The average capital loan, compared with the loan with equal principal and interest, uses a simple way to calculate interest, and only the principal generates interest (while the loan with equal principal and interest needs to generate interest). In this way, under the same loan conditions, the use of average capital loans will obviously cost less interest than loans with equal principal and interest.

Calculation formula of average capital loan:

Monthly repayment amount = (loan principal/repayment months)+(principal-accumulated amount of repaid principal) × monthly interest rate.

As can be seen from the formula, the repayment amount of each installment calculated by the average capital loan is different. From the early stage to the late stage of repayment, the amount gradually decreases, while the repayment amount of each installment calculated by the equal principal and interest loan is equal.