Introduction to loan amortization

Loan Amortization in Google Sheets

Brent Allen

Instructor

What is a loan amortization table?

  • Periodic payments

  • Interest and principal

  • Finite length

Amortization table example

Loan Amortization in Google Sheets

Where are loan amortization tables used?

Places Normally Found

  • Mortgages
  • Car Loans
  • Student Loans

Places Normally Not Found

  • Credit Cards
  • Lines of Credit
  • Payday Loans
Loan Amortization in Google Sheets

Key elements of an amortization table

Required Elements
  • Interest rate
  • Amortization period of the loan
  • Frequency of loan payments
  • Amount of the loan
Not Required Elements
  • Inflation rate
  • Credit rating of the borrower
  • Value of the underlying purchase.
Loan Amortization in Google Sheets

Interest example

Monthly Interest on a $1,000 loan at 6% interest. Monthly Interest on $1000 at 6%

Loan Amortization in Google Sheets

Monthly payment example

  • Interest goes to the lender.
  • Principal Payment pays off the loan.
  • Monthly Payment remains the same.

Breakdown between interest and principal

Loan Amortization in Google Sheets

Paydown example

Loan paydown example

Loan Amortization in Google Sheets

Paydown example over time

Paydown example over time

Loan Amortization in Google Sheets

Let's start amortizing some loans!

Loan Amortization in Google Sheets

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