When a person takes a loan, in his mostcases offer two payment options - Annuity and differentiated. They differ from each other the principle of repayment of principal and interest payments.
It is important to understand what each of these options may be advantageous under certain conditions.
Note the difference in the pay structure. Differentiated credit refers to the separation of all of the principal debt on the same number of units and the accrual of interest on the remaining amount. In this case, the size of payments recalculated and gradually decreases every month, as interest payments become smaller and smaller. If you choose an annuity loan, on the other hand, every time a person pays the same amount, ie, Bank calculates the basic monthly payment, and does not reduce its debt until maturity.
Take into account the difference in the percentage calculationsloan. When a differentiated payment is charged a percentage of the principal, and to the extent that it reduces the amount of the remaining payments, and the payment is reduced amount of interest. Annuity payment involves a completely different calculation scheme. First person pays almost nothing but interest, repaying the minimum part of the debt. Over time, interest payments decrease, and on principal - are growing, though it is uniform. Payment, however, remains the same. For example, in the first month of a person can pay 5,000 rubles. Interest and 1,000 p. of the principal, and the second - 4000 p. Interest and 2000, p. of the principal.
Evaluate the size of the monthly payment. When differentiated loan at maturity the debtor pays a relatively small amount, but at the beginning of the monthly payment is higher than the annuity loan. This feature is important to consider for two reasons. Firstly, if you can not allocate the loan payment of a sufficiently large amount of the annuity payment will be profitable for you. Secondly, the choice of differentiated credit total amount that will be ready to give the bank will be lower than if the preference will be given an annuity. This is due to the fact that the bank's representatives take into account the maximum size of the monthly payment in determining the amount that can be issued to the client.