In this post, we will discuss the two main types of loan repayment structures and build sample loan schedules using the cashflower package.
List of content:
Repayment structures
There are two main types of loan repayment structures:
- equal payment loan (annuity loan),
- equal principal loan (fixed principal).
Equal payment loan (annuity loan)
The total monthly payment is fixed (the same amount every month). Initially, a larger portion of the payment goes towards interest and a smaller portion towards the principal. Over time, as the outstanding loan balance decreases, more of …