Equal payment vs. equal principal
Equal payment repays the same total amount (principal + interest) every month for the life of the loan, which makes monthly budgeting easy and is the most commonly chosen method.Equal principal divides the principal evenly across the loan term, with interest shrinking as the remaining balance shrinks β payments start higher but total interest ends up lower.
Formula
Equal-payment monthly payment = principal Γ monthly rate Γ (1 + monthly rate)^months Γ· ((1 + monthly rate)^months β 1)
Equal-principal monthly principal = loan amount Γ· months, monthly interest = remaining principal Γ monthly rate
Important notes
This calculator produces a reference estimate based on the principal, rate, and term you enter, and actual loan repayments may differ. Prepayment penalties, origination fees, guarantee fees, and preferential rate conditions are not reflected, and actual loan approval, rates, and limits depend on the lender and your individual credit profile. Always confirm important loan decisions with your lender and their official loan terms.
Frequently Asked Questions
Which repayment method is better?
Looking purely at total interest, equal principal costs less. But since the early payments are larger, equal payment can be more practical if you want a consistent monthly amount.
Does this include prepayment penalties?
No, this calculator only computes pure principal and interest. Real loans may add prepayment penalties, origination fees, and other charges β check with your lender for full details.
Can I use this for a variable-rate loan?
This calculator assumes a fixed rate. For a variable-rate loan, you'll need to recalculate each time the rate changes for an accurate figure.