How to repay the loan more cost effectively in advance with equal principal and interest repayment?

The sooner you pay it back, the better, the principal is reduced, and the interest is paid less.

Mortgage repayment calculation (equal principal and interest).

Wherein: monthly interest = remaining principal monthly interest rate of the loan.

Monthly Principal = Monthly Instalment - Monthly Interest.

Calculation principle: The bank collects the remaining principal interest first and then the principal from the monthly payment; The proportion of interest in the monthly contribution decreases with the decrease in the remaining principal, and the proportion of the principal in the monthly contribution increases, but the total monthly payment remains the same.

If you want to repay the loan in advance with equal principal and interest, how to repay it in advance?

If the borrower must choose to repay the loan in advance with equal principal and interest, he first needs to calculate his remaining loan principal and interest.

Then the borrower also needs to look at the remaining repayment period, if there is still 2 3 left in the repayment period, then early repayment is undoubtedly very cost-effective. If there is only 1 3 left in the repayment period, there is a limit to the interest savings that can be saved by early repayment.

In principle, the best time for early repayment of equal principal and interest is when there are 2 3 remaining in the repayment period. If the borrower repays the loan too early, the borrower may need to pay a liquidated damages, which vary from bank to bank, and some of the liquidated damages will even exceed one year's interest charges.

The sum of the loan principal and interest repaid each month is fixed, and the monthly repayment pressure is balanced, but the principal and interest repaid in each month are mutually repaid: the interest repaid in the early stage of loan repayment is more and the principal is less, and the principal repaid in the later stage of repayment is more and the interest is less.

Therefore, if the loan is repaid early, the lump sum amount is the remaining principal and the outstanding interest up to the date the loan is repaid. The amount of interest saved by early repayment is related to the time it takes to pay off the loan early, and the earlier the early repayment of the same loan, the more interest you will save.

A person who is suitable for prepayment needs to meet the following three criteria:

1. If you choose the equal principal and interest repayment method and are within 5 years before repayment, you can save a lot of interest if you repay the loan early.

2. You have spare funds in your hands, but you have no other investment channels, or the investment rate of return is less than the loan interest rate.

3. It is less likely that there will be large expenses in the near future.

Normally, the earlier the prepayment is more appropriate, but some banks stipulate higher prepayment penalties, and banks generally require the loan to be repaid for one year before early repayment.

There are two ways to repay the loan: equal principal and equal principal and interest. Under the condition that the loan period is the same, the interest to be paid under the equal principal and interest repayment method is higher than that under the equal principal repayment method. Therefore, if you plan to repay the loan early, it is best to choose the equal principal repayment method.

If it is a partial early repayment, equal principal and interest early repayment is a more cost-effective way, and equal principal and interest + shortened term is the most interest-saving one.

Before we get down to business, let's talk about equal principal and interest. Generally speaking, equal principal is also known as the interest repayment method with principal and equal principal without equal interest. The lender spreads the principal of the loan evenly over each month, and the principal repaid each month is exactly the same.

The formula for calculating the equal principal amount is: monthly principal and interest repayment amount (principal number of repayment months) (principal accumulated principal repaid) monthly interest rate.

and the monthly principal total principal number of months of repayment; Monthly Interest (Principal Accumulated Principal Repaid) * Monthly Interest Rate; Total interest on repayment (number of months of repayment 1) * loan amount * monthly interest rate 2;Total repayment amount (number of repayment months 1) * loan amount * monthly interest rate 2 loan amount.

The characteristics of equal principal are that the principal to be repaid each month is the same, but the interest is different, so the monthly repayment amount of this repayment method is different, showing a state of decreasing month by month. Compared with the equal principal and interest, the total interest expense is lower, but the principal and interest paid in the previous period are more, and the repayment burden decreases month by month.

Okay, now let's get back to the topic and answer the question "Is it cost-effective to repay the principal and interest in equal amounts?" In fact, from the perspective of early repayment, the equal principal and interest repayment method has less principal and more interest when repaying in the front, and the principal to be repaid later will be more when repaying in advance, so it will be more disadvantageous when repaying in advance. That is, it is not cost-effective!

Therefore, I would like to offer two suggestions:

First, if you need or are likely to repay the loan early, you must repay the loan in equal principal amounts. Although there is a lot of pressure to repay the principal in front of the same amount, you will suffer less loss when you repay the loan early.

Second, if you really want to repay the loan early and have a lot of financial surplus, then you can apply to the bank to switch to the repayment method of equal principal. In this way, the repayment can be made in advance with the same amount of principal, but only if the bank agrees to the application to change the repayment method.

In fact, the difference between equal principal and interest and equal principal is obvious. But the bank will not tell you this, the bank will generally recommend you to repay the principal and interest in equal amounts, so if you insist on using the equal principal repayment method to repay the loan in advance, then you can apply.

If you want to repay the loan in advance with equal principal and interest, how to repay it in advance?

If this kind of equal principal and interest is repaid, it is not necessary to repay the loan in advance if it is repaid in advance for the first five years, and there is no need to repay the loan in advance if the equal principal and interest are more than five years.