What is the credit payment to choose an annuity or differentiated?

Few people know that when making a loan, you can choose several loan repayment schemes. Banks independently offer options, since the most common payment scheme is the annuity of the return of funds on the loan, the more it is the most profitable for the bank. In fact, there is also a differentiated loan refund scheme.

It is important to take into account all the information when signing a loan agreement. Most of the clients do not think about what kind of repayment program will be used in the future when paying the loan. They select a loan based on favorable conditions and their own experience, but they lose a very important point.

In this article, we will consider in more detail the differences existing between the repayment schemes.

It provides for the constant volume of monthly payments during the entire validity period of the loan. The monthly payment will include the amount of the principal debt and accrued interest. But the distribution of parts of the principal debt occurs unevenly. To increase the term of payment, the main amount of debt will increase, and interest on the loan decrease.

This scheme differs from the previous one that the monthly payment will become less every month. The distribution of the principal amount of the debt occurs evenly, and the amount of payment changes by reducing interest on the balance of the debt.

This type of payments will suit customers with constant fixed income. The borrower will not need to contact the schedule every time in order to create a non-permanent reserve of funds to fulfill contractual obligations.

This type of payments is suitable for people with changed income, which in a few months may differ.

Annuity payment is the most common. They enjoy 85% of borrowers, against 15% of the selected differentiated.

What credit refund scheme to choose to solve only you!

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