What is the difference between average capital and equal principal and interest?
First, the algorithm of interest is different.
1, the algorithm of equal principal and interest method
Monthly repayment amount = [principal * monthly interest rate *( 1+ monthly interest rate) * loan months ]/[( 1+ monthly interest rate) * repayment months-1]
Monthly interest = residual principal * monthly loan interest rate
Total repayment interest = loan amount * loan months * monthly interest rate *( 1+ monthly interest rate) * loan months /[( 1+ monthly interest rate) * repayment months-1)- loan amount
Total repayment amount = repayment months * loan amount * monthly interest rate *( 1+ monthly interest rate) * loan months /[( 1+ monthly interest rate) * repayment months-1]
Note: In the matching principal and interest method, the bank collects interest first and then the principal, so the monthly interest decreases with the decrease of the principal, but the total amount paid each month will not change.
2. The algorithm of average capital method.
Monthly principal and interest repayment amount = (principal/repayment months)+(principal-accumulated repaid principal) × monthly interest rate.
Monthly principal = total principal/repayment months
Monthly interest = (principal-accumulated principal repayment) * monthly interest rate
Total repayment interest = (repayment months+1)* loan amount * monthly interest rate /2.
Total repayment amount = (repayment months+1)* loan amount * monthly interest rate /2+ loan amount.
Note: In the average capital method, the principal paid by people is constant, but the interest paid every month decreases with the decrease of principal, so the total monthly repayment is decreasing.
It can be seen that in the case of the same principal, the interest paid by equal principal and interest is more than that paid by average capital, and the difference is proportional to the loan time.
Second, the right people are different.
1, with equal principal and interest and the same repayment amount every month, which is more suitable for families with fixed income every month, especially for young people. With the increase of their work experience, they may be promoted, which means an increase in income, thus alleviating the pressure on loans and improving their quality of life. However, if you choose the average capital, the financial pressure in the early stage will be very great.
2. The amount of payment in the early stage of the average capital method is relatively large, and then it decreases month by month, so it is more suitable for users with certain deposits or users with strong working ability and good future income expectations, and only those with certain financial strength can easily bear the extra payment of average capital.