In the repayment method of equal principal and interest, the monthly repayment amount in the early stage is less in principal amount and more in interest amount, which is not conducive to early repayment. If there is a plan to repay the loan in advance and the income is relatively stable, it is recommended to choose the average capital.
There are two ways to repay the loan in advance, and there is learning. According to the financial advice, if you choose equal principal and interest, the repayment period has exceeded half, and most of the interest has been paid, you can choose not to repay in advance; If you use the equal principal to repay, the term has exceeded one third, the principal has been repaid by more than half, and the remaining interest is getting less and less. It is of little significance to choose to repay in advance.
Extended data:
First, people who are suitable for repaying loans in advance need to meet the following three conditions:
1. If the repayment method of equal principal and interest is chosen, and it is within 5 years before repayment, such people can repay the loan in advance, because they can save a lot of interest.
2. I have spare money, but there are no other investment channels, or the expected annualized rate of return on investment is less than the expected annualized interest rate of loans.
3. It is unlikely that there will be large expenditures in the near future.
2. Equal principal and interest
(1) Generally speaking, the repayment method of equal principal and interest means that the borrower repays the loan principal and interest with the same amount every month.
The calculation formula of equal principal and interest is:
Monthly repayment amount = [principal * monthly interest rate *( 1+ monthly interest rate) loan months ]/[( 1+ monthly interest rate) repayment months-1]; And monthly interest = residual principal * monthly loan interest rate.
(2) From the perspective of prepayment, the repayment method of equal principal and interest has less principal before repayment and more interest, and prepayment equals more principal to be repaid later, so prepayment will be more unfavorable and uneconomical.
(3) If it is necessary or possible to repay the loan in advance, the repayment method of average capital must be adopted. Although the repayment pressure in front of the average capital is great, you will suffer less if you repay in advance.
(4) If you really want to repay in advance and have a lot of money in the economy, you can apply to the bank for repayment with average capital. In this way, the average capital can be used for early repayment, but only if the bank agrees to change the repayment method.