When you finance a home or a car, you'll usually choose between two amortization systems: the French system (fixed payments, also called the Price method) and the Constant Amortization System (decreasing payments). Both repay the same debt, but they spread interest and payments very differently — and that difference can mean a lot of money over the life of the loan. This guide shows which one costs less, how each works, and which to choose.
Which is cheaper: French or Constant Amortization?
Straight answer: in total interest paid, the Constant Amortization System almost always wins. Because you pay down a fixed amount of principal every month, the balance falls faster, and interest is charged on a smaller balance over time. With the French system, the early payments are mostly interest and the balance shrinks slowly, so you pay more interest across the loan.
But "cheaper overall" doesn't mean "better for everyone." The French system has one big advantage: the first payment is lower. For anyone on a tight budget at the start — or who needs the payment to fit their income to get the loan approved — the French system can be the only workable option, even if it costs more in the end. In short:
- Want to pay the least interest overall and can handle higher early payments → Constant Amortization.
- Want the lowest possible starting payment and value predictability → French (fixed payments).
The most honest way to decide is to run your own numbers through both. Compare both systems in the financing calculator and see, with your figures, the real difference in payment and total interest.
What's the difference between the two systems?
The difference is what stays fixed in each payment.
In the French system (Price), the total payment is fixed from start to finish. What changes inside it is the mix: early on you pay mostly interest and little principal; over time that flips. It's predictable — you know exactly what you'll pay each month.
In the Constant Amortization System, the principal portion is fixed — you pay down the same amount of the balance every month. Because the balance falls steadily, the interest shrinks month after month, and the total payment starts high and decreases all the way to the end.
How the French system works in practice
Imagine a $120,000 loan over 120 months. With the French system, the payment is the same from the first month to the last. At the start, most of that payment is interest and only a small part reduces the balance. That's why, halfway through the loan, you still owe more than you'd expect — the balance falls slowly at first. The upside is predictability: the payment never goes up.
How Constant Amortization works in practice
Take the same $120,000 over 120 months under Constant Amortization: you pay down $1,000 of principal every month ($120,000 ÷ 120). The first payment is the highest, because interest is charged on the full balance; the last is the lowest, because the balance is nearly gone. The balance falls in a straight line, and the total interest paid is lower than with the French system.
Comparison table: French vs Constant Amortization
FeatureFrench (Price)Constant Amortization PaymentFixed from start to finishStarts high, decreases Principal portionGrows over timeFixed every month Total interest paidHigherLower First paymentLowerHigher Outstanding balanceFalls slowly early onFalls at a constant rate Best forThose who need a low starting paymentThose who want to pay less interest overall
Where each system is used
The French (fixed-payment) system is the most common worldwide for auto loans, consumer financing and retail installment plans, because a predictable payment is easy to budget. The Constant Amortization System appears more often in some mortgage markets and in longer-term loans, where paying less total interest matters more than a low starting payment.
So which should you choose?
There's no universal "best" — only the best for your goal. If your focus is saving overall and you have room for higher early payments, Constant Amortization tends to be the cheaper choice. If your priority is fitting the payment into your budget right now, or the lender only approves a smaller payment, the French system solves it. The decision becomes much clearer once you see the numbers for your own loan.
Frequently asked questions
Is Constant Amortization always cheaper than the French system?
In total interest paid, almost always yes, because the balance falls faster. The practical exception is anyone who can't afford the higher early payments of Constant Amortization — in that case the French system makes the loan viable, even if it costs more in the end.
Does the payment in Constant Amortization always go down?
The principal portion is fixed and the interest falls each month, so the payment trends downward. On variable-rate loans the payment can move with the rate, but the falling-interest logic still holds.
Can I switch from one system to the other after signing?
Usually no — the amortization system is set in the contract. That's why it's worth comparing both before you sign, not after.
Which system leaves a smaller balance halfway through?
Constant Amortization. With constant principal, you've paid off half the balance at the halfway point. With the French system, the balance falls more slowly early on, so you still owe a larger share at the midpoint.
Compare both systems with your own numbers
Theory helps, but the decision gets obvious when you see the difference in dollars. Enter your amount, term and rate in the financing calculator and see both systems side by side: first payment, last payment, total interest and how the balance evolves. In seconds you'll know which one works for your case.