Bank apps ask you to pick a repayment method but explain very little. This guide compares what annuity, equal-principal, and bullet repayment actually cost on the same 100,000,000 loan, using calculated figures.
It comes down to how fast you repay the principal. Annuity holds the combined payment constant and gradually raises the principal share. Equal principal repays the same principal every month, so the balance — and with it the payment — shrinks steadily. Bullet repayment pays no principal at all until maturity. Because interest is always charged on the current balance, the method that reduces the balance fastest produces the lowest total interest.
Equal principal is cheapest at 20,166,675 in total interest, followed by annuity at 21,494,176, with bullet repayment far behind at 39,999,960. The annuity–equal-principal gap is 1,327,501, while bullet costs nearly twice the annuity total.
| Method | Monthly payment | Total interest | Total repayment |
|---|---|---|---|
| Equal principal | 1,166,666 first month → 836,151 final month | 20,166,675 | 120,166,675 |
| Annuity | 1,012,451 every month | 21,494,176 | 121,494,176 |
| Bullet | 333,333 interest monthly + 100,333,333 at maturity | 39,999,960 | 139,999,960 |
Run your own figures in the loan interest calculator by changing the amount and rate.
If your budget is tight at the start and you need predictable outgoings, annuity is the safe default. If you earn enough to handle larger early payments, equal principal saves real money. Bullet repayment belongs only where a lump sum at maturity is genuinely secured — for example a deposit-backed loan that will be settled when the deposit is returned. Always check both numbers before choosing: the method with the lowest monthly payment is rarely the method with the lowest total cost.
During a grace period you pay interest only and principal repayment pauses. Borrowing 50,000,000 at 5% over 5 years without a grace period costs 6,613,695 in interest with payments of 943,562. Add a one-year grace period and you pay 208,333 of interest 12 times, then repay over only 4 years: payments jump to 1,151,465 and total interest rises to 7,770,302, an increase of 1,156,607. A grace period means paying more interest later in exchange for relief now.
Often more than the method. Raising the rate by one point, from 4% to 5%, lifts total interest on a 100,000,000, 10-year annuity loan from 21,494,176 to 27,278,623 — an extra 5,784,447. Cutting the term from 10 years to 5 more than halves the interest to 10,499,137, but the monthly payment climbs from 1,012,451 to 1,841,652. Try different rates and terms in the calculator to see which lever matters most for your loan.
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On total interest alone, equal principal wins. Borrowing 100,000,000 at 4% for 10 years costs 20,166,675 in total interest with equal principal versus 21,494,176 with annuity, a difference of 1,327,501. But equal principal starts at 1,166,666 per month versus 1,012,451 for annuity. Choose equal principal if you can afford the early payments, and annuity if a stable monthly budget matters more.
On a 100,000,000, 10-year annuity loan, total interest is 21,494,176 at 4% but 27,278,623 at 5% — an increase of 5,784,447. The monthly payment also rises from 1,012,451 to 1,060,655, a difference of 48,204. The larger the amount and the longer the term, the bigger the effect of each percentage point.
On total interest alone, yes. Borrowing 50,000,000 at 5% over 5 years costs 6,613,695 in interest with no grace period, but 7,770,302 with a one-year grace period — 1,156,607 more — and the monthly payment afterwards rises from 943,562 to 1,151,465 because the repayment window shrinks. A grace period can still be the right choice when cash flow is temporarily blocked, such as before moving in or before income starts.
On a 100,000,000 loan at 4% with annuity repayment, cutting the term from 10 years to 5 years reduces total interest from 21,494,176 to 10,499,137, saving 10,995,039. The trade-off is a monthly payment that rises from 1,012,451 to 1,841,652. Shortening the term is the most reliable way to cut interest, as long as the higher payment fits your budget.
Because the principal never decreases until maturity, interest is charged on the full original amount every month. Borrowing 100,000,000 at 4% for 10 years means 333,333 of interest repeated 120 times, for a total of 39,999,960 — nearly double the annuity cost. The low monthly outlay hides the highest total cost of the three methods.
Your bank's schedule is authoritative. Banks apply their own sub-unit rounding, daily interest for the first period, and date-based calculations, which can differ from this tool by a few hundred to a few thousand units. Use this calculator to compare methods and gauge magnitudes, not as a contractual figure.