Loan Parameters
Calculation Results
Equal Principal vs Equal Installment (same conditions)
Monthly Schedule
| Period | Principal ($) | Interest ($) | Payment ($) | Balance ($) |
|---|
View calculation formula
Equal Principal: Monthly principal = P / n (fixed); month k interest = (P − (k−1)·P/n)·r; monthly payment = monthly principal + that month's interest; the payment decreases by P/n·r each month; total interest = (n+1)·P·r/2.
Equal Installment (for comparison): Monthly payment M = P·r·(1+r)n / ((1+r)n − 1); total interest = M·n − P.
Here P = loan principal, n = total periods (years × 12), r = monthly rate (annual rate / 12). Amounts use integer cents internally to avoid floating-point errors and are converted to dollars for display.
Equal Principal vs Equal Installment
Equal Principal: You repay a fixed principal each month (= loan amount ÷ number of periods) plus the interest on the remaining balance. Because the remaining balance shrinks every month, the interest drops every month, so the monthly payment decreases month after month. The first payment is the highest and the last is the lowest; total interest is lower.
Equal Installment: The monthly payment is fixed; early payments are mostly interest with little principal, then it reverses over time. The payment burden is stable, but because principal is repaid more slowly and money is tied up longer, total interest is higher.
Key difference: Under the same conditions, equal principal has lower total interest but higher early payments; equal installment eases early pressure but costs more interest. The total principal repaid is identical; only the total interest and cash-flow rhythm differ.
Early repayment: With equal principal you have already repaid more principal early on, so if you plan to pay off the loan early the remaining balance is smaller and it is more worthwhile; with equal installment most early payments are interest, so the interest savings from early repayment are relatively discounted.
Who Should Choose Equal Principal
Equal principal repayment is a better fit for the following groups:
High current income Wants to pay less total interest Plans early repayment Income may decline over time OK with higher early payments
1. High current income that may decline later: Strong repayment ability now lets you repay more principal up front; later the decreasing payment lowers pressure in step with your income curve.
2. Focused on total cost and saving interest: Under the same conditions total interest is clearly lower than equal installment, saving money over the long run.
3. Planning to repay early: A larger share of principal is already repaid up front, so the remaining balance is smaller when you settle early, making the interest savings more effective.
4. Don't want to be locked into a long, high fixed payment: The payment falls over time, giving you more financial flexibility later.