1. What is a Promissory Note Payment Schedule?

A promissory note payment schedule shows the breakdown of payments between principal and interest over the life of a loan. It helps borrowers understand how much of each payment goes toward reducing the principal versus paying interest.

2. How Does the Calculator Work?

The calculator uses the following formula:

Where:

• \( Cumulative\ Payments \) — Total payments made to date (USD)
• \( Interest \) — Total interest paid to date (USD)

Explanation: The formula calculates the portion of payments that has gone toward reducing the principal by subtracting the total interest paid from the total payments made.

3. Importance of Payment Schedule Calculation

Details: Understanding your payment schedule helps in financial planning, tax preparation (as interest may be deductible), and assessing loan amortization progress.

4. Using the Calculator

Tips: Enter the cumulative payments and total interest paid in USD. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why is the payment schedule important?
A: It shows how much of your payments are actually reducing your loan balance versus paying interest, helping you understand your loan's progress.

Q2: How often should I check my payment schedule?
A: Review it annually or whenever you make extra payments to understand how they affect your loan amortization.

Q3: What's the difference between cumulative payments and principal payments?
A: Cumulative payments include both principal and interest, while principal payments are the portion that reduces your loan balance.

Q4: Does making extra payments change the schedule?
A: Yes, extra payments typically go toward principal, which reduces future interest and accelerates loan payoff.

Q5: How does this relate to amortization schedules?
A: This is a simplified calculation that can be derived from a full amortization schedule which shows each payment's breakdown over time.