If we compare the calculation of loan amounts with fixed principal amount and loan with annuity scheme of repayment at one interest rate, amount and term, we'll see that total payment amounts for these schemes are different. The calculation schedule shows that the amounts of varied payment are reducing from month to month. It explains the principle of loan calculation according to the method of fixed principal amount, which represents the division of entire loan amount into equal parts, the number of which is equal to periods, specified in loan agreement.
Then each of these payments are supplemented with amount of interest, accrued to outstanding loan balance. As the rest is reducing, both the interest and amount of varied payment are also reducing. Simultaneously with the calculation of total repayment amounts and interests, calculator displays the table with monthly payments interpretation - loan schedule.
|Total Interest Paid: