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Amortization calculators help
Webster’s dictionary defines amortization as, “the systematic repayment of a debt”. The emphasis is on the word “systematic”. Amortizing a loan means paying it down, bit by bit. Usually this signifies to make regular monthly payments, and this can be done for mortgage, for example. But any periodic payment over time to a loan is amortization. Amortization has an advantage that you are aware of how much you have to pay each month, within a fixed interest rate, to finish the loan within the specific time. You can work out an amortization table to show each payment.
You may know what is your monthly payment going toward the principal and how much is going toward the interest by the use of Amortization Calculator. You can also use this calculator to create a printable amortization table for your loan and to estimate the monthly payments on your mortgage. On the basis of amortization process an Amortization Calculator is used to fetch the periodic payment amount due on a loan (typically a mortgage).The amortization repayment model factors varying amounts of both interest and principal into every instalment, though the total amount of each payment is the same
Amortizing a Mortgage Loan
You have to make a monthly payment to the lender by taking out a mortgage and that is an amortization payment. A section of the payment covers the total interest due on the loan, and the remainder that is left from the payment goes to reduce the principal amount owed. Interest is computed on the current amount owed and thus will become progressively smaller as the principal is decreased. In the beginning, you would make small payments and large interest payments to the principal. As time goes on, you will reduce the principal to the point that you haven’t got much to pay in interest, and so your payment covers mostly the principal.
Let’s have a overview of the amortization table on the Amortization Calculator page to see how it works.
Credit Card Amortization
Credit card amortization is the process by which consumers pay off the debt that they have accumulated on their credit cards and can be easily calculated with the use of Amortization Calculator. It is required from the credit card providers that you pay a minimum amount on that debt each month, but that payment is almost entirely made up of interest. When you plan amortization payments to pay off credit card debt, you plan payments large enough to cover the interest due, and to pay down the principal as well.
With the help of Annual Percentage Rate interests on credit cards is calculated, or APR, afterwards which is compounded monthly against the principal still owed. Just as with a mortgage, as more money is paid by the consumer to the credit card company, the principals of credit card amortization show that there will be less interest owed on each payment if the card is not being used. We have a Amortization Calculator customized for credit card amortization.
Amortization in Tax Law
The term ‘amortization’ has a somewhat different meaning in U.S. tax law, however it has been applied to periodic payments.
Amortization Calculator has its importance in explaining the value of an asset, like a lawnmower or an airplane, decreases over time as the asset gets older and gets used more. This deduction in value is known as depreciation, and each year loss in value is deducted from tax.
But what if you have an intangible asset, like a patent, or a copyright? Under section 197 of U.S. law, the asset value may also deduct, time by time, year by year. This periodic process is called amortization. These are the intangible assets you are allowed to amortize:
- Going concern value
- Workforce in place (that is, current employees, including their experience, education, and training)
- Business books and records, operating systems, or any other information base, including lists or other information concerning current or prospective customers
- A patent design, pattern, copyright, formula, process, know-how, format, or similar item
- A customer-based intangible, including customer base and relationships with customers
- A supplier-based intangible (the value of future purchases due to relationships with vendors)
- Any item similar to items (3) through (7)
- A license, permit, or other right granted by a governmental unit or agency (including issuances and renewals)
- A covenant not to compete or non-compete agreement entered into in connection with the acquisition of an interest in a trade or business; and
- A franchise, trademark, or trade name
- A contract for the use of a term interest in if there is any item in this list.
Just as with a loan, you can calculate the periodic decline in value using an amortization table.
Amortization in Business
In business purposes, Amortization Calculator has a vast use to maintain the proper flow or working. At sometimes probably it is possible to amortize a cost over several years of revenue in business. This is done in some kinds of leasing contracts and long-term contracts. The advantage, for the business, is that the cost does not have an excessive impact on the business’s annual revenue and profit.