Loan Amortization Schedule
Category : Spreadsheet Templates.
Topic : Types of excel spreadsheets. Author : .
Posted : Tue, Feb 23rd 2021 00:25 AM.
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Loans are typically paid off over many years, and accrue interest during this time. The process of paying down loans in small increments over time is called “amortization.” Large loans with long payment periods (i.e. mortgages) can feel overwhelming, so it can be helpful to make a plan of payment - this is called an amortization schedule. Amortization schedules will help you stay on top of your current balances, and also enable you to look ahead to the future because you know exactly how much you will owe, and when it is due.
Before creating an amortization schedule, there are several pieces of information about your loan that you will need. These variables will enable you to calculate the necessary payments and balance(s):
- Loan amount: This is the total dollar amount of the loan you received (before it has accrued interest or been paid down).
- Annual interest rate: The yearly interest applied to your initial loan.
- Loan period: The total amount of time you will take to pay off your loan. This is typically in years.
- Payment frequency: How often you will make payments on your loan. This will typically be monthly, though it could also be weekly or yearly depending on the type of loan you’ve taken out.
- Number of payments: The total number of payments you will make to pay off the loan. Some tools will calculate this value for you by multiplying loan period by payment frequency.
- Loan date: The date that the loan was disbursed.
- First payment due date: The date of the first required payment.
- Payment amount: This is the amount you will pay each payment period (monthly or yearly). You will calculate this value based on the other factors. Payments are comprised of the principal (loan money you are paying back) plus the interest.
- Payoff amount: The total amount of money that you will have paid by the end of the loan period. This is the starting loan amount plus the total amount of interest accrued over time.
Many people opt for a calculator tool to find these values, but mapping out a full schedule helps you visualize and organize your payments. You can create an amortization schedule from scratch using a basic spreadsheet or calendar, but there are several online tools with built-in amortization schedule templates to help you get started. In the next section, we’ll walk you through setting up an amortization schedule in two premiere programs, Excel and Smartsheet.
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