Installment loan is a loan that requires the borrower to repay the principal in installments. The installments have both principal and interest on the amount remained due for the year. The borrower has to pay the principal loan in installments as per the amortization schedule.
Assume you borrowed $150,000 at 12% for 10 years. The bank requires you to pay the loan in 10 equal installments and each installment is set to be $26547.62.
The loan will be fully paid in 10 years as follows.
|
Period |
Installment |
Interest (12%) |
Principal Paid |
Principal remaining |
|
0 |
- |
- |
- |
150,000.00 |
|
1 |
26,547.62 |
18,000.00 |
8,547.62 |
141,452.38 |
|
2 |
26,547.62 |
16,974.29 |
9,573.33 |
131,879.05 |
|
3 |
26,547.62 |
15,825.49 |
10,722.13 |
121,156.91 |
|
4 |
26,547.62 |
14,538.83 |
12,008.79 |
109,148.12 |
|
5 |
26,547.62 |
13,097.77 |
13,449.85 |
95,698.27 |
|
6 |
26,547.62 |
11,483.79 |
15,063.83 |
80,634.45 |
|
7 |
26,547.62 |
9,676.13 |
16,871.49 |
63,762.96 |
|
8 |
26,547.62 |
7,651.56 |
18,896.06 |
44,866.90 |
|
9 |
26,547.62 |
5,384.03 |
21,163.59 |
23,703.30 |
|
10 |
26,547.62 |
2,844.40 |
23,703.30 |
0.00 |
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