An amortization chart contains information on the monthly payment of a loan, including how much of the monthly payment goes towards interest and how much goes towards the principal of the loan, according to TVMCalcs.com. It also shows the remaining principal after each payment.
Continue ReadingOther information included on an amortization chart is the total number of payments, the original loan amount and the annual interest rate, reports TVMCalcs.com. An amortization chart breaks down the monthly payments and contains a row with the payment, principal, interest and remaining loan balance for each payment of the loan term. For example, a three-year loan has 36 payments, so there are 36 rows in the amortization chart.
The monthly payment amount is calculated using the initial loan amount, annual interest rate and total number of payments, according to TVMCalcs.com. As the loan amount decreases over time, the amount paid towards interest each month also decreases. Typical amortization charts do not include extra principal payments, which are optional payments towards the principal loan amount only. Principal payments decrease the term of the loan as well as the amount of interest paid on the loan.
People can make an amortization chart in a spreadsheet program such as Excel using the data from their loan, explains TVMCalcs.com. A person also has the option to use an online amortization calculator to make a chart, states MyAmortizationChart.com.
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