REY DAVID DE LIRA ROBLES.

10ª. UNIVERSIDAD TECNOLÓGICA EL RETOÑO.

AMORTIZATION TABLE.
An amortization table is a table showing the payment schedule (principal and interest)
that must be faced when a loan is granted.
That is, the repayment schedule is a summary of all the payments that the borrower (the
person who enjoys the loan) has to make during the life of the loan. For example, in the
table will be how much we will have to pay interest, repayment of the principal and what
is the outstanding debt in each period.

Components of a depreciation table.

The amortization table is usually made up of five columns:

 Period: It is usually found in the first column, that is, each period refers to the
moment in which the payment has to be made.
 Interest: It is in the second column. Here are the interests that the borrower pays
the lender in each period. It is calculated by multiplying the interest rate agreed by
the outstanding capital (which, as we will see, is the fifth column). The interest can
be fixed or variable.
 Amortization of capital: It is usually in the third column. The repayment consists of
the repayment of the loan, without counting the interest. That is, it is what is
deducted each period of outstanding capital.
 Fee to pay: It is in the fourth column. It is the sum of interest and amortization.
 Loan capital pending repayment: It is in the fifth column. To calculate it, the
outstanding capital of the previous period and the amortization of the current
period are subtracted in each period.
An amortization table may have different implications, depending on its interest rate:
If the interest rate is fixed: The repayment schedule is real and definitive from the first
moment. That is, the payment schedule established in the granting of the loan is the one
to be applied.
If the interest rate is variable: The amortization table is a simulation. That is, it is a
forecast of payments, but it is not the definitive payment schedule, since interest rates
will change over time.
TYPES OF AMORTIZATION
The loan repayment can be done in various ways. The most important are the following:

 Through constant capital amortization (the third column, as in the graphic

example). The fee to be paid each time is smaller, since the interests are smaller as
time passes. It is also known as the French method or progressive (quota) method.
If you indicate that you provide us with a French amortization schedule, it has been
carried out with this method.
 Through constant quotas (the fourth column). In this case, the fee to be paid is
always the same, while the loan repayment is lower at the beginning and higher at
the end. It is the most common method for paying fixed rate mortgages.
 Through a single repayment, at the end of the loan or American method. In this
case, only interest is paid during the life of the loan and, at the end of the loan, the
entire amount of the borrowed capital is paid. For example, it is used for
repayment of interest and principal of bonds.

EXAMPLE.