Difference between equal principal and equal principal (including calculation formula)

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For most people, they need to borrow money from a bank to buy a house. This involves an important issue. Generally, there are two ways to lend money to a bank:Equal principal methodAndSame amount of information. Many people do not know much about these two methods, so they suffer a huge loss in terms of loans. Today I will give a detailed explanation to you.Difference between the same amount of principal and interestAnd their respectiveApplicable audience.

 

Same amount of information

The most important feature of the same amount of pay-as-you-go method is that the amount of pay-as-you-go is the same every month. In essence, the proportion of the principal increases by month, the proportion of interest decreases by month, and the number of monthly payments remains unchanged, that is, in the proportion of the monthly "principal and interest", the amount of interest paid in the first half of the period is large and the proportion of the principal is small, after the repayment period is over half a year, the principal proportion is large and the interest proportion is small. The formula is as follows:

Monthly pay-as-you-go = [Principal X monthly interest rate x (1 + monthly interest rate) number of loan months]/[(1 + monthly interest rate)Monthly prepayment-1]

Monthly interest = Remaining principal x loan monthly interest rate

Total Repayment Interest= Loan Amount * Number of loans per month * monthly interest rate *(1 + monthly interest rate)Loan month/【(1 + monthly interest rate)Monthly prepayment-1]-Loan amount

  Total repayment amount = Monthly payment * loan amount * monthly interest rate * (1 + monthly interest rate) Loan month / [(1 + monthly interest rate)Monthly prepayment-1 ]

Note: In the same amount of interest method, a bank generally first accepts the remaining principal interest and then the principal. Therefore, the proportion of interest in the monthly subscription will decrease with the decrease of the principal, the proportion of the principal in monthly payments increases accordingly,The total monthly supply remains unchanged.

 

Equal principal method

The largest feature of the same amount of principal method is that the monthly repayment amount is different and shows a decreasing status month by month. It distributes the loan principal equally by the total number of months of repayment, plus the interest of the remaining principal in the previous period, in this way, the monthly repayment amount is formed. Therefore, the amount of the first month of the same amount of principal method is the most, and then the amount is reduced by month. The smaller the amount, the calculation formula is:

Monthly pay-as-you-go= (Principal/number of repayment months) + (Principal-total amount of paid-in principal) x monthly interest rate

Monthly principal= Total principal/monthly repayment amount

Monthly interest= (Principal-accumulative paid back principal) × monthly interest rate

 Total Repayment Interest=(Number of months for repayment + 1) * loan amount * monthly interest rate/2

Total repayment amount=(Monthly payment + 1) * loan amount * monthly interest rate/2 + loan amount

Note: In the same amount of principal, the original amount returned by people every month remains unchanged, and the interest decreases with the decrease of the remaining principal.The monthly repayment amount gradually decreases.

We can see from the above that, under normal circumstances, the total interest of the same amount of interest is more than the same amount of principal, and the longer the loan term, the larger the difference in interest.

 

Suitable audience

The same amount of monthly repayment is the same, so it is suitable for families with normal expenditure plans, especially young people. As the age increases or the job is promoted, the income will increase, and the living level will naturally rise; if such people select the principal method, the initial pressure will be very high.

 

Suitable audience for the same amount of principal

The same amount of principal method is suitable for lenders with strong repayment ability in the past because of the large amount of repayment in the Early Period and the decrease in the next month. Of course, some older people are more suitable for this method, because as you get older or retire, your income may decrease.

 

After talking about this, many readers may also be confused. The following is an example to illustrate the differences and advantages of the same amount of principal and interest.

Example:Mr. Li bought a commercial apartment with an area of 120 square meters. He lent 0.6 million yuan to the bank and the repayment period is 20 years. The annual interest rate is 6% (the monthly interest rate is 5 ‰) now we use the same amount of principal and the same amount of interest method for analysis:

Equal cost and interest: Monthly repayment amount = [600000*5 ‰ * (1 + 5 ‰) 240]/[(1 + 5 ‰) * 3012.5-1] = yuan

Equal principal: The first month = (600000/240) + (600000-0) × 5‰ = 5500

The second month = (600000/240) + (600000-2500) × 5‰ = 5487.5

......

 

Essentially,The same amount of principal and the same amount of interest are not very good or bad.Most of them are based on the current situation and needs of everyone. The same amount of information facilitates memory, planning, and repayment. In fact, the vast majority of people would rather choose the "same amount of repayment", because the monthly repayment amount of fixed repayment pressure balance is not very different from the same amount of principal method, and with the increase of time, the use value of funds may be different. Of course, there are also many people who are relatively well-off and will choose the same amount of principal to make their future lives easier and save costs. Simply put, the payment method you choose depends on your current situation and future plans. Do not trust others.