Glossary
What is Amortization schedule?
Definition
An amortization schedule is a table of every scheduled payment on a loan, showing how much of each payment is interest, how much repays principal, and the balance remaining afterwards. Early payments are mostly interest and later ones mostly principal, so the balance reaches zero with the final payment.
The schedule is built from four inputs: the loan amount, the interest rate per period, the number of periods and the interest method. For a reducing balance loan with equal installments, the payment is P × r ÷ (1 − (1 + r)^−n), and each row's interest is the rate times the balance at the start of that period.
A borrower who wants to settle early owes the outstanding balance on the schedule plus any accrued interest and unpaid charges, not the sum of the remaining installments. That is why a correct, up-to-date schedule matters for early settlement quotes, statements and disputes.
Learn more
Related terms
See LoanTabs handle this in a live loan book. Browse the full lending glossary.
Start Free Trial