What is the goal of an amortization schedule?

The goal of an amortization schedule is to outline the repayment plan, detailing how principal and interest are paid over the life of a loan. This schedule breaks down each payment into its components, showing how much of each payment goes towards reducing the principal balance and how much is allocated to interest.

By providing a clear view of the loan repayment process, an amortization schedule helps borrowers understand their financial obligations, track their progress, and plan their budgets accordingly. It also illustrates how the balance of the loan decreases over time, enabling borrowers to see how long it will take to pay off the loan and how much they will pay in total interest over the loan's duration. This understanding is critical for making informed financial decisions.