How to Create an Amortization Schedule Using Excel Templates?

Creating an amortization schedule using Excel templates is a great way to keep track of loan payments and understand how they’re applied to principal and interest over time. Here’s a step-by-step guide to help you create an amortization schedule using Excel:

1. Open Excel: Open Microsoft Excel on your computer.
2. Download an Amortization Schedule Template: There are many free amortization schedule templates available online. You can search for one using a search engine or browse through Microsoft’s template library. Look for templates specifically labeled “loan amortization schedule.”
3. Enter Loan Details: Once you’ve downloaded the template, open it in Excel. You’ll need to enter your loan details:
   • Loan Amount: The initial amount borrowed.
   • Interest Rate: The annual interest rate of the loan.
   • Loan Term: The number of months or years for repayment.
   • Start Date: The date when the loan payments begin.
4. Calculate Monthly Payment: Use the Excel formula PMT to calculate the monthly payment based on the loan amount, interest rate, and loan term. The formula should look something like this:
   =PMT(interest rate/12, loan term in months, -loan amount)


   Replace “interest rate” and “loan term in months” with your actual values.

5. Populate the Schedule: The template will likely have columns for Payment Number, Payment Date, Beginning Balance, Payment, Interest Payment, Principal Payment, and Ending Balance.
   • Start with Payment Number 1 and Payment Date equal to your start date.
   • The Beginning Balance for Payment Number 1 will be the original loan amount.
   • Use the calculated monthly payment for Payment.
   • Calculate Interest Payment using Beginning Balance * Interest Rate / 12.
   • Calculate Principal Payment using Payment - Interest Payment.
   • Calculate Ending Balance using Beginning Balance - Principal Payment.
6. Drag Formulas: Enter the formulas for the first row, then drag them down to populate the rest of the rows in the amortization schedule.
7. Format the Schedule: Format the schedule to make it clear and easy to read. You can use bold fonts, currency formatting, and data bars to highlight important information.
8. Graphical Representation (Optional): You can create a line chart in Excel to visualize how the principal and interest components change over time.
9. Review and Save: Double-check your entries and calculations. Save the Excel file with a descriptive name.

Using an Excel template makes it easier to create an accurate and organized amortization schedule. However, if you’re not comfortable with creating complex formulas, you can also consider using specialized loan amortization calculators available online.