Loans are a part of many people's lives. The typical loan, especially the mortgage kind, is amortizing, which means that the principal balance is paid down through payments throughout its life. A loan amortization schedule is a common tool that borrowers use to keep track of how much of the principal balance they have paid so far. Some people make their own schedule using computer programs, while others obtain one from the Internet or from their lender.
A few crucial details are needed to have an accurate result in a loan amortization schedule. The loan amount, annual interest rate, and number of years that the loan will last are typically the first numbers that are put in. The payment frequency and compound period, which are both typically monthly, are also needed. Most amortization schedules also allow space for users to note the months in which they pay an extra amount toward principal.
The typical loan amortization schedule offers a summary of the interest paid, and the number of months left on the loan, to name a few items of information. Many amortization schedules allow users to put in the numbers for loans that are not common. For example, some schedules also work for loans that are paid bimonthly, quarterly, weekly, or some other frequency, instead of just monthly. There are so many schedules available that most borrowers can find what they are looking for quite easily, no matter their circumstances.
Some people use a loan amortization schedule before they even obtain the loan, which can allow them to see just how quickly they can pay it off. This is because many amortization schedules allow the numbers that are input to be manipulated. Borrowers can find out how longer terms, bimonthly payments, and extra payments toward principal can affect what they pay in interest in the long run. Of course, other factors can usually be changed on schedules, as well.
Most people can get a loan amortization schedule from their lender, while others might find calculators online that offer the same or other features. Some borrowers prefer to make their own, either through special computer software, or with templates to use on standard spreadsheet programs. For those creating their own schedules, formulas that can create accurate results can be found for free online. Since many formulas are difficult for the average borrower to follow and apply, however, it is often easier to find a reputable schedule on a lender's website.