2026-07-02 · Calc-Tools Editor

Loan Comparison Calculator: Compare Different Loan Plans

The most common mistake in comparing loans is looking only at the monthly payment. The payment answers one question — can I cover this month — while the total interest answers a different one: what does this money ultimately cost me. Those two answers often point in opposite directions. On a CNY 1,000,000 loan over 30 years, equal-principal repayment starts 26.8% higher than equal-installment, yet finishes CNY 90,102.54 cheaper in interest.

This guide sets out both formulas, a rate-by-rate table you can recompute cell by cell, the real difference between shortening the term and reducing the payment when you prepay, and what an LPR repricing date actually does to your instalment. Every figure below can be reproduced in the loan comparison calculator or checked by hand against the formulas.

1. The Two Formulas, Written Out

An equal-installment (annuity) payment is fixed by this formula, where P is the principal, r is the monthly rate — the annual rate divided by 12 — and n is the number of instalments:

Equal-installment payment = P x r x (1+r)^n / ((1+r)^n - 1)

The formula solves an annuity-present-value problem: discount n identical payments back at rate r, set the sum equal to P, and solve for the payment. Because the payment is fixed while interest is charged on the outstanding balance, the interest share of each payment falls month by month and the principal share rises — but the two always add up to the same number.

Equal principal spreads the principal evenly instead, and charges interest on whatever balance remains:

Equal-principal payment in period k = P / n + [P - P / n x (k-1)] x r

The principal slice is a constant P / n while the interest slice declines linearly with the balance, so the payment traces a straight line from high to low. The only real difference between the two methods is how fast the principal is repaid: slowly at first under equal installment, quickly under equal principal. Every trade-off below follows from that single fact.

2. CNY 1,000,000 Over 30 Years: How Big Is the Gap?

Thirty-year Chinese residential mortgages in September 2026 are commonly priced somewhere between 3.0% and 4.5% a year. The table below computes CNY 1,000,000 over 360 instalments at four rates, to show how much a half-point of rate is worth once it compounds across three decades:

Read the table across: moving from 3.0% to 4.5% adds only CNY 850.81 to the monthly payment, a 20.2% rise, but adds CNY 306,292.60 to total interest — a 59.2% rise. Rate acts as a lever that the term keeps multiplying. In any loan comparison, negotiating the rate is worth more than choosing between repayment methods.

That CNY 90,102.54 is not a discount. It is bought with roughly CNY 1,200 of extra payment every month for the early years. Whether the purchase is worth it comes down to one question: could that money, left in your hands, reliably earn more than the loan rate? If not, equal principal wins on arithmetic. If it could — most obviously when a housing-fund loan is priced well below what a conservative investment yields — equal installment is the better deal.

3. Where the Interest Gap Comes From

The rate is identical under both methods, so the gap can only come from how long the principal stays outstanding. Interest = outstanding balance x monthly rate, so whichever schedule drives the balance down faster pays less. Equal principal retires a constant P / n each period; equal installment retires well under that in the early years, so its average outstanding balance across the term is higher.

This produces a counter-intuitive but correct conclusion: the interest equal principal saves is really the cost of borrowing less money for less time. It is not a better rate — it is you voluntarily repaying more, earlier, and shortening the average borrowing period. The price is the higher early payment. The fair way to rank the two is total interest plus the cost of the early cash-flow burden, not total interest alone.

4. Worked Examples

Example 1: the full first-home chain. A home priced at CNY 3,000,000 with a 30% down payment of CNY 900,000 leaves a loan of CNY 2,100,000 at 3.5% over 30 years.

• Equal installment: payment CNY 9,429.94, total interest CNY 1,294,777.84, total repaid CNY 3,394,777.84.
• Equal principal: first payment CNY 11,958.33, final payment CNY 5,850.35, total interest CNY 1,105,562.50.
• Gap: interest is CNY 189,215.34 lower, at the cost of roughly CNY 2,528 more per month in the early years.

Compare this with section 2: scaling the principal from CNY 1m to CNY 2.1m — a factor of 2.1 — scales the interest gap from CNY 90,102.54 to CNY 189,215.34, also a factor of 2.1. The gap scales with the loan, and so does the burden. A bigger loan does not make equal principal "more worth it"; the decision still rests on your monthly cash flow.

Example 2: a CNY 100,000 car loan over 5 years at 5%. Equal installment gives CNY 1,887.12 a month and CNY 13,227.40 of interest; equal principal starts at CNY 2,083.33, ends at CNY 1,673.61, and costs CNY 12,708.33. The difference is only CNY 519.07, against CNY 196.21 more in the first month. The shorter the term, the less the two schedules diverge. On a five-year car loan, spend your attention on origination fees and bundled insurance instead; the car loan calculator will confirm the payment.

Example 3: what the payment costs you in income share. Using the CNY 4,490.45 payment from a CNY 1m, 3.5%, 30-year loan: it takes 29.9% of a CNY 15,000 monthly income, 22.5% of CNY 20,000, 18.0% of CNY 25,000 and 15.0% of CNY 30,000. Lenders commonly cap the ratio at 50%, but that is a credit-approval ceiling, not a comfort line. At 22.5% you still need to budget separately for ownership costs — property management, heating and insurance typically add 5% to 10% of the payment — plus an emergency reserve.

5. Prepaying: Shortening the Term vs Reducing the Payment

Lenders handle a prepayment in one of two ways, and the interest saved differs sharply. Shortening the term keeps the payment and compresses the remaining schedule. Reducing the payment keeps the term and lowers the instalment. Take CNY 1,000,000 at 3.5% over 30 years, and prepay CNY 200,000 at instalment 60, when the balance stands at CNY 896,971:

The same CNY 200,000 saves CNY 117,408 more when it shortens the term — 2.17 times the saving from reducing the payment — because a shorter schedule drives the balance down faster, leaving less principal accruing interest for less time.

Timing matters too. Prepaying the same CNY 200,000, always by shortening the term:

The saving declines steadily: CNY 271,736 at instalment 12, only CNY 105,875 by instalment 180. Ranked purely on interest saved, earlier is always better. But the decision involves more than that column — a prepayment at instalment 60 also means CNY 200,000 less liquidity. A complete test looks at three things together: the opportunity cost of the money (can it reliably beat the loan rate), whether your emergency reserve still covers six to twelve months of spending, and the prepayment terms in your contract (compensation charges, annual limits on the number and size of prepayments, and any minimum period after drawdown). If you also carry credit-card instalments or consumer loans at higher rates, clear those first.

6. Loan Types and Rate Structures

Loan products are priced by very different logic. Placing their typical features side by side shows why a low headline rate usually arrives with conditions attached:

Note: the rate column signals relative level only. Actual quotes move with the city, the lender, your credit profile and current policy, so treat the annualised rate stated in the contract as the reference. Equating a low nominal rate with a low total cost is a reliable way to get the comparison wrong — handling fees, account charges and bundled insurance all belong in the true cost, which is exactly what the APR exists to express.

On rate structure, mortgages in China generally float as "LPR plus a spread", with fixed-rate products also available. Two mechanics must be kept apart. The LPR is published monthly, but your payment does not move with it immediately. It is recalculated only on the repricing date in your contract — commonly 1 January, or the annual anniversary of drawdown — using the LPR then in force. And the spread is normally fixed for the life of the contract, so a falling LPR lowers the benchmark without removing the spread.

One concrete figure shows how modest the effect is. On CNY 1,000,000 over 30 years at 3.5%, after 60 instalments the balance is CNY 896,971 and the payment CNY 4,490.45. If the LPR falls 0.25 points to 3.25% on the repricing date, the new payment is CNY 4,371.09 — CNY 119.36 less per month. Keeping the payment unchanged and shortening the term instead retires the loan 12 periods early, cutting 300 remaining instalments to 288. The payment falls by far less than intuition suggests, because interest is only part of the payment and that share shrinks as the balance does. To see the payment at other rates, run your own figures through the mortgage calculator.

7. Frequently Asked Questions

Which is genuinely cheaper, equal installment or equal principal?

At the same rate, equal principal always costs less interest: CNY 90,102.54 less on CNY 1,000,000 at 3.5% over 30 years. But its first payment is CNY 5,694.44 against CNY 4,490.45 — 26.8% higher. So "cheaper" depends on whether roughly CNY 1,200 more each month is safe for your cash flow. If that money can reliably out-earn the loan rate, equal installment is the better choice.

Does a larger loan make equal principal the obvious pick?

No. The gap scales with the principal: moving from CNY 1,000,000 to CNY 2,100,000, a factor of 2.1, widens the interest gap from CNY 90,102.54 to CNY 189,215.34 — also 2.1 times — while the extra first-month payment scales the same way. A larger loan changes the absolute amounts, not the trade-off between early cash flow and total interest.

When I prepay, should I shorten the term or reduce the payment?

Shorten the term. Prepaying CNY 200,000 at instalment 60 on a CNY 1,000,000, 3.5%, 30-year loan saves CNY 217,782 by shortening versus CNY 100,374 by reducing the payment — a difference of CNY 117,408. Compensation charges and limits vary by contract; typical clauses cover an annual cap on prepayment amount and frequency, a minimum period after drawdown, and a percentage charge on the amount prepaid.

My LPR just fell — will my payment change next month?

Not immediately. Your payment is recalculated only on the contractual repricing date, usually 1 January or the anniversary of drawdown, and the spread stays fixed. Example: on CNY 1,000,000 over 30 years at 3.5%, after 60 instalments the balance is CNY 896,971 and the payment CNY 4,490.45; at 3.25% it becomes CNY 4,371.09, saving CNY 119.36 a month, or 12 instalments if you keep the payment and shorten the term.

What share of income is a safe monthly payment?

Lenders usually cap the payment at 50% of monthly income, but that is an approval threshold rather than a comfortable level. A CNY 4,490.45 payment is 29.9% of CNY 15,000 and 22.5% of CNY 20,000. A safer target keeps the payment inside 40% of household income, with ownership costs adding 5% to 10% of the payment and an emergency reserve of six to twelve months of expenses held separately.

When is an interest-first loan worth considering?

An interest-only structure pays just interest until maturity, then the full principal in one lump. The monthly burden is the lightest, but the whole principal accrues interest for the entire term, so total interest is the highest, and you must find the full balance at the end. It suits only short terms with a confirmed source of repayment; using it as a long-term mortgage option raises total cost sharply and adds refinancing risk at maturity.

8. Three Common Misconceptions

Misconception 1: the lowest total interest is the best plan. Total interest is a single number that flattens every cost into one dimension — and drops the cash-flow constraint entirely. Equal principal wins on that number only if you can sustain roughly CNY 1,200 more each month for years. If you cannot, a missed payment or a forced refinancing costs far more than the CNY 90,102.54 you were chasing.

Misconception 2: watching the LPR is enough, so the repricing date does not matter. A lower LPR only changes the benchmark, and the spread stays; the payment is recalculated on the repricing date. Treating a rate cut as "next month's payment drops" leads to bad cash-flow planning. The date worth putting in your calendar is the one written in your own contract.

Misconception 3: prepaying late is pointless. Timing does matter — CNY 200,000 prepaid at instalment 12 saves CNY 271,736, while the same amount at instalment 180 saves CNY 105,875. But "worth it" is not measured by interest saved alone. Money idling in a current account still does better prepaying late than not at all. The correct comparison is always against what else that money could earn.

9. Three Practical Steps

• Negotiate the rate before choosing a repayment method. Run the same principal at several rates in the loan comparison calculator: on CNY 1,000,000 over 30 years, moving from 3.0% to 4.5% changes total interest by CNY 306,292.60 — far more than the CNY 90,102.54 that separates the two repayment methods.
• Split the prepayment decision into three checks. Read the prepayment clause in your contract; confirm your emergency reserve still covers six to twelve months of spending; then compare the interest saved by shortening the term against reducing the payment. Only execute if all three pass.
• Use the housing fund first. Housing-fund loans are usually priced below commercial mortgages of the same term, and the limit depends on your contributions. Work out the available amount in the housing fund calculator before deciding how to split a combined loan.

A loan is only the liability side of the household balance sheet. To put the repayment plan back into the wider picture, read equal installment against equal principal, month by month, housing fund limits and city comparison, and compound versus simple interest — the interest a prepayment avoids is the same compounding logic running in reverse.