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  1. #1
    Bronze Lounger
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    Prepaying Installment Loans (2000)

    Problem: I would like to schedule out by month the payments on interest and principal I would be making on a typical term installment loan (say $50,000 over 5 years at 6%), allowing for prepayments of principal (say I want to pay a set amount per month). Any takers?
    Thanks.

  2. #2
    Plutonium Lounger
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    Re: Prepaying Installment Loans (2000)

    You'll probably need the IPMT (interest payment) and PPMT (principal payment) worksheet functions. Look them up in the Excel help, or see the thread starting at <post:=511,840>post 511,840</post:> - it contains several links to tutorials etc.

  3. #3
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    Re: Prepaying Installment Loans (2000)

    Thanks, Hans. Unfortunately, I am a step beyond: what I am looking for is what if I apply an additional $100 (or some other amount) toward the principal outstanding each payment period; what does that do to the outstanding balance as well as the number of periods remaining? I don't know if that requires VBA or not, but anyway...
    Thanks anyway...

  4. #4
    Plutonium Lounger
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    Re: Prepaying Installment Loans (2000)

    Let's see if a financial expert replies...

  5. #5
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    Re: Prepaying Installment Loans (2000)

    >what does that do to the outstanding balance as well as the number of periods remaining?

    That will be buried in the fine print of your loan agreement. Such a scenario - as well as whether there is any early redemption penalty - is always the kind of issue to have in mind up front when initially negotiating your loan.

    Without any firmer facts, the range of scenarios is too large for a clear response.

    HTH
    Gre

  6. #6
    WS Lounge VIP sdckapr's Avatar
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    Re: Prepaying Installment Loans (2000)

    The easiest way to "play" with different scenarios, in my opinion, would be to create a amortization table with a column for "extra payment". This would allow to change the values monthly or at set points during the course of a loan.

    It is much more general and adaptable (and easier to code) than to create a function. It only takes some formulas and then to copy them...

    Steve

  7. #7
    Uranium Lounger
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    Re: Prepaying Installment Loans (2000)

    The exact method depends on the exact terms of the loan agreement. The attached works using the terms from my home mortgage, yours may be different.
    Legare Coleman

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