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How do you create a loan amortization table?

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Quick Answer

Loan amortization tables can be generated using specialized amortization schedule calculators accessible on Bankrate.com or on the Internet portals of organizations such as Pine Grove Software. Loan amortization tables can also be created using preprogrammed spreadsheet templates available at Vertex42.com and OpenOffice.com.

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Full Answer

In addition to using web-based amortization calculators and spreadsheet software, amortization tables can also be made manually, notes the Houston Chronicle. The first step involves drawing four columns on a piece of paper. The columns are labeled Payment Amount, Interest Paid, Principal Paid and Remaining Loan Balance, in that order. Scheduled payments are recorded in the first column, labeled Payment Amount; for instance, if a loan requires 12 payments of $300 each, this figure should appear 12 times in the first column.

The next step involves multiplying the interest rate by the remaining loan balance and recording the result on the second, Interest Paid, column, explains Chron. For instance, if a $1,000 loan attracts 5 percent interest, the result will be $50. After that, the figure in the second column should be subtracted from the amount recorded in the first, Payment Amount, column, and the result noted in the third, Principal Paid, column. The next step involves subtracting the figure in the third column from the original loan balance and documenting the result in the last, Remaining Loan Balance, column. These steps should be repeated for successive payments until the loan is fully repaid.

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