Equal principal and interest and equal principal are the loan methods that customers are more likely to encounter when applying for loans, although the difference between the two is only one word, but in fact they are very different, so the requirements for customers will be different, so what is the difference between equal principal and interest and equal principal? Let's take a closer look.
What is the difference between equal principal and interest and equal principal?
1. The monthly repayment amount is different
Equal principal and interest is a type of interest calculated on the full principal, while equal principal is calculated on the remaining principal. Therefore, in the equal principal and interest repayment, the monthly instalment of each instalment is unchanged, while the monthly instalment of the equal principal repayment is different and decreases.
For example, if you also apply for a mortgage of 1 million, the loan term is 30 years, and the loan interest rate is 4If it is 1%, the monthly repayment amount of equal principal and interest is 483198 yuan, while the monthly repayment of the equal principal decreases month by month, and the first month is 619444 yuan.
2. The repayment pressure is different
From the above calculation results, it can be seen that even if you apply for a loan with the same term, the same interest rate and the same amount, the repayment pressure of the equal principal in the early stage is obviously higher than that of the equal principal, but in the later stage of the loan, the monthly repayment of the equal principal is relatively small.
3. The total interest generated is different
It is still to apply for a mortgage of 1 million, with a loan term of 30 years and a loan interest rate of 41%, the total interest generated by equal principal and interest is 739514$14, and the total interest accrued by the equal principal amount is 61670833 yuan, relatively speaking, the same amount of principal can play a role in saving more loan interest.
4. The suitable customer groups are different
Under the equal principal repayment method, the upfront repayment amount is higher but the repayment amount will decrease month by month, which is suitable for people who currently have more money and can save more interest; The monthly repayment amount of equal principal and interest is the same, which is suitable for people with a certain fixed income every month.
5. The requirements of lending institutions are different
Because the repayment pressure in the early stage of equal principal is greater, lending institutions have stricter requirements for customers who choose to repay equal principal, and the customer's qualifications need to be good enough to be able to successfully lend, especially in terms of income, and the platform must not be worried.
The above is an introduction to the difference between equal principal and interest and equal principal, I hope it will be of some help to customers.
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