What is a loan amortization schedule?

A loan amortization schedule is indeed a table that details the loan payments throughout the loan's term, breaking down each payment into its components of principal and interest. This is important for borrowers to understand how their payments will affect their loan balance over time.

The schedule typically shows each payment period, the total amount of each payment, the portion that goes toward interest, the portion that goes toward reducing the principal, and the remaining balance of the loan after each payment. This detailed information allows borrowers to see how much they will pay in total interest over the life of the loan and how their loan balance decreases over time, fostering a clearer understanding of their financial obligations.

In contrast, other options do not correctly describe an amortization schedule. Calculating future income pertains to income projection rather than detailing loan payments. A summary of loan applications relates to the processing stage of loans, not their repayment schedule. A document explaining loan repayment terms might include conditions under which a loan must be repaid but would not provide the specific breakdown of payments and balances like an amortization schedule does.