An amortization table is a breakup of installment amount related to a mortgage or lease payments. The table breaks the installments into principle and interest payment and also tracks the remaining principal to be paid.
To understand it lets assume that a bank offers a finance lease for the car that has a 5 years installment plan. The bank will pay the total amount of car i.e. $199,635.50 now and will require the lessee to pay the amount in 5 equal installments of $50,000 each and the interest rate implicit is 8%. The following amortization table will be formed.
|
Period |
Installment |
Interest (8%) |
Principal Paid |
Principal Remaining |
|
0 |
- |
- |
- |
199,635.50 |
|
1 |
50,000.00 |
15,970.84 |
34,029.16 |
165,606.34 |
|
2 |
50,000.00 |
13,248.51 |
36,751.49 |
128,854.85 |
|
3 |
50,000.00 |
10,308.39 |
39,691.61 |
89,163.23 |
|
4 |
50,000.00 |
7,133.06 |
42,866.94 |
46,296.29 |
|
5 |
50,000.00 |
3,703.70 |
46,296.30 |
0.00 |
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