Excel Loan Amortization Schedule With Balloon Payment In Oakland
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In some cases, you may be able to negotiate with your finance provider to spread the balloon payment over monthly instalments – this is essentially what refinancing is. Doing this can help make the payment more manageable and reduce the financial strain of a large lump sum payment.
The Rule of 78 weights the earlier payments with more interest than the later payments. In 12 equal installments, interest is allocated as follows: 12/78 of the interest is considered earned in the first month, 11/78 in the second, 10/78 in the third, and so on.
The term of a balloon mortgage is usually short (e.g., 5 years), but the payment amount is amortized over a longer term (e.g., 30 years). An advantage of these loans is that they often have a lower interest rate, but the final balloon payment is substantial.
However, the larger balloon payment at the end represents a substantial financial obligation that needs to be carefully planned and managed. Accounting Treatment: The balloon payment is usually recorded as a liability in the financial statements until it becomes due.
Fortunately, Excel can be used to create an amortization schedule. The amortization schedule template below can be used for a variable number of periods, as well as extra payments and variable interest rates.
