By using amortization calculation became very easy even in the above scenario. In loans, more prepayment is done will result in less interest as principal balance will reduce. If any borrower does part payment his amortization schedule changes and effect of same is visible on EMI or tenure that means borrower can request for tenure change where EMI tenure will reduce and his EMI amount will be same or he can request for the change in EMI where EMI amount will reduce and tenure will be the same. It gives deep details from starting till maturity of the loan. Amortization is used in Personal loan, Home loan, Auto loan repayment schedule preparation.
Significance and Use of Amortization Formula ƥ = 0.1 * 100,000 / 12 * Īnd now, to calculate interest paid we will put value in interest formula.
Now, we have to calculate the EMI amount and interest component paid to the bank.Īmortization is Calculated Using Below formula:
You can download this Amortization Formula Excel Template here – Amortization Formula Excel TemplateĪ salaried person took home loan from a bank of $100,000 at the rate of interest of 10% for a period of 20 years.