course, some older people are also more suitable for this way, because their income may decrease with age or retirement.

The monthly repayment amount of equal principal and interest is the same, so it is more suitable for families with normal consumption plans, especially young people. Moreover, with the promotion of age or position, income will increase and living standards will naturally rise; If this kind of person chooses the principal method, the early pressure will be very great.

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