Irrespective of whether you are a borrower or a lender, you will want to know how to create an amortization schedule and leverage it as your essential tool to keep track of your loan payments over the given period.
We aim to organize data using Excel, and creating an amortization schedule can help. Since not everyone knows how to create an amortization schedule, we will tell you how to set it up and share with you some effective templates that you can use.
What is an Amortization Schedule in Excel?
An amortization schedule is essentially a chart that comprises a couple of pieces of information that provide you a better insight about your overall loan that is easy to ignore when you only see the numbers upfront.
An amortization schedule tells you how much you pay monthly, which is the same on most types of loans. The amortization schedule tells you how much from each payment will go towards the principal, which is the amount that you took out for a loan and the amount that is going towards the interest, which is the amount that you are paying the bank to have this loan.
And, of course, the amortization schedule will show you the total interest you pay overtime each month and the total of your actual payment left for the principal.
Preparation for Setting Up Excel for Amortization Schedule in Excel
Before we proceed to understand how to create an amortization schedule in Excel, you will want to know everything about the preparation for setting up Excel for setting up the amortization schedule.
How to Set up Excel
To set up Excel, you will want to follow the below-given steps:
Step 1: Open Excel and open a new spreadsheet in Microsoft Excel.
Step 2: Create the proper labels in the “A Column” to organize your information.
Step 3: Proceed to put the following details:
Loan Amount
Interest Rate
Months
Payments
Step 4: Put the loan information in the “B Column.”
Step 5: Click the “B4” cell and type the following formula:
“ROUND(PMT($B$2/12,$B$3,-$B$1,0), 2)”
Step 6: Create a Column Headers in “Row 7” to add the following additional data:
Period
Beginning Balance
Payment
Principal
Interest
Cumulative Principal
Cumulative Interest
Ending Balance
Step 7: Populate the “Period Column.”
Important Notes:
You will want to prepare the data before creating the amortization schedule.
Make sure you have the right Excel version to ensure compatibility.
Basic Excel Navigation Tips
Here are some basic spreadsheet navigation tips that you might need to create a loan amortization schedule in Excel:
If your Excel workbook has many worksheets, you can find navigation buttons at the bottom left-corner of the sheet that you can click on to get to the worksheet that you want to work on.
You can try some keyboard shortcuts to navigate between the Excel worksheets.
You can use the following shortcut to go to the “next” worksheet:
To move to the “previous” worksheet, you will want to use the following shortcut:
For easy worksheet management, you will want to “right-click” on any sheet tab, which will display a shortcut menu of worksheet options.
How to make an amortization schedule in Excel?
When it comes to how to create an amortization schedule in Excel, generally, you have two options to choose from. You can use templates directly, or you can create an amortization schedule manually.
Create an Amortization by Using Templates Directly
When it comes to how to create an amortization schedule in Excel, you can benefit from the free invoice templates that are available in Microsoft Excel.
Have a look at the templates:
Loan Amortization Schedule
You can customize this template and put in your values to make accurate calculations.
This is another example of using Microsoft Excel to create an amortization schedule in Excel:
WPS Template – Loan Amortization Schedule
WPS Office is a free alternative to Microsoft Office that comprises tons of free templates that you can use, download, and customize according to your needs.
Useful Loan Amortization Schedule WPS
You can use an amortization schedule template to create an amortization schedule in Excel, which will make the entire creation process easier. With a few clicks, you can easily export the template in your Excel spreadsheet to make the calculation and assessment easier.
The WPS templates, for instance, are pre-structured Excel documents that comprise fillable fields and can help you create an amortization schedule without having to manually type the complex formulas that are part of the process.
How to Create an Amortization Schedule in Excel Manually
Here are the steps for how to create an amortization schedule in Excel manually:
Step 1: Open Excel and create a new spreadsheet.
Step 2: Create the labels for column A.
Step 3: Proceed to enter loan-related information in column B.
Step 4: Type the following formula to calculate payments in the “B4” cell:
ROUND(PMT($B$2/12,$B$3,-$B$1,0), 2)
Step 5: Navigate to the row 7 to create a column header. Proceed to enter the following labels in row seven.
Period
Beginning Balance
Payment
Principal
Interest
Cumulative Principal
Cumulative Interest
Ending Balance
Step 6: Populate the “period” column.
Populate the “Period” column with your respective payment dates. Use the “A8” cell to add the Month and Year for the first loan installment.
Step 7: Fill in the cells from “B8” to “H8.” Go to the “C8” cell and type the following: "=$B$4,” and proceed to press “Enter.”
Step 8: Enter the following formula: “ROUND($B8*($B$2/12), 2)” in cell E8. Go to the “D8” cell to calculate the difference in the loan interest amount using the following formula: “$C8-$E8.”
Step 9: Use the crosshairs to complete the rest of the amortization schedule.
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How to Download WPS Office Suite?
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FAQs
What is the difference between amortization and payment schedules?
Regarding the difference, a payment schedule indicates the payment that is due on what date without revealing anything else. Compared to that, an amortization schedule provides more transparent payment information, including the interest amount.
Is creating an amortization schedule with irregular payment amounts possible?
Yes, it is possible to create an amortization schedule with irregular payment amounts as long as the payments are going toward the principal and not the interest. A single extra payment can reduce the interest and the amount of interest.
WPS Office – A Great Free Alternative to Microsoft Excel
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You can immensely benefit from the free templates, including Excel templates for all types of occasions, including customer invoices and balance sheets, and for creating an amortization schedule in Excel. This powerful free software allows users to streamline their workflow and boost their productivity.
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