The equal-amount principal repayment method, whether it is a long-term loan or early repayment, will save a lot of interest and principal. The only disadvantage is that the monthly payment pressure is relatively high, which is suitable for those who can afford a higher monthly payment. There are some home buyers who are under financial pressure and are prepared to repay early. Although the interest on equal principal and interest is higher and the repayment amount is larger, it can leverage a large amount of loan with a small monthly payment, which is suitable for young home buyers who cannot bear the pressure of high monthly payment.

What are equal principal and interest and equal principal?

1. Equal principal and interest refers to the equal principal and interest repayment method: the loan principal and interest are repaid in the same amount every month, and the interest decreases month by month. The principal increases month by month, and the monthly repayment amount of the equal principal and interest plan = [Loan principal × monthly interest rate × (1-month interest rate) ^ number of repayment months] ÷ [(1-month interest rate) ^ number of repayment months - 1].

2. Equal principal refers to the equal principal repayment method: equal principal is repaid every month, and the interest part is reduced monthly. The monthly repayment amount of the equal principal plan = (loan principal ÷Number of repayment months) (loan principal - accumulated principal repaid) × monthly interest rate.

The difference between equal amounts of principal and equal amounts of principal and interest

1. Different definitions

Equal amounts of principal: refers to dividing the total loan amount into equal parts during the repayment period , repay the same amount of principal every month and the interest generated by the remaining loan in that month. Since the monthly repayment principal amount is fixed and the interest is getting smaller and smaller, the monthly repayment amount is also getting smaller and smaller as time goes by. few.

Equal principal and interest: refers to repaying the same amount of loan (including principal and interest) every month during the repayment period.

2. Different repayment methods

The equal principal and interest repayment method is to repay the same amount of loan (including principal and interest) every month during the repayment period. The total remains unchanged.

Calculation method: monthly principal and interest payment = [principal x monthly interest rate x (1 month interest rate) number of loan months]/[(1 month interest rate) number of repayment months - 1]

The equal-amount principal repayment method means that the monthly repayment amount is different and decreases month by month. For the equal-amount principal repayment, the first month’s repayment amount is the largest, and then it decreases month by month. The more you pay, the more you pay. few.

Calculation method: monthly principal and interest payment amount = (principal/number of repayment months) (principal - accumulated principal repaid) × monthly interest rate

3. Suitable Different groups of people

Equal principal and interest is suitable for families with a fixed and normal expenditure plan, especially young people. As age increases or positions are promoted, income will increase and living standards will naturally rise. Equal principal and interest is a good choice for home buyers with smaller down payment funds that can support larger loans. Equal principal is more suitable for borrowers who have strong repayment ability in the past period. For example, some older people may have lower income as they age or retire. This repayment method is especially suitable for people who can repay the loan quickly in a short period of time, because it can save part of the interest and quickly reduce the remaining principal.