Equal principal and interest is a common loan repayment method, which is very common for loans such as buying a house or a car. But how do you save the most money when it comes to repayment?Let's take a look.
First of all, we need to understand how the equal principal and interest repayment method is calculated. The equal principal and interest repayment method is based on a fixed monthly repayment amount to calculate the interest and principal, and the monthly repayment amount is the same. As a result, the proportion of interest and principal in each monthly repayment will change over time during the term of the loan.
So, how to repay the loan to save the most money?
1.Early repayment.
If you have enough money, consider making early repayments. Early repayment can reduce the term of the loan, thereby reducing the total interest expense and saving money. However, it should be noted that early repayment may require a penalty or early repayment fee, so you need to read the relevant terms and conditions of the loan contract carefully.
2.Maintain a stable repayment history.
Under the equal principal and interest repayment method, the monthly repayment amount is fixed, so it is important to maintain a stable repayment history. If you are often overdue or owe a large amount, it will not only affect your credit history, but you may also be subject to higher interest rates or disqualification from the bank or lending institution.
3.Don't apply for loans or credit cards too often.
Frequent loan or credit card applications can leave a mark on your credit profile, and the bank or lending institution will perceive you as in poor financial condition, which can affect your credit score and loan interest rate. Therefore, try to avoid frequent loan or credit card applications during the loan period.
4.Make reasonable use of wealth management products.
If you have extra funds, you can consider buying some wealth management products to increase your income. However, it should be noted that the income of wealth management products may not be able to cover the loan interest expenses, so you need to carefully compare the benefits and risks of different products and choose the right wealth management products for you.
In short, in order to save the most money under the equal principal and interest repayment method, you need to repay the loan early, maintain a stable repayment record, avoid frequent loan or credit card applications, and make reasonable use of wealth management products to increase income. At the same time, you also need to carefully read the relevant clauses in the loan contract to understand your rights and obligations to avoid unnecessary losses.