Amortization Schedule
A complete schedule of periodic blended loan payments, showing the amount of principal and the amount of interest that comprise each payment so that the loan will be paid off at the end of its term. Early in the schedule, the majority of each periodic payment is interest. Later in the schedule, the majority of each periodic payment is put toward the principal. Investopedia Says:
If you know the term of a loan and the total periodic payment, an easy way to calculate an amortization schedule is to do the following: Starting in month one, multiply the loan balance by the periodic interest rate. This will be the interest amount of the first month's payment. Subtract that amount from the total payment, which will give you the principal amount.
To calculate the next months' interest and principal payments, subtract the principal payment made in month one from the loan balance, and then repeat the steps from above. Related Terms:
Alternative Mortgage Instrument
Amortization
Balloon Maturity
Equated Monthly Installment - EMI
Fully Amortizing Payment
Growing-Equity Mortgage
Inflexible Expense
Negative Amortization
Self-Amortizing Loan
Term Loan |