Mr. Rajesh Sharma, a tax consultant, owns a small car but intends to buy a bigger one. But, instead of buying a brand new car, he decides on a pre-owned sedan as it allows him to pick a better model without burning a huge hole in his pocket. Mr. Sharma decides to borrow a loan from his past lender, who offers him an attractive interest rate. He opts for a loan tenure of three years, which means that he has to pay off the principal amount borrowed along with a certain interest within the specified period. He wishes to know how many periodic repayments he has made with the help of an amortization table.
Meaning of amortization schedule
An amortization schedule refers to the tabular display of the repayments made. This table shows the principal as well as the interest that comprises each payment till the end of the loan tenure. This schedule also displays the amount of debt that is outstanding after making repayments.
It is important to understand how an amortization schedule works. Every Equated Monthly Installment (EMI) has a higher interest component at the beginning of the schedule. As the loan advances through its term, the majority of the EMI payment cover’s the principal amount borrowed. At the extreme end of the amortization table, the total interest and the principal amount is displayed. This helps you to get a clear understanding of how much interest you have paid during the entire loan term.
In case an extra payment is made or a lower EMI is paid during a particular month, the schedule is recalculated. This is because the interest is charged on the outstanding amount. Therefore, a change in the EMI affects the balanced amount. The process of recalculating is not a cumbersome task. Most of the lenders’ websites have a calculator that computes the new table within seconds.
The main benefit of an amortization table is the ability to identify the outstanding balance at any time during the loan tenure. A quick look at the table will not only show you the approximate balance of your used car loan but also help you configure the debt, in case you wish to make an advanced payment.
Tata Capital amortization schedule
Tata Capital offers second-hand car loans to those planning to such cars. These loans are offered at competitive interest rates and have numerous other benefits like quick disbursement, hassle-free processing, minimal documentation, and higher borrowing limit. This reputed financial institution also offers flexible repayment schemes, where you have the option to repay according to your cash flow every month. Based on this prepayment or lower EMI payment, you may recalculate your outstanding amount with the help of the online calculator available on the website. The amortization table then displays the amount paid as well as the outstanding amount.
Tata Capital has numerous verified used car listings on its website. These listings are from across 2000 dealers in the country. This makes it easy for you to choose from various types of SUVs, sedans, and hatchbacks based on your needs. Go ahead and purchase your dream vehicle from a huge range of Tata Capital used cars in India.
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