How to Prepare Amortization Schedule in Excel

An amortization schedule shows the interest applied to a fixed interest loan and how the principal is reduced by payments. It also shows the detailed schedule of all payments so you can see how much is going toward principal and how much is being paid toward interest charges. What's more, an amortization schedule is easily created on Microsoft Excel. Start at Step 1 to make your own schedule at home without wasting money by hiring someone else to make it!

Steps

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    Launch Microsoft Excel and open a new spreadsheet.
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    Create labels in cells A1 down through A4 as follows: Loan Amount, Interest Rate, Months and Payments.
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    Include the information pertaining to your loan in the cells B1 down through B3.
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    Enter your loan interest rate as a percentage.
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    Calculate your payment in cell B4 by typing " =ROUND(PMT($B$2/12,$B$3,-$B$1,0), 2)" into the formula bar without the quotation marks and pressing the Enter key.
    • The dollar signs in the formula are absolute references to make sure the formula will always look to those specific cells, even if it is copied elsewhere into the worksheet.
    • The loan interest rate must be divided by 12, since it is an annual rate that is calculated monthly.
    • For example, if your loan is for $150,000 at 6 percent interest for 30 years (360 months), your loan payment will calculate out to $899.33.
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    Label the columns from cell A7 across through H7 as follows: Period, Beginning Balance, Payment, Principal, Interest, Cumulative Principal, Cumulative Interest and Ending Balance.
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    Populate the Period column.
    • Enter the month and year of the first loan payment in cell A8. You may need to format the column to show the month and year correctly.
    • Select the cell, click and drag down to fill the column to cell A367. Make sure the Auto Fill Option is set to "Fill Months."
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    Complete the other entries in cells B8 through H8.
    • Key the beginning balance of your loan into cell B8.
    • In cell C8, type "=$B$4" and press "Enter."
    • In cell E8, create a formula to calculate the loan interest amount on the beginning balance for that period. The formula will look like "=ROUND($B8*($B$2/12), 2)". The single dollar sign creates a relative reference. The formula will look for the appropriate cell in the B column.
    • In cell D8, subtract the loan interest amount in cell E8 from the total payment in C8. Use relative references so this cell will copy correctly. The formula will look like " =$C8-$E8."
    • In cell H8, create a formula to subtract the principal portion of the payment from the beginning balance for that period. The formula will look like " =$B8-$D8."
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    Continue the schedule by creating the following entries in cells B9 through H9.
    • Cell B9 should include a relative reference to the ending balance of the prior period. Type "=$H8" in the cell and press the Enter key. Copy cells C8, D8 and E8 and paste them into C9, D9 and E9. Copy cell H8 and paste it into H9. This is where the relative reference becomes helpful.
    • In cell F9, create a formula to tabulate cumulative principal paid. The formula will look like this: " =$D9+$F8." Do the same for the cumulative interest cell in G9 which will look like this: " =$E9+$G8."
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    Complete the amortization schedule.
    • Highlight cells B9 through H9, mouse over the bottom right corner of the selection to receive a crosshair cursor and then click and drag the selection down to row 367. Release the mouse button.
    • Make sure the Auto Fill Option is set to "Copy Cells" and that the final ending balance is $0.00.

Tips

  • If you do not receive a final ending balance of $0.00, make sure you have used the absolute and relative references as instructed and the cells have been copied correctly.
  • You can now scroll to any period during the loan payment to see how much of the payment is applied to the principal, how much is charged as loan interest and how much principal and interest you have paid to date.

Warnings

  • This will only work for home loans that calculate monthly. If the loan is a car loan or a daily compounded loan, this will only give rough estimates for interest paid.

Things You'll Need

  • Computer
  • Microsoft Excel
  • Loan details

Article Info

Categories: Microsoft Excel