In what distinction of the annuity and differentiated payments on the credit?
Now almost at every turn it is possible to face the advertizing offer of banks on availability and ease of registration of the credit. Despite allure of the offer to issue the credit and at once to acquire desirable goods or services, in bank it is necessary to approach the decision on receiving the credit with all responsibility and care.
It becomes frequent the credit the real problem, and borrowers are forced to make ends meet, if only to pay off on the next payments and not to allow delay. Why does that happen? Apparently, borrowers got acquainted with conditions of the credit agreement and knew what obligations they undertook.
Practice shows that in some cases borrowers, having even got acquainted with the sum of monthly payment, are not ready to the termination of term to pay the remained sum. Most often such situation develops with so-called annuity payments.
Let`s understand what is annuity payments and in what there can be their inconvenience for the borrower?
By definition annuity payments are the uniform monthly payments on the credit calculated on an annuity formula (fr. annuite from armor. - annual, annual). The essence of the annuity schedule of repayment is that in the first year (or years, depending on period of validity of the credit) as a part of monthly payment the main share is made by percent on the credit agreement, and the sum of a principal debt (a credit body), is repaid in smaller volume or not repaid in general and is subject to payment in the last month of service of a credit debt.
Thus, the bank insures itself against loss of percent in case of non-execution by the borrower of the obligations, and also in case of early repayment of the credit. Besides such payments regarding obtaining the income are more favorable to bank.
We will review for comparison examples of calculation of the sum of debt on the basis of the annuity and differentiated payment.
We will assume, you took a credit to the amount one million rubles for 5 years under 15% per annum with monthly payments in the last day of month.
In case of annuity payments throughout all term of debt servicing (60 months) you will pay the same sum - 23790 rub, at the same time the structure of payments will change as follows: in the first month repayment of a principal debt - 11290 rub, and percent - 12500 rub, in the last month, respectively - 23496 rub and 294 rubles. For all period of validity of the credit your overpayment on percent will make 427396 rubles (it without the single and monthly commissions and an insurance).
In case of the differentiated payments on the same conditions of the credit agreement the first payment will include the sum of a principal debt - 16667 rubles, and percent - 12500 rubles, i.e. total amount of payment will be more, than in the first example - 29167 rubles.
At further service of the credit the size of debt on a principal debt will decrease by 16667 rubles and consequently, and interest payments will decrease too: the second month - 12292 rubles, the third month - 12083 rubles etc. In the last month the total amount of payment will make 16875 rubles from which 16667 rubles - a principal debt, and 208 rubles - percent. For all period of validity of the credit your overpayment on percent will make 381250 rubles (also without the single and monthly commissions and an insurance).
Total calculation shows that even at an equal interest rate the total amount of debt at the differentiated payments will be 46146 rubles less, than at annuity.
Some borrowers, without penetrating into an essence of annuity payments, then are surprised that by the end of a repayment period of the credit there is rather large sum - the rest of debt on a principal debt (it in case of monthly repayment of debt only on percent). Therefore attentively study the schedule of payments on the credit and pay attention to an amount of payment in the last month of service of the credit.
If all of you - decided to take the credit with annuity payments, then it is the best of all to plan your expenses on all repayment period of the credit in advance and to gradually accumulate reserve fund for repayment of the rest of the credit. Only competent planning of expenses will help you to avoid violation of contractual obligations before bank and possible negative consequences.