Equal principal payment refers to a repayment method in which the principal repaid in each installment is the same during the repayment period, but the interest is reduced month by month. The calculation method is as follows:

Suppose the total loan amount is A, the loan term is n years, and the annual interest rate is r, then the principal to be repaid each month is A÷n, and the first month’s interest is A× r÷12, the interest in the second month is (A-A÷n)×r÷12, the interest in the third month is (A-2A÷n)×r÷12, and so on.

Therefore, the amount paid each month = the monthly principal payable and the current month’s interest.

For example, if someone takes a loan of 100,000 yuan, the loan term is 20 years, and the annual interest rate is 5, then the monthly principal payable is 100,000 yuan ÷ (20 × 12) = 416.67 yuan. The interest in the first month is 100000×0.05÷12=416.67 yuan, the interest in the second month is (100000-416.67×1)×0.05÷12=413.89 yuan, and the interest in the third month is (100000-416.67×2 )×0.05÷12=411.11 yuan, and so on, the monthly interest repayment decreases month by month.

It should be noted that with the equal principal repayment method, although the monthly repayment amount gradually decreases over time, since the monthly principal is the same, the repayment pressure is greater in the early stage and the later stage. smaller.