:: Full guidance on debt repayment

What is debt and interest?

Debt is the amount owed by the borrower to the creditors. Interest is the fee charged by the creditor for lending funds, usually at the annual rate of interest. Debt can come from a variety of sources, including credit cards, personal loans, student loans, mortgages, car loans, etc. Understanding your debt and interest rates is essential to an effective repayment plan.

Two common ways to repay.

Equivalent (most common): The amount reimbursed is fixed on a monthly basis. More interest is paid in the prior period and more principal in the later period. This approach makes it easier to plan the budget because of the fixed monthly cost.
Equivalent principal: The principal payments are fixed on a monthly basis and interest is reduced as the principal amounts decrease. The early repayments were higher, but the total interest was lower. If you can, this way will save more interest.

Why is the debt payout calculator important?

Understanding the real costs: Many do not know how much their debt actually costs. The calculator shows you the real interest cost.
Compare different options: You can try different repayment periods and ways to see which is best for you.
(b) Development of repayment plans: With specific figures, you can develop realistic repayment plans.
Accelerated debt service: By increasing the monthly payments, you can pay off the debt faster and save interest.

How to use this tool

Enter the amount of the obligation
Enter the annual rate (see your loan file or confirm it with the lender)
Selection of expected repayment period (years)
Selection of repayment mode (equivalent principal or equivalent principal)
Check the monthly payments and total interest

Debt repayment strategy

Snowball method: First, pay the smallest debt, get the psychological victory, then pay the bigger debt with the savings.
Avalanche Law: Priority in servicing the highest interest rates, which will maximize interest savings
Advance repayments: If you have extra income (grats, tax refunds, etc.) to pay off your debts in advance.
Transfer of debt: If possible, transfer to a credit card or loan at a lower interest rate