Let me share with you these 24 Free Loan Amortization Schedule Templates (MS Excel) to allow you printing your own Loan Amortization Schedule quickly.
Loan Amortization is a carefully spell out payment schedule drawn on a loan and designed to be paid in parts in order to clear out such loan. It involves making periodic payments, usually monthly, that ensures a fraction of the principal and the interest is paid at a rate that will clear out a loan within a specified period of time.
Usually, while the amount paid on the principal is the same over the period of payment, the interest changes based on the amount of the principal remaining to be cleared. It is clear, however, that both the principal and the interest are cleared along concurrently only that interest values reduce with time. This is because as more principal is paid over time, less interest is due from the calculation of the balance of the principal.
Using Loan Amortization Schedule Templates
For easy analysis and clarity on how to calculate Loan Amortization Schedule, it is best to draw up a Loan Amortization Schedule table. This will check any kind of mix-up in the repayment plan. But the most difficult part of this is how to prepare the Loan Amortization Plan which will need the three details below for it to be properly calculated.
- The principal borrowed which is also the exact amount of the loan in question.
- The interest on the said loan as given by the financial institution or the lender.
- The time frame designed to repay the loan.
Loan Amortization can also be used while dealing with car, mortgage and/or housing loan.
How to Calculate Loan Amortization Schedule?
Loan Amortization Schedule is a table drawn to show how a loan facility is to be repaid over the period of time stipulated. Let’s assume that you are offered the sum of $200,000 as a housing loan to be repaid over the period of 120 months (10 years) at 5% interest rate. The implication is stated below:
Monthly Repayment: $200,000 / 120 months
Monthly Interest: 5% of $200,000
= $10,000 (Annual)
$10,000.00/12 (first month)
Repayment time: 120 months
Like I stated earlier, it is advisable to draw a Loan Amortization Schedule in order to put the many details in clear format.
One peculiar change that will happen as the months’ progress is that the amount due for payment is reduced every month the loan is serviced resulting in reduction in the amount to be deducted as 5% monthly interest till the total loan is cleared.
For instance, the interest for the second month will be calculated as stated below:
(Principal – total first month payment): $200000 – ($1,666.67 + 833.3)
Interest for second month: $197,500.03 – 5% divided by 12
The differences continue to change and decline as the payment made continues to grow forcing down the value of the principal every month.
A more direct method is to use a formula where the needed values are imputed for each of the months till you have the 120 months stipulated completed. The formula is as stated below:
Where ‘A’ is the monthly payment intended. The ‘I’ is the varying monthly interest rate, ‘P’ being the loan initial amount and ‘n’ denotes the total number of payments to be made. You can input the values on a monthly basis to derive the value payable on monthly basis.
Free Loan Amortization Schedule Templates
Here is preview of a Free Loan Amortization Schedule Template in MS Excel Format.
Download link for this Loan Amortization Schedule Template.