Loan Interest Calculator Guide: Equal Payment, Equal Principal, and Bullet Loans

A loan rate alone does not determine the real cost. The repayment method changes the first payment, the speed at which principal falls, total interest, and the amount due at maturity. This guide applies the same KRW 100 million principal, 4% annual rate, and 10-year term to all three methods so the comparison stays fair.

Fair comparison

A loan rate alone does not determine the real cost. The repayment method changes the first payment, the speed at which principal falls, total interest, and the amount due at maturity. This guide applies the same KRW 100 million principal, 4% annual rate, and 10-year term to all three methods so the comparison stays fair. Fees, taxes, insurance and late-payment charges are excluded from this planning example. Use the loan calculator with identical inputs before changing one variable at a time.

How the methods work

Equal payment keeps the combined principal and interest payment near KRW 1,012,451 each month. Interest is heavier at the beginning and principal grows later. Equal principal repays about KRW 833,333 of principal every month, so the first payment is about KRW 1,166,667 and then declines. A bullet loan pays about KRW 333,333 interest monthly and leaves the full KRW 100 million principal for maturity.

Amount comparison

Equal principal produces about KRW 20,166,667 of total interest, compared with about KRW 21,494,166 for equal payment and KRW 40,000,000 for the bullet structure. The cheapest method is not automatically the safest. If a high first payment forces a borrower to use expensive credit, the apparent saving can disappear. Predictable cash flow and an emergency reserve matter.

For housing finance, continue with the mortgage calculator, LTV calculator, and DSR calculator. The links separate payment cost, collateral limit, and income affordability instead of mixing them into one number.

Rate stress test

Run the calculator at the quoted rate, then again at one and two percentage points higher. Review the remaining balance, cumulative interest, last payment, and not only the first monthly figure. Actual bank schedules may differ because of day-count rules, rounding, payment dates, rate resets, fees, and insurance costs.

Run the calculator at the quoted rate, then again at one and two percentage points higher. Review the remaining balance, cumulative interest, last payment, and not only the first monthly figure. Actual bank schedules may differ because of day-count rules, rounding, payment dates, rate resets, fees, and insurance costs.

How to choose

Choose equal payment when stable budgeting matters most. Choose equal principal when early cash flow is strong and reducing debt quickly is the priority. Consider a bullet loan only when the maturity funding source is specific and reliable. A vague expectation of refinancing or selling an asset is not a repayment plan.

Compare spare cash with the deposit interest calculator. Prepayment can help when the loan rate exceeds the safe after-tax return, but it should not consume the entire emergency reserve.

Checklist before signing

• Use identical principal, rate, and term. Check the highest monthly payment, total interest, final payment, remaining balance, prepayment fee, emergency reserve, and the source of maturity funds.
• Use identical principal, rate, and term. Check the highest monthly payment, total interest, final payment, remaining balance, prepayment fee, emergency reserve, and the source of maturity funds.
• Confirm the lender disclosure, personal rate, reset rule, and repayment schedule before signing.

Frequently asked questions

1

Which method has the lowest interest? Equal principal usually does under identical terms because principal falls faster.

2

Why is a bullet loan expensive? The entire principal remains outstanding, so interest is charged on the same balance throughout the term.

3

Why can bank figures differ? Banks may use actual days, different rounding rules, reset dates, and contract-specific fees.

4

What does a grace period do? It delays principal reduction and usually increases later payments and total interest.

5

When does prepayment help? When saved future interest exceeds the prepayment fee and the return lost on cash used.

6

Can this estimate approve a loan? No. It is a planning comparison; the lender contract and repayment schedule control.

Conclusion

Equal principal produces about KRW 20,166,667 of total interest, compared with about KRW 21,494,166 for equal payment and KRW 40,000,000 for the bullet structure. The cheapest method is not automatically the safest. If a high first payment forces a borrower to use expensive credit, the apparent saving can disappear. Predictable cash flow and an emergency reserve matter. Choose equal payment when stable budgeting matters most. Choose equal principal when early cash flow is strong and reducing debt quickly is the priority. Consider a bullet loan only when the maturity funding source is specific and reliable. A vague expectation of refinancing or selling an asset is not a repayment plan. This calculator is an educational estimate, not financial advice or a credit decision. The signed lender contract and official schedule take priority.

Verification note

This article was checked against the primary source below. Recheck changing prices, rates and rules at the source before deciding.

• Primary source: https://fine.fss.or.kr/
• Reproducible check: 100,000,000 × 0.04 ÷ 12 = 333,333

Limits

This article was checked against the primary source below. Recheck changing prices, rates and rules at the source before deciding.

Verification date: 2026-08-29.