Definition of 'Amortization Schedule'
A complete table of periodic blended loan payments, showing the amount of principal and the amount of interest that comprise each payment so that the loan will be paid off at the end of its term. While each periodic payment is the same, early in the schedule, the majority of each periodic payment is interest. The percentage of each payment that goes toward interest diminishes a bit with each payment, and the percentage that goes toward principal increases. Later in the schedule, the majority of each periodic payment is put toward the principal. The last line of the schedule shows the borrower’s total interest and principal payments for the entire loan term.
Investopedia explains 'Amortization Schedule'
For example, the first few lines of an amortization schedule for a $250,000, 30-year fixed-rate mortgage with a 4.5% interest rate would look like this:
An amortization schedule is used for loans whose payoff date is known at the time the loan is taken out, such as a mortgage or car loan. If you know the term of a loan (30 years) and the total periodic payment ($1,266.71), an easy way to calculate an amortization schedule without using an online amortization schedule calculator is to do the following: