How to choose a profitable loan scheme?

What is the difference between the diagrams of differentiated and annuity loans. Why annuity calculation is better for long-term loan. How to correct the early repayment of the loan

Obtaining a loan – a responsible step that requires and caution and some theoretical training. To prevent well how you pay the borrower with the bank, it is very important to understand the basic schemes of its calculation. You are not difficult to delve into this topic, but you will feel confident and calm.

In banking practice, annuity and differentiated loans are now distributed, each of which may be more convenient for you. Let’s try to figure out what their essence. 

Repayment formula your loan 

When you take into debt by the bank, then agree to return the loan amount and pay interest for its use – from these two digits and consists of your loan.

Based on your needs, you determine how much and for how long it is necessary to take, and the borrower offers a percentage rate – this is a figure that the debt increases for 1 year of use. Most often it is 15 or 17%.

Each payment is designed in such a way as to repay two directions – the balance of the loan and the fee for the use of them (interest). Depending on how the ratio of these two parts, the scheme refers to either to differentiated or to the annuity loan.

A simple way to understand the difference – use the credit calculator and take a look at the speaker’s column with monthly payments. With a differentiated formula, a monthly amount will decrease, with an annuity – to remain the same to the last estimated period. 

Differentiated Redemption Scheme 

The differentiated method means that the amount (the main debt is excluding interest of the bank) is divided by month equal parts.

At the same time, interest is accrued to the balance of the debt – the amount that remains still to pay.

This principle is maintained and for calculating annuity payments on the loan, but differentiated has difference, namely the constantly declining digit of the monthly contribution. This means that the first your contributions will be large than the latter, and most often the new amount will need to be clarified each time to go to the cashier. 

Advantages: 

• Every month it is easier to pay everything;
• Saving percent bank. 

Flaws: 

• With current hyperinflation, the first major contributions are disadvantageous;
• Bank places more stringent demand for the borrower. 

This way is better to choose if you are confident in your solvency (to make the first large payments not for everyone). Optimal Such a choice will be if you are planning a chart for a short time – 6-12 months. Your benefit will in this case will be apparent – a smaller overpayment of a jar and a speedy debt payment. 

Annuity scheme for repayment of the loan 

The repayment of the loan by an annuity method is the type of payment of payment, in which the main criterion will be its unchanged amount.

To provide a permanent digit, the Bank calculates a contribution to a special way: a part of payment aimed at repaying the body of a loan, and over time increases, and a part intended for the repayment of the Bank’s commission, on the contrary, decreases.

In practice, this means that at first you pay mostly loan services, and only with time you begin to more actively repay the debt itself. 

Advantages: 

• fixation of the amount of payment for the entire estimated period;
• Loyal requirements for borrowers. 

Flaws: 

• High overpayment by percent;
• Financial losses in loan restructuring. 

If the bank gives you the opportunity to choose a loan calculation formula by annuity payments, take advantage of it for long-term lending. It can be 3, 5, 7 years old or mortgage with a maximum payment period. It is believed that, even disposable repayment, you win in the sense that every year due to inflation fixed amount will be felt for your budget everything is easier. 

On early repayment of annuity loan 

You want to get away from the debt to each borrower, and it will help early repayment. With a tangible monetary difference between the differentiated and annuity payments on the loan in this case, there is no scheme for the savings of interest. However, you must be prepared to take some features.

First, check with your borrower bank, as he recalculates debt due to your overpayments. Two options are possible: a monthly contribution is reduced, and the period remains the same, or the amount remains unchanged, and the overpayment is charged in recent months of payments schedule. The last option occurs more often and means that the payroll will become shorter.

Secondly, it is important to understand that banks do not practice such a form of recalculation, in which overpayment in one month is transferred to the next. That is, you cannot, for example, in May you will double more, and in June I do not pay anything. Banks do not give credit holidays on the basis of the previous overpayment.

If you make more than required under the contract, it will be reasonable to contact each time with the bank and find out whether the funds arrived at the expense and how they will be accepted – in the form of a decrease in the period or monthly payment. If you do not do such a reconciliation, then it may be that your tools are stuck somewhere, and it will be difficult to find them. It is better to find out such questions immediately in fact.

We hope this information will benefit you and will help avoid problems and misunderstandings when making and paying loan.