Equal Installment vs Equal Principal: Which to Choose?
When you take out a mortgage or personal loan, the repayment method decides how much you pay each month and how much interest you pay overall. The two most common structures are equal installment (等额本息) and equal principal (等额本金). Understanding the difference helps you pick the cheaper option and plan your monthly cash flow.
What Is Equal Installment (等额本息)?
With equal installment, every monthly payment is the same amount for the entire term. Early payments are mostly interest; the principal portion grows slowly at first and accelerates later. Borrowers like the predictability because the budget stays stable for 10, 20, or 30 years.
What Is Equal Principal (等额本金)?
With equal principal, the principal repaid each month is fixed while the interest is calculated on the remaining balance. That means your first payment is the highest and each subsequent payment drops slightly. You pay less total interest, but your early cash outflow is bigger.
Total Interest: Which Costs Less?
Equal principal almost always costs less in total interest because you reduce the balance faster. On a 30-year mortgage the saving can be substantial. The trade-off is uneven monthly payments that start high and gradually ease.
Which Should You Choose?
Choose equal installment if you value stable payments and a tight monthly budget. Choose equal principal if you can afford higher early payments and want to minimize interest—this is common for borrowers who plan to prepay or refinance within a few years.
Compare Both Side by Side
Enter your loan amount, term, and rate into the comparison tool to see the exact payment schedule for both methods next to each other, then decide which fits your plan.
Early Repayment and Prepayment
Prepaying principal cuts future interest no matter which method you chose, but the effect differs. Under equal principal, prepayments shrink an already-declining balance; under equal installment, they break the interest-heavy front end faster.
Check whether your lender charges a prepayment penalty and whether there is a minimum holding period. If prepayment is free, making extra payments early in the loan saves the most interest.