If you choose to reduce the monthly payment, the monthly repayment pressure will be reduced, but because the monthly principal is reduced, the total loan interest will naturally not be saved as the monthly payment remains unchanged.
Prepayment is generally divided into two ways: partial prepayment and full prepayment.
According to the different repayment methods, the borrower can choose to reduce the term or amount. It is understood that at present, most banks can provide five ways to repay loans in advance for customers to choose from.
First of all, all loans are repaid in advance, that is, customers will pay off all the remaining loans in one lump sum. There is no need to repay interest, but the interest paid is non-refundable.
Second, some loans will be repaid in advance, and the remaining loans will keep the monthly repayment amount unchanged, thus shortening the repayment period. (Save more interest).
Third, repay some loans in advance, reduce the monthly repayment amount of the remaining loans, and keep the repayment period unchanged. Reduce the burden of monthly payment, but save more than the second one.
Fourth, some loans are repaid in advance, and the monthly repayment amount of the remaining loans is reduced, and the repayment period is shortened. (Save more interest).
Fifth, the remaining loans keep the total principal unchanged and only shorten the repayment period. (The monthly payment increases and the interest decreases, but it is relatively uneconomical).
Financial experts suggest that in early repayment, the principal should be reduced as much as possible, the loan term should be shortened, and the interest on expenses should be reduced.
How to handle prepayment and what are the requirements for prepayment?
First of all, the borrower must repay the principal and interest of the loan regularly within six months, and then he can propose to repay part or all of the loan in advance for the first time.
Second, for the sake of serious loan management, lending institutions have set a minimum amount for the prepayment of some loans, which generally needs more than 654.38+00,000 yuan.
Third, the borrower generally needs to notify the lending institution of prepayment 10 or 15 days in advance, and must submit a written application to the lending institution with the original loan contract, the bank loan repayment savings card, the monthly repayment interest slip, my ID card and other materials, which will be reviewed and approved by the lending institution.
Fourth, the borrower still needs to repay the original monthly loan principal and interest repayment amount in the current month, and at the same time deposit the loan amount that needs to be repaid in advance into the bank savings card.
After confirmation, the lending institution will recalculate the loan balance and final repayment period after repaying part of the loan in advance according to the calculation principle of "interest first, capital later, equal monthly reduction and shortening the repayment period", and re-print the "Monthly Interest Statement for Repayment" and re-sign the "Loan Change Contract" with the borrower.