how to create an amortization schedule with extra payments in excel

You can find loan amortization calculators on the Internet.

You want to reduce the principal amount for the debt with the highest interest rate. Your extra payment will have the biggest impact on the loan with the highest interest rate.

Consider the interest rate on the debts you have outstanding.

The faster you’re able to reduce principal, the less total interest you will pay over the loan term.

Whenever possible, make extra payments to reduce the principal amount of your loan faster.

You can use your knowledge of amortization to manage your personal debts. Since your mortgage loan and many car loans use amortization, you need to understand this concept. Use the concept of amortization to make smart choices about your finances.

You can also try an online amortization calculator.

monthly payment, interest rate) as this will allow you to quickly visualize how changes will affect each other over the life of the loan.

Even better is to set aside a separate set of columns and input your main loan variables (e.g.

Once entered correctly, simply drag your equation(s) down through the remaining cells to compute amortization over the life of the loan.

A spreadsheet makes the calculations significantly quicker because, if done correctly, you only have to enter a given equation once (or twice, as when you are using the previous month's calculation to fuel all subsequent calculations).

The total number of rows below those headings would be 360 to account for each monthly payment.

This calculation has a few moving parts and would best be accomplished in a spreadsheet where you've pre-loaded all your relevant info into column headings like: Principal, Interest Payment, Principal Payment, and Ending Principal. You will mostly be paying off the interest when you start making payments, and then your payments will start to go to the balance. However, the portion of the payment that is principal or interest will change. The dollar amount of the payment stays constant. Since amortization is a monthly calculation in this example, the term is stated in months, not years.

The term of the loan is 360 months (30 years).

To calculate amortization, you will convert the annual interest rate into a monthly rate.

Your interest rate (6%) is the annual rate on the loan.

If your loan has a balance outstanding of $100,000 (not counting any accrued interest), that is the principal. For example, say you are paying off a 30-year mortgage.

The principal is the current loan amount.

In this case, you will calculate monthly amortization. To calculate amortization, you also need the term of the loan and the payment amount each period. You’ll need the principal amount and the interest rate.

Gather the information you need to calculate the loan’s amortization.

How to create an amortization schedule with extra payments in excel