Why is there a difference in interest rate depending on the repayment method?

Generally, there are the following:

Repayment of equal principal and interest: This is the most common and longest-term advice from banks. The repayer pays back a fixed amount to the bank, but the monthly repayment principal increases month by month, and the proportion of the monthly equity ratio decreases.

However, it also has drawbacks because bank funds are used for a long period of time, and the equal principal repayment method repays the total amount of interest than described below.

2. Equal Principal Repayment The so-called equal principal repayment is also known as a clear repayment method, so the benefits within this scope. The lender allocates the principal amount and pays interest each month at the same time the day before the date of repayment. This is a lower total interest payment than an equal principal and interest repayment method, but the burden of more upfront principal and interest repayment decreases month by month.

Beginning with equal monthly principal repayments is more burdensome than equal principal and interest. Especially in the case of the total amount of the loan, the difference can be in the thousands. However, over time, the repayment burden gradually decreases.

In this way, it is suitable for the population with a high current income, but already expected to reduce the income in the future. In fact, many middle-aged people, it is difficult to break through after the career, there is a certain economic foundation, considering the possible reduction of income, retirement and other factors, you can choose this repayment method; 。

Debts: Previously, the bank provided for this repayment method with a term of one year (including one year) for loans, and the following due debts were executed, specified. However, with the method of repayment changes, it is expected that the one-year period will be extended to a maximum of five years.

Banks generally only open small short-term loans.

However, this repayment method is very simple to operate, and it is important to note that this practice often gives the lender insufficient repayment compression, causing credit damage. With this loan, the lender is the best arrangement.

The essence of the two repayment methods, which are equal and decreasing, is not different, and it is another variant of the repayment method of equal principal and interest. The repayment period is divided into details, and in each split unit, the repayment method is equal, with equal principal and interest. The difference is that the amount of repayment per time split unit may be increased by the same amount, decreasing by equal amounts.

5. Regular payment of interest principal: Negotiate and decide with the bank lender to formulate the return of the loan principal and interest in different repayment time units. This discretion is given at monthly, quarterly, or yearly intervals for repayments.

In fact, that is, the lender has to repay the money every month according to different financial situations, making up for several months also. The business quarters launched by China Merchants Bank also fall into this range.

Principal repayment plan: After negotiation between the lender and the bank, each repayment principal shall not be less than 1000000 yuan, and the interval between the two repayments shall not exceed 12 months, and the interest will be returned on a monthly or quarterly basis.

But how to pay it back, different banks have different regulations, you must consult the bank you choose to lend to.

To put it bluntly, the repayment method is different.

One is that when the time comes, the debt and interest will be paid in a lump sum.

One is to repay the principal and interest every month.

Therefore, the interest calculation method and the interest generated by the two are different.

In fact, you should look at the equal principal and equal principal and interest, these two different repayment methods are real, and the interest will be different.

The monthly repayment amount is the same as equal principal or equal principal and interest.

Equal principal repayment means that you divide the total amount of your loan equally under the total term of your loan, that is, the principal repayment is the same every month, and then because the total principal is the largest at the beginning, the corresponding interest will be more, and then as your repayment month increases, the principal decreases accordingly, and the interest also decreases. This type of loan is for customers who expect to have a large disposable income when they start making repayments, and their disposable income may decrease over time. In layman's terms, you have more money to repay at the beginning, and after a few years, the corresponding possible repayment amount may be reduced.

Equal principal and interest repayment is a way to repay a fixed amount of money every month while the interest rate remains the same. This method is more suitable for customers who have a regular income every month. Comparison between the two:

The advantage is that the equal principal repayment needs to pay less interest than the equal principal and interest repayment method, and the disadvantage is that the amount of equal principal repayment that needs to be repaid at the beginning is relatively large compared to the equal principal and interest repayment method.

With the change of consumption concept, many young people have become accustomed to spending in advance, and there are unpaid accounts every month, and the loan industry has gradually developed. Many people do not have a deep understanding of the repayment method, and the general bank will default to the repayment method, but there is a certain difference in interest between different repayment methods, as follows.

1. Equal principal and interest vs equal principal

This is a multiple-choice question that people who take out a loan to buy a house often encounter, and the bank will generally introduce you to use equal principal and interest, because the repayment amount is the same every month, and the total interest is higher than the equal principal, and the bank profit is greater. Although the interest on the equal principal is relatively small, the pressure to repay the loan is relatively large, and the repayment amount is getting smaller and smaller.

Equal principal and interest: It is suitable for home buyers with stable and regular income, and can plan their finances.

Equal principal: The economic conditions are relatively good, there is a certain amount of deposit, you can choose this repayment method, and the total interest is relatively low.

2. Borrow and repay at any time vs interest before principal

These two are also more common repayment methods, interest first and then principal are suitable for business, small and micro enterprises, as long as the interest is repaid every month, and the principal will be repaid at one time when the money is earned. This repayment method is suitable for small loans, which is more flexible, can be short-term turnover, and there will be no liquidated damages for early repayment.

Interest before principal: low monthly payment pressure and high capital utilization rate.

Borrow and repay at any time: the quota is recycled, suitable for short-term turnover.

In short, there are many other repayment methods, such as bi-weekly payment, equal principal and equal interest, which can meet the needs of consumers, everyone should choose according to their actual situation, do not blindly choose the low interest, which will increase the repayment pressure.

Yes, the repayment method is divided into equal principal and interest, equal principal, interest first and principal later. If it's a real estate loan, it's the first two. Equal principal and interest:

The monthly repayment amount is the same, but the interest is higher in the previous payment period. Equal principal: The monthly principal amount is the same, the amount is gradually reduced, and the economic pressure in the early stage will be a little larger.

If the contact funds are sufficient, choose the same amount of principal and repay less interest. If it is not particularly sufficient, choose equal principal and interest, which is less stressful, but it is not recommended to repay the loan in advance. It doesn't matter if it's a credit loan, the credit loan can basically be borrowed and repaid at any time, and there is no penalty handling fee, but the interest rate is often more.

"Constant repayment and shortened term" and "Constant repayment and reduced repayment amount" are both adjustments to the repayment method of the loan, but the impact of the two is different.

"Reduction of repayment amount" means that the repayment amount of each instalment remains unchanged when the repayment period of the loan is shortened. For example, the original loan term was 5 years, and the monthly repayment was 1,000 yuan, but now the term of Zhichangwen is shortened to 3 years, and the monthly repayment amount is still 1,000 yuan. In this case, although the loan term is shortened, the monthly repayment amount remains the same, so the total repayment amount will be reduced, because the shortened repayment period is equivalent to a decrease in the loan interest.

"Reduction in repayment amount with the same term" refers to the reduction of the repayment amount in each instalment while the loan repayment period remains unchanged. For example, the original loan term was 5 years and the monthly repayment was 1,000 yuan, but now the term is kept unchanged and the monthly repayment amount is reduced to 800 yuan. In this case, the repayment amount per instalment is reduced, but the loan term is not shortened, so the total repayment amount will not be reduced, but on the contrary, the loan interest may increase due to the reduction of the repayment amount per installment.

Therefore, the impact of the two is different, and it is necessary to choose according to the actual situation. If you want to reduce the interest on the repayment, you can choose "Repayment amount remains unchanged and the term is shortened"; If you want to reduce the repayment pressure during the repayment period, you can choose "Repayment Reduction with the same term".

Let's say it's an "equal principal and interest" repayment method.

The annual interest rate is, 1. Annual interest rate = , monthly interest rate = annual interest rate 12=

Formula] Monthly repayment amount = loan amount * monthly interest rate [1 - (1 + monthly interest rate) - number of months of repayment] monthly repayment amount = 700,000*

Monthly repayment amount = 4, yuan.

Total repayment = 1,026, RMB.

Total interest = 326, yuan.

2. Annual interest rate = monthly interest rate = annual interest rate 12=

Formula] monthly repayment amount = loan amount * monthly interest rate [1 - (1 + monthly interest rate) - number of months of repayment of the loan].

Monthly repayment amount = 700,000*

Monthly repayment amount = 4, yuan.

Total repayment = $1,009.

Total interest = 309, yuan.

3. Calculate the difference in interest under the two interest rates.

The difference between the monthly repayment amount = RMB.

The difference between the total amount of repayment = 17, RMB.

The difference between the total amount of interest = 17, yuan.

Results:

the difference between the monthly repayments under the two interest rates under the assumption; The difference between the total amount of repayment = 17, RMB. The difference between the total amount of interest = 17, yuan.