Result
Savings with the differentiated schedule
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This calculation is for informational purposes only and does not replace advice from a qualified professional. Formulas and rates may not fit your exact situation — double-check the figures before making decisions.
How it is calculated
With an annuity schedule the payment is the same every month, but early on it's mostly interest and the principal shrinks slowly — so total interest is higher. With a differentiated schedule the principal is repaid in equal chunks, interest is charged on a fast-shrinking balance, and the first payment is noticeably larger than the last.
Total payments under the differentiated schedule = loan amount × (1 + monthly rate × (number of months + 1) ÷ 2) — this comes from summing interest on an evenly declining balance. The difference from the annuity total is the pure interest savings for the same amount, rate and term.
The savings come at the cost of a heavier payment early on: the first differentiated payment is noticeably larger than the annuity payment, and that upfront financial load is exactly why banks usually offer the annuity as the default option.