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Finance

How to Create an Amortization Schedule

It is not easy to escape the shackles of debt, but with the right tools, things become a little easier. This is where an amortization schedule can be your friend as it helps to show what impact the payments you make have on the amount you owe, both in principal and interest. Just so we’re reading from the same hymn sheet, a loan amortization schedule is basically a table that illustrates, in a dumbed-down manner, how long it will take to service the loan. It does so by showing every single payment you make over the course of a loan, detailing the updated principal after each periodic payment, as well as the interest.

This handy schedule demystifies the monster that is a loan by showing you exactly how long it will take you to pay off your loan if you are making a given payment each month. The beauty of it is that unlike spreadsheet formulas and macros that require specialized skills, an amortization schedule is extremely user-friendly and anyone can use it. It’s one of those tools, simple yet extremely effective. And creating one is a piece of cake.

There are several ways on how to create an amortization schedule, but here is one that will take youless than 5 minutes.

Launch Microsoft Excel

excel program

Your first step is to launch your Microsoft Excel program. 

Click on New

excel new sheet

Open a new spreadsheet by selecting the “New” option from the left side of the bar.

Make a Search

excel search

You will find a search provision that allows you to search for online templates. Type the search term “amortization schedule” and click on the small magnifying glass on the right end of the search bar. You can as well hit the Enter key on your keyboard. The results should be able to yield several template options as shown below (this is Microsoft Office version 2013).

Select Template and Create

excel create

Choose one of the templates from your list of choices. For simplicity purposes, however, opt for the template labeled Loan amortization schedule (it is the first item on the left as in the illustration in Step 3). The third listed option is a nice choice too because it generates schedules efficiently and with ease. Both make for great resources when filed as print-outs, so something else to consider if you want to keep hard-copy references. After selecting the template, simply click create and the template will download.

Create Schedule

excel amortization loan schedule

Above is a screenshot of Item 1 from our template options, as it displays after downloading. From there, you can go right ahead and edit the values as regards your loan: change the principal, key in the interest rate and all the other small details – loan period, number of payments you will be making annually, loan start date and any extra payments if any.

And just like that, voila, the rest will be done for you. Neat and clean. More power to the computer!

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