Calculation formula of interest before principal:
1. Monthly repayment:
Interest before principal = loan principal × (annualized loan interest rate12);
2. Repayment by quarter:
Interest before principal = loan principal × (annualized loan interest rate ÷ 4);
3. Annual repayment:
Interest before principal = loan principal × annualized loan interest rate.
Interest before capital refers to the repayment method of paying interest first and then paying the principal according to the repayment agreement after the loan is issued. However, in the equal principal and interest method, the proportion of principal in monthly repayment increases month by month, and the proportion of interest decreases month by month. In addition, the matching principal and interest method is more common, so the interest first and then the principal usually refers to the "matching principal and interest method" to repay the loan. From the perspective of saving, the average capital method can save more interest than the equal principal and interest method. However, in the first few years, the monthly repayment amount of the average capital method may be slightly larger than that of the equal principal and interest method, so families with tight monthly income will feel greater pressure at first, but its advantage is that the monthly repayment amount will gradually decrease, and the less amount will be repaid for you every month.
Another method is to pay interest every month after interest and repay the principal at maturity. This repayment method is more suitable for individuals or enterprises with high cash flow pressure and a certain amount of funds will be credited after a certain period of time.
The so-called interest before capital means paying interest first and then paying principal. Matching principal and interest means paying part of the principal plus interest every month, and the amount paid every month is the same. The advantage of paying interest first and then paying principal lies in the high utilization rate of funds. For example, if you borrow a credit loan of100000 yuan, you don't need to repay the principal for the first three years, just pay the interest every month, and finally pay the principal of100000 yuan. The disadvantage of matching principal and interest is that the interest is higher than matching principal and interest, and the repayment pressure in the last month is great. The advantage of equal principal and interest is to evenly disperse the debt pressure, and the interest is generally at least 1/3 lower than that of equal principal and interest, but the disadvantage is that the utilization rate of funds after interest payment is not high. Finally, to sum up, the interest of equal principal and interest must be lower than the interest before the principal (it must be compared with the same type of loans, not with personal and corporate loans). As for how to choose the two, it depends on the use of your personal funds. If it is personal consumption, it is recommended to choose equal principal and interest. If it is used for enterprise or project operation, you can choose to pay interest before capital, so that you can repay the principal after the completion of such projects).
How to calculate interest after interest?
At present, there are three main repayment methods for banks: one-time repayment of principal and interest, average capital and interest before capital. One-time repayment of principal and interest refers to one-time full repayment without installment payment. Average capital is the most common, and it pays part of the principal and interest every month. Pay interest first, then the principal once a month, and then the principal at the end of the bill.
The calculation method of interest after interest is: principal * annual interest rate (this is the interest required for one year), and monthly interest = annual interest/12. Interest first, principal later, and the loan date is not less than 45 days.
How to calculate interest first and then principal?
At present, there are three common repayment methods, namely, average capital, one-time repayment of principal and interest and interest before principal.
The average capital pays interest plus principal every month, and the interest is calculated according to the remaining amount of your monthly repayment.
One-time repayment of principal and interest refers to one-time repayment of principal and interest at the end of the loan cycle.
Paying interest first and then paying capital means paying interest only once a month. Generally, this is the repayment method of pledge or mortgage.
First, the interest, and then the monthly interest of the bank loan amount. After the maturity, the loan principal will be repaid in one lump sum, where the monthly interest is the annual interest divided by 12. This method is generally suitable for projects with a loan term of more than 45 days.
Average capital refers to a repayment method of loans. During the repayment period, the total amount of loans is divided into equal parts, and the same amount of principal and interest generated by the remaining loans in that month are repaid every month. In this way, because the monthly repayment amount is fixed and the interest is less and less, the borrower is under great repayment pressure at first, but as time goes on, the monthly repayment amount is less and less.
contrast
Matching principal and interest refers to repaying the same amount of loans (including principal and interest) every month during the repayment period.
Monthly repayment amount = [loan principal × monthly interest rate ×( 1+ monthly interest rate )× repayment months] = [(1+monthly interest rate )× repayment months]
The characteristics of equal principal and interest repayment method: the principal of equal principal and interest repayment method increases month by month, the interest decreases month by month, and the monthly repayment amount remains unchanged; Compared with the repayment method of average capital, the disadvantage is that there are more interest expenses. In the initial repayment period, interest accounts for most of the monthly contributions, and the proportion of principal in the contributions increases with the gradual return of principal. However, the monthly repayment amount of this method is fixed, which can control the expenditure of family income in a planned way and facilitate each family to determine the repayment ability according to their own income.
The characteristics of the average capital repayment method are: the principal of the average capital repayment method remains unchanged, the interest decreases month by month, and the number of monthly repayments decreases; Because the monthly repayment amount is fixed and the interest is getting less and less, the lender is under great pressure to repay at first, but as time goes on, the monthly repayment amount is getting less and less.
Compared with the two, in the case of the same loan term, amount and interest rate, in the early stage of repayment, average capital's monthly repayment amount is greater than the equal principal and interest, but in the later stage, the monthly repayment amount is less than the equal principal and interest. That is, according to the whole repayment period, average capital's repayment method will save the loan interest.
Generally speaking, the repayment method of equal principal is suitable for borrowers who have a certain economic foundation, can bear heavy repayment pressure in the early stage and have an early repayment plan. Matching principal and interest repayment method is easy to arrange income and expenditure because the monthly repayment amount is the same, and it is suitable for borrowers with relatively stable income, because their economic conditions do not allow excessive investment in early repayment.
Comparing these two repayment methods, the conclusion is that the interest paid by equal principal and interest will be much more than that paid by average capital.
The difference between advance payment:
If the repayment is made in advance, the equal principal and interest method will suffer greatly because the interest is basically paid off in the early stage, but the principal is not much.
If the average capital method repays the loan in advance, the interest in the later period can be avoided because of the large proportion of the principal repaid in the earlier period.