An amortization schedule is a periodic table of loan payments that shows the amount of principal and amount of interest of each payment until the loan is cleared at the end of its term. Initially, a larger percentage of each payment covers interest. Later in the schedule, most of each payment covers the loan’s principal. Amortization tables help loan recipients understand how their loan payments break down and enable them to predict their outstanding balance or interest cost in the future.
1. Scheduled Payments
Since the amortization schedule is a periodic table, it shows every payment an investor makes. These payments are recorded systematically to ensure no confusion during the transactions. It also shows an investor the required monthly payments. Out of that payment, a share goes to the interest expense. The remaining share pays down the loan balance.