How to calculate equal principal amount
Equal principal installment is one of the mortgage repayment methods. Compared with equal principal and interest installments, the monthly repayment amount of equal principal installments is gradually reduced, but the total interest expense is less. This article will introduce in detail the calculation method of equal principal, and attach a structured data table to help you better understand.
1. Definition of equal principal amount
Equal principal payments refer to repaying the same principal amount every month and paying interest on the remaining principal at the same time. As the principal decreases each month, the interest will decrease accordingly, so the total monthly payment will gradually decrease.
2. Calculation formula for equal amounts of principal
The formula for calculating the equal amount of principal is as follows:
1.Monthly principal repayment due= Total loan amount ÷ Number of repayment months
2.Monthly interest payable= Remaining principal × monthly interest rate
3.Total monthly repayment= monthly principal repayment + monthly interest repayment
The following is a sample table for equal principal repayments:
| Period | Remaining principal (yuan) | Monthly principal repayment (yuan) | Monthly interest payable (yuan) | Total monthly repayment (yuan) |
|---|---|---|---|---|
| 1 | 1,000,000 | 2,777.78 | 4,166.67 | 6,944.45 |
| 2 | 997,222.22 | 2,777.78 | 4,155.09 | 6,932.87 |
| 3 | 994,444.44 | 2,777.78 | 4,143.52 | 6,921.30 |
| ... | ... | ... | ... | ... |
| 360 | 2,777.78 | 2,777.78 | 11.57 | 2,789.35 |
3. Advantages and disadvantages of equal principal amounts
Advantages:
1. The total interest expense is small and suitable for long-term loans.
2. The repayment pressure is high in the early stage, but gradually reduces in the later stage.
Disadvantages:
1. The upfront repayment amount is relatively high, which may put pressure on borrowers with unstable income.
2. The monthly repayment amount is not fixed and requires strong financial planning skills.
4. Comparison between equal amounts of principal and equal amounts of principal and interest
The following is a comparison table of equal principal and equal principal and interest:
| Repayment method | monthly repayment amount | total interest expense | Suitable for the crowd |
|---|---|---|---|
| Equal amount of principal | Decreasing | less | Borrowers with stable income who want to reduce interest rates |
| Equal principal and interest | Fixed | More | Borrowers with stable income and low monthly repayment pressure |
5. How to choose the repayment method?
When choosing a repayment method, you need to decide based on your own financial situation and future income expectations:
1. If your income is high and stable, you can choose equal principal payments to reduce total interest expenses.
2. If the income is relatively fixed or the initial pressure is high, you can choose equal principal and interest to reduce the monthly repayment burden.
6. Summary
Equal principal payments are a repayment method suitable for long-term loans if you want to reduce your total interest payments. Through the detailed calculations and comparison tables in this article, you can have a clearer understanding of its characteristics and make a more informed loan choice.
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