12-26-2012 08:22 PM
I have a question about amortization and the payment chart that Travis84 made.
If the payments in the early stages of paying off a loan pay more of the interest, would it make more sense to pay a higher amount at the beginning to aggressively tackle the interest? Then you could pay a lower amount once you are into more of the principal amount.
But the spreadsheet Travis84 made has the higher payments at the end...
I am just learning about amortization...
12-27-2012 03:24 PM
I will agree with you that the ideal way to pay off a loan is to pay as much as possible. Paying more in the early stages of a loan, will reduce the total interest paid. The reason I set the loan up that way is because the assumption is fresh out of college, you don't make as much, and can expect to get pay raises as you advance in your career. I also had it set up so my payment jumps 100.00 when my car is paid off, since I will have more money to put towards the loan.
I also saw a few recent request for this doccument. I don't know what happened to it. I don't have it on my computer to reupload either. My plan was very consertative, and I've been agressive with payments, so I am a bit more than 2 years ahead of my schedule, so I stopped using the spreadsheet about a year ago. With a bit of work in excel, anybody can use the pictures as a template to make a sheet customized to them.
12-27-2012 04:32 PM
Ahh that makes sense. I have seen student loan repayment plans that are graduated that way as well.
Best of luck to you Travis84 and thanks so much for sharing the good spreadsheet!
myFICO is the consumer division of FICO. Since its introduction 20 years ago, the FICO® Score has become a global standard for measuring credit risk in the banking, mortgage, credit card, auto and retail industries. 90 of the top 100 largest U.S. financial institutions use the FICO Score to make consumer credit decisions.>> About myFICO