1. What is equal principal and interest?
Equal principal and interest refers to a loan repayment method, which refers to repaying the same amount of loan (including principal and interest) every month during the repayment period.
Equal installments of principal and interest and equal installments of principal are different concepts. Although the monthly repayment amount may be lower than the amount of equal installments of principal repayment at the beginning, the interest paid in the end will be higher. This method is often used by banks for equal principal repayment.
2. What does equal principal repayment mean? Thank you
Equal principal repayment means that the amount of equal principal repayment is constantly decreasing according to your monthly repayment, which is a *** loan How much money you get is divided by the term of your loan, so the interest rate also changes accordingly. The equal principal repayment divides the loan principal evenly according to the total number of months of repayment, plus the interest on the remaining principal from the previous period, thus forming the monthly repayment amount, so the first month's repayment amount with the equal principal repayment method At most, then it decreases month by month, and the more you pay, the less you pay. There is another repayment method, and its corresponding equal principal and interest is the sum of the money you borrow and the interest divided by the term of your loan. The principal is fixed every month. CITIC Bank Standard Card Advertisement
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Equal principal amount refers to a loan repayment method, which is to divide the total amount of the loan into equal parts during the repayment period, and repay the same amount of principal and the remaining loan amount in that month. Since the monthly principal repayment amount is fixed and the interest is getting smaller and smaller, the borrower has greater pressure to repay at first, but as time goes by, the monthly repayment amount becomes smaller and smaller. The biggest feature of the equal principal payment method is that the monthly repayment amount is different and decreases month by month; it divides the loan principal evenly according to the total number of months of repayment, plus the interest on the remaining principal from the previous period, so that The monthly repayment amount is formed, so the first month's repayment amount of the equal principal method is the highest, and then it decreases month by month, and the more you repay, the less it is.
3. What does equal-amount principal repayment mean?
Equal-amount principal repayment is also called the interest-following principal repayment method and the equal-amount principal repayment method. Below is some relevant information about the meaning of equal principal repayment that I have compiled for your reference.
The meaning of equal-amount principal repayment
The so-called equal-amount principal repayment is also known as the interest-following principal repayment method and the equal-amount principal repayment method. The lender spreads the principal into each month and pays off the interest between the last transaction day and the current repayment date. Compared with equal principal and interest, this repayment method has a lower total interest expense, but more principal and interest are paid in the early stage, and the repayment burden decreases month by month.
For example, if you borrow 200,000 yuan from the bank with a repayment period of 15 years, and choose equal principal repayments, you need to repay the bank principal of about 1,111 yuan every month, and the first month’s interest is 918 yuan. , a total of 2,200 yuan was repaid to the bank in the first month. Subsequently, the principal repayment remained unchanged every month, and the interest gradually decreased with the return of the principal.
The equal principal repayment method is a repayment method that is very simple to calculate and highly practical. The basic algorithm principle is to repay the loan principal in equal installments during the repayment period, and at the same time repay the interest generated by the unpaid principal in the current period. The method can be monthly repayment and quarterly repayment. Due to the requirements of bank interest settlement practices, quarterly repayment is generally adopted (such as Bank of China).
Determinants of equal principal repayments
Every day money is deposited in the bank earns one day’s interest. The more money you deposit, the more interest you get. The same is true for loans. If you use a bank loan for one more day, you will have to pay one more day's interest. The larger the loan amount, the more interest you pay to the bank.
The calculation formula of bank interest is: interest = amount of funds × interest rate × occupation time.
Therefore, the amount of interest, if the interest rate remains unchanged, can only be determined by the actual occupation time and amount of the funds, rather than which repayment method is used. This is an ironclad truth!
Different repayment methods are only designed to meet the different needs or consumption preferences of people with different incomes, different ages, and different consumption concepts. Its essence is nothing more than the fact that the loan principal is repaid first and then later due to the "morning and evening" or "morning and evening" style, resulting in the fact that the loan principal is used for a long time and used more for less, which in turn affects the interest rate according to the actual amount of funds occupied. Increase or decrease due to changes in period length.
It can be seen that no matter which loan repayment method is adopted, the bank does not make a losing business, and the customer does not have the benefit of saving interest expenses.
Calculation of equal principal repayments
The calculation formula of the equal principal repayment method is as follows:
Quarterly repayment amount = loan principal ÷ loan Number of quarters (principal - accumulated amount of principal repaid) Return the principal in equal installments: 200000÷(10×4)=5,000 yuan
Interest for the first quarter: 200000×(5.58%÷4)=2,790 yuan
Then the first The quarterly repayment amount is 50002790=7790 yuan;
The second quarter interest: (200000-5000×1)×(5.58%÷4)=2720 yuan
Then the second The repayment amount for the first quarter is 50002720=7720 yuan;
The interest for the 40th quarter: (200000-5000×39)×(5.58%÷4)=69.75 yuan
Then the fourth The repayment amount for 40 quarters (the last period) is 500069.75 = 5069.75 yuan
It can be seen that with the continuous repayment of the principal, the interest on the unrepaid principal in the later period will become less and less. , the repayment amount each quarter will gradually decrease. This method is more suitable for borrowers who already have certain savings, but whose expected income may gradually decrease, such as middle-aged and elderly worker families who have certain savings, but whose income will decrease as retirement approaches.
This method was launched in January 1999 and is being gradually adopted by various banks.
Related articles about the meaning of equal principal repayment:
1. What is equal principal repayment
2. What is the meaning of equal principal and interest repayment< /p>
3. The difference between the equal principal and interest method and the equal principal and interest method
4. Which repayment is more cost-effective: equal principal and interest or equal principal
5. 2016 mortgage principal and interest repayment in equal installments Is the loan a good deal?
4. What does equal principal repayment mean? Thank you
What you are talking about is how much money you borrowed divided by the term of your loan. The principal is fixed every month, except for interest. It is constantly decreasing according to your monthly repayment amount, so the interest also changes. The equal amount of principal and interest is the sum of your loan money and interest divided by the term of your loan. , so the equal principal and interest are the same every month