Loan Repayment Methods Compared: Which Saves You More?

Choosing the right repayment method can save you thousands in interest. Let's compare Equal Principal & Interest, Equal Principal, and Maturity repayment.

1. Equal Principal & Interest

The most common method. Your monthly payment (principal + interest) remains the same throughout the loan term.

• Pros: Predictable monthly expenses. Easier to budget.
• Cons: Total interest is slightly higher than the Equal Principal method.
• Best for: Salaried employees with fixed income.

2. Equal Principal

You pay a fixed amount of principal each month, plus interest on the remaining balance.

• Pros: Lowest total interest. Monthly payments decrease over time.
• Cons: Initial monthly payments are the highest.
• Best for: Those who want to minimize interest costs and can afford higher initial payments.

3. Maturity (Bullet Repayment)

You only pay interest during the loan term and repay the entire principal at the end.

• Pros: Lowest monthly payments during the term.
• Cons: Highest total interest. Huge burden to repay principal at the end.
• Best for: Short-term financing or when expecting a large lump sum later.

Use our Loan Calculator to simulate your loan and find the best repayment strategy.