Personal credit: how to read an amortization table?

The amortization table, in the case of a private loan, is a very useful document that summarizes on one page the information related to the repayment of the credit: amounts to be paid, dates, etc. But how to read this table and what is it for? Here are some explanations.

 

What is an amortization table?

amortization loan

It is a document that summarizes the set of payments to be made to settle a private credit. Each line corresponds to a date on which the debtor will have to make a payment. Furthermore, the above table will include for example 12 lines (12 months) in the case of a loan repaid in 1 year, and 60 lines (60 months) in the case of a loan repaid in 5 years.

 

What are the elements indicated?

personal credit

Each row of the document is divided into several columns based on the information you want to appear. In general, an amortization table includes at least, on each line:

  • The number of monthly installments, or the date of payments: indicates which installment the line refers to. The first line corresponds to the date of the first payment to be made, the last one to the date of the end of the payment.
  • The monthly installment: it is simply the invoice amount to be paid.
  • Amortization: this is the amount used to repay the loan.
  • Interest: the interest paid monthly.
  • The balance: the remaining amount to be paid to ensure that the loan is fully amortized.

 

Depreciation, interest, monthly installments

interest rate

One of the fundamental elements to understand in an amortization table, is that every month paid by the debtor includes on the one hand the amortization and on the other the interest paid. If, on the other hand, the installment is fixed for the entire duration of the repayment, the parts that concern the amortization and the payment of the interest vary with time. For example in a credit of USD 10,000 in 12 months with a rate of 8.9%.

  • The fixed installment is 872.45 USD / month.
  • In the first month, the depreciation will be USD 801.16 and the interest paid will be USD 71.30. The invoice total therefore returns to USD 872.45.
  • On the 6th month, the depreciation will be 824.25 USD, and the interest paid will be 48.21 USD. The total invoice therefore remains at 872.45 USD.

Generally speaking, the portion of interest paid by the borrower is more important at the beginning of the repayment than at the end.

 

Credit balance and early repayment

Credit balance and early repayment

The balance to be paid corresponds to the total amount of the credit, of which we deduct the amortization already made. This is an amount “which remains to be repaid”. Knowing how much remains to be paid is particularly useful if the debtor decides to make an early repayment. At any time, the latter can in fact decide to “settle” his credit by paying all the invoices that remain to be paid. Interest paid in addition will be returned to him, except for any deductions for early repayment fees.

 

How to get your own amortization table?

How to get your own amortization table?

In general, it is always possible to claim this document (or its equivalent) with the bank where the credit was requested. But be careful, because this service could sometimes be billed up to 200 USD per bank! At the conclusion of the contract, some intermediaries provide this amortization table, tailored to each client. 

Consumer credit: positive data already for the first month

The Italians begin 2018 by requesting more loans. In fact, the first month of the year compared to 2017 recorded a 3.3% growth in consumer financing requests. The data come from the CRIF Barometer. The most important boost was given by personal loans which even peaked by + 13% after constant growth for the whole of last year.

A negative figure, on the other hand, comes from “finalized loans” with a drop of -3.3%. What caused this drop? The value seems to have been conditioned by the decrease in the request for loans for the purchase of cars or goods with a smaller amount. Loans not finalized, such as the transfer of the fifth, are instead one of the most popular forms of financing by Italians.

 

Consumer credit 2018: “technical” data of loan applications for the month of January

credit loans

The average amount requested by Italian families also increased and amounted to 9,372 dollars, a value that is 7.4% higher than in January 2017, but not only. With this figure, the record of the last 7 years was marked with the highest average amount requested, approaching the maximum peak of February 2010 when the maximum quota reached 9,630 dollars.

60.3% of requests for finalized loans concern amounts that remain below $ 5,000 while for personal loans, the most requested figures are between $ 10,000 and $ 20,000.

The Executive Director of CRIF stated that new lifestyles and new consumer habits have favored new ways of interacting also with the credit market. For example, more and more Italians are applying for online loans and who, before carrying out a proposal from a company, calculate different estimates to find the best offer.

 

Consumer credit 2018: what is the average age of applicants for personal loans?

Consumer credit 2018: what is the average age of applicants for personal loans?

If you look at the distribution of requests by age group, it seems that those who have most requested personal loans are between 45 and 54 years old (about 25.4% of the total) immediately followed by those between 35 and 44 years of age with a 23.2%.

Consumer credit 2018: Italians apply for more loans already in the first month last modification.