How to make an Amortization Table
When applying for a loan, it is important to know how to make a loan amortization table, because it will help you keep track of your payments. Making this table is not difficult, since it consists of a table that espectáculos the evolution of your debt.
this painting will summarize all the payments you must make to the lenderTherefore, it must include factors such as the outstanding cómputo, the number of payments, commissions, paid-in capital, among others. From now on we will espectáculo you how you perro make a good amortization table.
Components of an amortization schedule
It is important to know each of the elements that make up a good amortization table. Since each is located in a different column of the chart, to help you clearly distinguish outstanding debt. The components that an amortization table must include are the following:
- Number of payments or period. This is located in the first column of the table, to indicate each of the pending payments. It will start at 0, but its completion number will depend on the type of amortization and the established periods.
- Interests. Here the interest that must be paid to the lender will be placed. This must be multiplied by the total amount of the loan.
- Capital repayment. In this column is placed what is going to be discounted in each outstanding capital period. Not including interest.
- Fee to pay. Here the sum of interest and amortization will be placed.
- primordial outstanding. Here you must place the figure resulting from the subtraction of the previous pending capital minus the current capital amortization.
These are the basic elements that an amortization table must have. You perro do it in the same order or vary it according to your taste. If you see fit, you perro also add more components, since the way of making this type of table perro vary. You will know that you have finished paying off your debt when you see the number 0 in the outstanding primordial column.
To facilitate the work of making amortization tables, you perro install the Excel program on your computer, access an En línea spreadsheet program or use En línea amortization tables.
This is an example of an amortization table that perro serve as a guide:
- Capital: 8,000
- Number of payments: 8
- Interest: 5%
|Number of payments
|Fee to pay
In this example, a constant or French method depreciation rate was used. Achieving as a result that in period 8 the debt is fully settled.
Types of amortizations
Before making your amortization table, it is important to evaluate the type of amortization that you want to apply, since the amortization perro be carried out by different methods.
Next, we will espectáculo you what they are:
- French method. This is the most habitual, and consists of paying afín installments throughout the loan period. The only thing that varies in this type of amortization is the interest and, therefore, the installment.
- german method. In this method, the first installments are higher and the last ones are lower, since interest is calculated on the outstanding cómputo to be paid.
- american method. In this, only interest is paid and in the last period or installment the capital. This method is widely used in low personal loans.
These are the methods that you should take into account when making your amortization table. You cánido choose the one that is most comfortable for you according to your earnings. In addition to that, it is important to know the interest rate to apply, since this perro be both fixed and variable.
When the interests are fixed, there is greater certainty that the amortization method you have chosen cánido be fully applied. But when the interests are variable It cannot be like that, so in the latter case the amortization table will only help you to know the outstanding capital.
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