You probably think that loan amortization schedules are only used by bankers and financial traders, right? Well, think again! In this article, we will show you how to harness the power of Google Sheets’ key financial formulas to analyze your own loans, such as student loans, car loans, and mortgages. We will create a dashboard in Google Sheets that utilizes visualizations and conditional formatting to produce presentation-ready spreadsheets that will impress any financial manager!
By Brent Allen, Financial Spreadsheet Expert.
The Basics of Financial Formulas in Google Sheets
Before diving into the details, let’s first understand the basics. Loan amortization schedules are used for mortgages, car loans, and student loans. However, they are not used for credit cards, lines of credit, or payday loans.
Here are the essential elements required to create a loan amortization schedule:
- Interest rate
- Loan amortization period
- Payment frequency
- Loan amount
Key Financial Formulas
Here are the main formulas you will use to create your loan amortization schedule in Google Sheets:
PMT(Interest Rate, Loan Amortization Period, Present Value, [Future Value], [End or Beginning])PPMT(Interest Rate, Current Period, Total Amortization Periods, Present Value, [Future Value], [End or Beginning])IPMT(Interest Rate, Current Period, Total Amortization Periods, Present Value, [Future Value], [End or Beginning])
These formulas will allow you to calculate the interest and principal payments for each period of your loan.
Creating a Functional Amortization Schedule
Now that you know the basics, let’s move on to creating a fully functional loan amortization schedule in Google Sheets. You will need to input important dates such as the loan date and payment date. You will also be able to customize your schedule by using different payment frequencies, such as monthly, bi-weekly, or semi-annually.
To make your schedule more visual, you can create online charts, bar charts, line charts, scatter plots, and histograms. By using data validation and cell protection, you can also create customizable dashboards.
Tips for Adjusting Amortization Schedules to Real Life
In real life, you may encounter more complex scenarios that require additional adjustments in your amortization schedule. For example, you may need to take into account upfront fees and lump-sum payments. You may also come across variable-rate loans, with maximum interest rates and negative amortization.
Non-amortized fees, such as moving fees and legal fees, need to be factored into your schedule. Additionally, mortgage loans can be more challenging to calculate due to multiple payments.
If you have an open loan, you can make additional payments throughout the loan. In that case, you will need to manually calculate the interest and principal payments for each period based on the outstanding balance. On the other hand, if you have a closed loan, you cannot increase the payments during the loan term without penalties.
Variable-rate loans also present their own set of challenges. Interest rates can fluctuate throughout the loan term, and amortization can accelerate when interest rates decrease. It is important to be aware of the maximum applicable interest rate.
Conclusion
Now that you have learned how to create a loan amortization schedule in Google Sheets, you can take control of your own loans. Explore all the features of Google Sheets to create personalized schedules, impactful charts, and convenient dashboards. Remember to follow good financial practices and make necessary adjustments to reflect reality.
If you want to learn more about advanced features of Google Sheets or need help creating your loan amortization schedule, visit Crawlan.com. We are here to help you succeed in your financial projects!
Now, go ahead and manage your loans like a pro!
