We often hear the term amortization in loan terms. Installments have the same number every time the payment period arrives, but payments will increase concerning interest rates. In the long run, the repayments in the amortization schedule excel are very small and vice versa. Here is a spreadsheet that can help you to understand it.
Part of Amortization Schedule Excel
1. Loan information
In this section, fill in the information in the form of total loans, annual interest rates, and terms. You also need to write the first payment date which will be the next. The frequency of payment is also written and depends on the policy. There is a daily, weekly, monthly or annually frequency.
A summary is an information about how the debtor has paid part of his debt so far. Enter the number of payments or the number of times the debtor has paid. Write the total payment and also the total interest. After that, calculate the estimation of interest saving. The summary will make it easier to find out the actual remaining debt.
3. Amortization Schedule
In the first column, write the due date of each time the debt payment period. The second column contains the amount to be paid and already paid. Separate from the additional payment which may be in the form of a fine if the payment passes due date. Put interest in a different column. Interest will depend on inflation or the exchange rate.
Benefit of Amortization
1. It’s intangible
Loans are assets that have no physical form so that they have a value and their value can be measured. That is why amortization becomes part of intangible assets. You can enter this in your asset register. Over time, its value will decrease when compared to the income you have.
Before the due date, you need to pay some money to the provider. Late payment will make interest rates higher so there are other costs outside the principal. By making an amortization schedule excel, you can find out when you have to pay to avoid multiplying interest.
You can create this schedule with the provider. In addition to making it, you also have to understand the information in it. That way, every payment will always be transparent and there is no difference. This helps you avoid fraud or increased interest without your prior knowledge.
There are many types of amortization schedule excel that you can use. Before starting repayments, you should know what risks occur if you make a decision. For example, by taking the long term, you certainly pay cheap for a long time. Conversely, higher costs have a shorter payment period.