Tuesday, November 17, 2009

Calculating total interest accrued while paying down the simple interest loan periodically.

I was unable to find a web service or calculator on any websites that had a simple interest calculator in which the total of the loan was being payed down regularly. I was forced to make one in Excel. There are plenty of amortization calculators out there that generate the schedule for a loan with compound interest, like a mortgage, but none that show the schedule for a simple interest loan, like some HELOCs (in Canada).

My Excel spreadsheet allows one to compare an amortization schedule on a compound interest loan to a schedule for a simple interest loan. This is useful if you want to see the affect of making payments on a simple interest loan, equal to the same amount at the same time of the month on the same frequency as you would on a mortgage.

The spreadsheet assumes interest for the simple interest loan is calculated daily and that payments against the loan are applied to the interest accrued first, and then toward the principal. It can be tweaked if you wanted to calculate interest monthly or increase the amortization duration. The spreadsheet also calculates the amortization schedule for a Canadian and US mortgage.

Download the spreadsheet.
You can check for tampering by calculating the MD5 digest which should be:
6c5a096b025b9ecb289691f12ef417d6

References below:
I was too lazy to link to each one and I had them bookmarked on my Diigo account so here is a link to the list of sources.
Btw, Diigo is the best social bookmarking site of them all. I am impressed by both the features I find the more I use it, and the new features the developers add frequently.