Loan Redemption

If you have taken out a loan from a bank, you have to pay back the money with the interest and fees to the lender, which is called repayment. There are three types of redemption, such as annuity redemption, installment repayments and term repayments.

Which repayment method offers which advantages and disadvantages? The annuity repayment is characterized by the fact that the rates, which one pays back to the bank, always remain the same. Here, the rate is composed of interest and repayment. The special feature is that the annuity (rate) at the beginning of the repayment, mainly from interest repayment and little of the repayment. However, the longer the loan runs, the lower the share of interest and the higher the repayment portion. The benefits of annuity annuity are, on the one hand, that the rate always remains the same, so it is possible to plan the loan better for the future.

The installment repayment is not dissimilar to the annuity repayment, on here it is necessary to repay in installments the interest and the cancellation of the loan to the bank. However, the monthly rate does not always remain the same, as interest rates fall and you only have to pay the same repayment, you pay less money every month. The disadvantage here, however, is that the burden on the borrower is highest for this repayment type. Furthermore, the payment in this variant takes longer.

In the maturity repayment, only interest is paid on the current loan. the dissolution then takes place only at the end of the term. The total amount of the loan is repaid at the last installment. The disadvantage here is that you have to pay such a high final rate.

Calculate his loan repayment

In order to be able to calculate his loan amortization, computers are available on the Internet. Here you can enter all the data needed to calculate his loan repayment. Thus one can already inform beforehand, which kind of repayment is most suitable for one. But you can also get a loan repayment from a specialist at the banks, and possibly compare them to a calculation on the internet.

If you take your time here and do the calculation correctly, you can determine exactly how much your monthly installments or the final installment will be.

Leave a Reply

Your email address will not be published.