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In the case of a business loan, they are usually paid back either quarterly/semi-annually or annually. Payments are equal payments over time. The process of making these payments is called loan amortization.
Most commonly with business loans, the business or borrower pays the interest on the loan when the loan comes due plus some fixed amount of the principal. This debt is said to be amortized when it is paid off in equal installments over its term or life. The principal paid is the same every time period. It is only the interest that changes. As the loan is paid, the interest payments become smaller and more of the principal is reduced and finally paid off.
Its a schedule of repayment of installments in future, suppose, if the loan is5 years then the amortization schedule will for5 years depending on monthly or quarterly or semi annual installments.
Yes Mr Vinod, The amortization of a loan is the method are being used through a table of payment amounts and timing for such loan plus it`s interest . The fixed amount are being paid in installments monthly or semi-annually or even quarterly are to write off the amount o interest plus an amount of the basic principal. Most of the creditors used to use this method to write off the interest first with long percentage with a very little part of the principle until certain time the amount of the basic loan will be more than the interest as most of the interest already paid.
Please find enclosed an example of amortization schedule for $1000 with interest5% for one year with a normal conditions.
Date Interest Principal Balance
Jan,2015 $4.17 $81.44 $918.56
Feb,2015 $3.83 $81.78 $836.78
Mar,2015 $3.49 $82.12 $754.66
Apr,2015 $3.14 $82.46 $672.20
May,2015 $2.80 $82.81 $589.39
Jun,2015 $2.46 $83.15 $506.24
Jul,2015 $2.11 $83.50 $422.74
Aug2015 $1.76 $83.85 $338.89
Sep2015 $1.41 $84.20 $254.70
Oct2015 $1.06 $84.55 $170.15
Nov2015 $0.71 $84.90 $85.25
Dec,2015 $0.36 $85.25 $0.00
2015 $27.29 $1,000.00 $0.00
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Agree Sir.
Thanks for the answers to these questions and really where a lot of additional knowledge Thank you very much
In the case of a business loan, they are usually paid back either quarterly/semi-annually or annually. Payments are equal payments over time. The process of making these payments is called loan amortization. Agree with the details by the experts.
