In How to Create Even-Payment and Straight-Line Amortization Tables in Excel, I used these two figures to show the trends in periodic payments for each type of loan. What Type of Loan is It? Even-Payment? Or Straight-Line? I’ll cover floating rate loans at another time. I’m going to assume that the interest rate is fixed.
Is the Loan’s Interest Rate Fixed or Floating? Investopedia: A loan from a bank for a specific amount that has a specified repayment schedule and a fixed or floating interest rate.Ģ.Term loans usually last between one and ten years, but may last as long as 30 years in some cases. Wikipedia: A monetary loan that is repaid in regular payments over a set period of time.Term loans are generally provided as working capital for acquiring income producing assets (machinery, equipment, inventory) that generate the cash flows for repayment of the loan. Business Dictionary: Asset based short-term (usually for one to five years) loan payable in a fixed number of equal installments over the term of the loan.For example, here’s how different sources define a term loan:
This is an interesting question because it touches on at least four issues related to the time value of money: 1. “How do I calculate cumulative principal and interest for term loans? I have scoured the web for a function that will perform this task, with no avail.
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