The meaning and calculation formula of the two are as follows:
1. Matching principal and interest repayment method, in the initial repayment period, the interest expense is the largest, and the principal is the least. Later, the interest payment is gradually reduced, and the principal is gradually increased, but the amount (principal+interest) is repaid at the same amount every month. It is more suitable for young people with low income and little savings, because the pressure of monthly supply will not reduce the quality of life. The formula is:
monthly repayment amount = loan principal * monthly interest rate * (1+monthly interest rate) total repayment months /((1+ monthly interest rate) total repayment months -1)
2. average capital repayment method refers to equal repayment of loan principal every month, with the loan interest decreasing month by month and the monthly repayment amount (principal+interest) decreasing gradually. The total interest repaid is less than the equal principal and interest method. Suitable for middle-aged people with high income and certain savings. The formula is:
monthly repayment amount = loan principal/total repayment months+(loan principal-accumulated repaid principal) * monthly interest rate, where: accumulated repaid principal = loan principal/total repayment months * repaid months.