# Thread: Prepaying Installment Loans (2000)

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

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

5. ## 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

6. ## 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. ## 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.

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