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Personal Loan Amortization

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					                 TT24 - Comparison of Different Loan Calculation Methods
                                   6-Nov-07
                          Personal Finance: Another Perspective

Purpose:
The following is a spreadsheet of three different methods used to calculate consumer loan
payments: Simple Interest (using your calculator), Add-on Method and Discount Method.
While we have been counseled that the only good debt is for a home and education, you should
also help others to never use the Add-on or Discount Method for installment debt.
This spreadsheet uses the amount, payment periods, and years from the first spreadsheet, then
shows how each of the other methods calculates payments. Finally, by changing
the calculated APR, you can see the impact of the loan amortization table. Only when the
"Calc. APR" equals the "Calculate rate using Excel "Rate" function" will the remaining
principle in the last month go to zero and so you will know that the APR is correct. Please only
in the "green" areas and leave all other areas as is.

Disclosure:
The purpose of this spreadsheet and this class is to help you get your financial house in
order and to help you on your road to financial self-reliance. If there are mistakes in this
spreadsheet, please bring them to our attention and we will correct them in upcoming
versions. The teacher, and BYU, specifically disclaim any liability, or responsibility for
claims, loss, or risk incurred, directly or indirectly, from using this material.
                                                                      TT24 - Comparison of Different Loan Calculation Methods
                                                                                         Personal Finance: Another Perspective


                  Note: This spreadsheet is more of a tool to help in teaching than to help in managing your family finances.
                  The following is a spreadsheet of three different methods used to calculate consumer loan payments: Simple Interest (using your calculator), Add-on Method and Discount Method.
                  While we have been counseled that the only good debt is for a home and education, you should also help others to never use the Add-on or Discount Method for installment debt.
                  This spreadsheet uses the amount, payment periods, and years from the first spreadsheet, then shows how each of the other methods calculates payments. Finally, by changing
                  the calculated APR, you can see the impact of the loan amortization table. Only when the "Calc. APR" equals the "Calculate rate using Excel "Rate" function" will the remaining
                  principle in the last month go to zero and so you will know that the APR is correct. Please only input in the "green" areas and leave all other areas as is.



Simple Interest Method                       Calc. APR          12.00% Add On Method --DO NOT USE                  Calc. APR           15.62% Discount Method--DO NOT USE Calc. APR                        20.42%
        Calculated rate using Excel "Rate" Function:             12.00%        Calculated rate using Excel "Rate" Function:            15.62%         Calculated rate using Excel "Rate" Function:         20.42%
    Amount           2,000 Stated Interest          12.0%                   Amount         2,000 Stated Interest           12.0%                   Amount         2,000 Stated Interest          12.0%         0%
    P/Y                   1 Payment            $1,183.40                    P/Y                 1 Payment             $1,240.00                    P/Y                 1 Payment             $1,000.00
    Years                  2 PMT = from loan calculator                     Years                2 PMT = (Principle + interest )/ periods          Years                2 PMT = Principle / periods
          Amount Received:            2,000                  Remaining         Amount Received:             2,000                  Remaining          Amount Received:             1,520               Remaining
        Amount Payment              Interest    Principle      Principle      Amount Payment              Interest     Principle Principle           Amount Payment              Interest     Principle Principle
  1    2,000.00 $1,183.40            240.00      $943.40      $1,056.60   1 2,000.00 $1,240.00             312.40       $927.60 $1,072.40        1 1,520.00 $1,000.00             310.38       $689.62    $830.38
  2 $1,056.60 $1,183.40              126.79    $1,056.60          $0.00   2 $1,072.40 $1,239.91            167.51     $1,072.40         $0.00    2 $830.38      $999.95           169.56       $830.38      $0.00
  3        $0.00     $0.00              -           $0.00         $0.00   3      $0.00     $0.00              -           $0.00         $0.00    3     $0.00      $0.00              -           $0.00      $0.00
  4        $0.00     $0.00              -           $0.00         $0.00   4      $0.00     $0.00              -           $0.00         $0.00    4     $0.00      $0.00              -           $0.00      $0.00
  5        $0.00     $0.00              -           $0.00         $0.00   5      $0.00     $0.00              -           $0.00         $0.00    5     $0.00      $0.00              -           $0.00      $0.00
  6        $0.00     $0.00              -           $0.00         $0.00   6      $0.00     $0.00              -           $0.00         $0.00    6     $0.00      $0.00              -           $0.00      $0.00
  7        $0.00     $0.00              -           $0.00         $0.00   7      $0.00     $0.00              -           $0.00         $0.00    7     $0.00      $0.00              -           $0.00      $0.00
  8        $0.00     $0.00              -           $0.00         $0.00   8      $0.00     $0.00              -           $0.00         $0.00    8     $0.00      $0.00              -           $0.00      $0.00
  9        $0.00     $0.00              -           $0.00         $0.00   9      $0.00     $0.00              -           $0.00         $0.00    9     $0.00      $0.00              -           $0.00      $0.00
 10        $0.00     $0.00              -           $0.00         $0.00 10       $0.00     $0.00              -           $0.00         $0.00 10       $0.00      $0.00              -           $0.00      $0.00
 11        $0.00     $0.00              -           $0.00         $0.00 11       $0.00     $0.00              -           $0.00         $0.00 11       $0.00      $0.00              -           $0.00      $0.00
 12        $0.00     $0.00              -           $0.00         $0.00 12       $0.00     $0.00              -           $0.00         $0.00 12       $0.00      $0.00              -           $0.00      $0.00
 13        $0.00     $0.00              -           $0.00         $0.00 13       $0.00     $0.00              -           $0.00         $0.00 13       $0.00      $0.00              -           $0.00      $0.00
 14        $0.00     $0.00              -           $0.00         $0.00 14       $0.00     $0.00              -           $0.00         $0.00 14       $0.00      $0.00              -           $0.00      $0.00
 15        $0.00     $0.00              -           $0.00         $0.00 15       $0.00     $0.00              -           $0.00         $0.00 15       $0.00      $0.00              -           $0.00      $0.00
 16        $0.00     $0.00              -           $0.00         $0.00 16       $0.00     $0.00              -           $0.00         $0.00 16       $0.00      $0.00              -           $0.00      $0.00
 17        $0.00     $0.00              -           $0.00         $0.00 17       $0.00     $0.00              -           $0.00         $0.00 17       $0.00      $0.00              -           $0.00      $0.00
 18        $0.00     $0.00              -           $0.00         $0.00 18       $0.00     $0.00              -           $0.00         $0.00 18       $0.00      $0.00              -           $0.00      $0.00
 19        $0.00     $0.00              -           $0.00         $0.00 19       $0.00     $0.00              -           $0.00         $0.00 19       $0.00      $0.00              -           $0.00      $0.00
 20        $0.00     $0.00              -           $0.00         $0.00 20       $0.00     $0.00              -           $0.00         $0.00 20       $0.00      $0.00              -           $0.00      $0.00
 21        $0.00     $0.00              -           $0.00         $0.00 21       $0.00     $0.00              -           $0.00         $0.00 21       $0.00      $0.00              -           $0.00      $0.00
 22        $0.00     $0.00              -           $0.00         $0.00 22       $0.00     $0.00              -           $0.00         $0.00 22       $0.00      $0.00              -           $0.00      $0.00
 23        $0.00     $0.00              -           $0.00         $0.00 23       $0.00     $0.00              -           $0.00         $0.00 23       $0.00      $0.00              -           $0.00      $0.00
 24        $0.00     $0.00              -           $0.00         $0.00 24       $0.00     $0.00              -           $0.00         $0.00 24       $0.00      $0.00              -           $0.00      $0.00
      $1,528.30 Total Int.=
Average =                            366.79 Actual APR =                    $1,536.20 Total Int.=
                                                                  12.0% Average =                          479.91 Actual APR =                     $1,175.19 Total Int.=
                                                                                                                                        15.6% Average =                           479.95 Actual APR =       20.4%
                                                          (same as above)                                                          (same as above)                                                     (same as above)

				
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Description: Personal Loan Amortization document sample