Amortization Schedule Calculator

We all aspire to own a beautiful home with the latest home appliances and expensive furniture and a car that makes our lives easier while still having some extra cash lying around in case of emergencies. You might not be able to afford all those things on a fixed income; this is when people generally turn to different banks and financial institutions for borrowing money and accessing extra finance. But are you aware of the actual cost you are paying to get these facilities?

Use the Amortization Schedule Calculator to Evaluate the Real Cost of Your Borrowings

Using the amortization schedule calculator can help you see through the small print provided by the banks at the time of lending you money. Borrowing is not just limited to individuals, businesses take up loans in order to meet their financial requirements. The Amortization schedule is a method used by most banks, let's see how we can define amortization accurately and how is it calculated.

Defining amortization, amortization schedule for loans

This method is used for all kinds of loans including mortgages and auto loans. Amortization is a technique used in accounting to lower the book value of the borrowed amount in a given period of time. It is used in paying off debt generally via Equated Monthly Installments (EMIs) over a preselected period of time. These payments are a combination of principal and interest which is paid over time. This method is generally used by lenders to finalize the amount of EMIs based on a specific maturity date.

The term amortization schedule refers to a complete table of payments that are generated through the amortization process explained above. It is used for spreading out a loan into a flow of fixed payments that will be due to be paid by you over the opted period of time. The monthly payment generally remains the same throughout the entire loan term, however, the components of this amount keeps changing.

The amortization schedules begin with the highest interest cost that keeps reducing during the loan tenure. This means the principal amount is reduced much slower in the beginning months. Put simply, you pay the interest part majorly and the principal balance does not reduce especially in long term loans. Gradually interest part of the EMI is reduced proportionally.

Other than calculation for loans, Amortization is also used for spreading the cost of intangible assets in businesses, let's take a look at this another use of amortization.

Amortization for spreading the cost of intangible assets

This calculation replaces the loan value with the cost of intangible assets that is spread over its estimated useful life. When you as a business amortize expenses over time, it will help you compare the cost of these assets with the revenue they generate during their lifetime.

The amortization of intangible assets accesses the certain expenses like goodwill patents, trademarks and copyrights, franchise or trade names, insurance, licensing expenses, permits, and expense of the workforce including their education and training.

Calculation of amortization is a bit of a lengthy process which you may perform using spreadsheets, however, there is an easier way to do these calculations, use an online calculator such as the Amortization Schedule Calculator designed by iCalculator. Let's have a look at the method of using this calculator.

Using the amortization schedule calculator for your borrowings

In order to get the results, you will need to input below details:

• Loan Amount: The principal amount of the loan that you are borrowing from a bank or a financial institution or in case of using it for spreading the cost of intangible assets, you may enter the amount that you have paid for acquiring the asset in question.
• Interest Rate: Input the rate of interest that is being offered by the bank. You may enter a straight line rate at which you want to expense the value of the intangible asset in question.
• Term: This is the preselected term in case of loan, and in the case of spreading the cost of intangible assets, you will be required to enter the useful life of the asset. This term can be entered in the form of months or years by selecting the drop down option.

On the basis of your inputs the calculator will provide you with the results.

You may take advantage of the calculator as it provides you with two kinds of results, Monthly Payment and Total Interest without prepayment.

The calculator performs the calculations in the simplest way possible for you. You may use the results to compare offers by different banks to get the best deal.