A loan amortization schedule can be prepared using one of the two ways. The first one is with a fixed interest rate and the second one is a variable interest rate. In this article, you will learn to prepare a loan amortization schedule with a variable interest rate in Excel.

## Download Practice Workbook

You can download the Excel file from the following link and practice along with it.

## What Is a Loan Amortization Schedule?

A **Loan Amortization Schedule** is a table of period payments against the loan. In the table, the total number of periods to pay back the loan, the remaining balance to pay, how much money you are paying for the interest, and the original amount all are stated.

## How to Prepare a Loan Amortization Schedule with Variable Interest Rate in Excel

### Steps to Prepare a Loan Amortization Schedule with Variable Interest Rate in Excel

I will show you to prepare a loan amortization schedule based on the following data.

**Total Loan Balance = $50,000.**

**The number of Years = 2.**

**Loan Payment Frequency per Year = 12.**

**Total Number of Payments Against the Loan = (The number of Years x Loan Payment Frequency per Year) = 2 x 12 = 24.**

Thus, in the **Period **column, we have taken a serial number from 1 to 24.

#### Step-1: Calculate the Payment Amount, PMT

In the **PMT **column, we will calculate the amount of loan payment per month. For that, we will use the **PMT function**.

Now follow the steps below to calculate the **PMT**.

âť¶ To begin with, select cell **C10**.

âť· Now insert the following formula:

`=-PMT(G10/$D$5,COUNT(B10:$B$33),F9)`

In this formula:

**G10**refers to the annual interest rate in the**AIR****$D$5**refers to the**Periods per Year.****COUNT(B10:$B$33)**returns the remains number of payments against the loan.**F9**refers to the total loan balance remaining.**-PMT(G10/$D$5,COUNT(B10:$B$33),F9)**calculates the payment amount. Originally the function returns a negative value. Thus the minus sign**(-)**before the function will return a positive value.

âť¸ Finally hit the **ENTER **button to execute the formula.

#### Step-2: Calculate the Amount of Interest Paid

The payment amount is used to pay both the interests and the principal. But to calculate the amount of interest, follow the steps below:

âť¶ Select cell **D10 **first.

âť· Then insert the following formula in cell **D10**:

`=F9*G10/$D$5`

Here,

**F9**is the remains balance to pay back.**G10**is the annual interest rate.**$D$5**refers to the**Periods per Year.**

âť¸ Finally hit the **ENTER **button to get the value.

#### Step-3: Calculate the Amount of Principal Paid

To calculate the amount of principal paid,

âť¶ Select cell **E10 **first.

âť· Then insert the following formula:

`=C10-D10`

Here,

**C10**refers to the**PMT**.**D10**refers to the amount of interest paid.

âť¸ After that hit the **ENTER **button.

**Read More: How to Use Formula for Mortgage Principal and Interest in Excel**

#### Step-4: Figure out the Remaining Original Balance Considering the Lump Sum End Payment

Now itâ€™s time to figure out the remaining original balance.

Sometimes the loan borrowers want to pay back all the money or the bigger portion of the money. In that case, the lump sum end payment should also be considered.

Thus, you can calculate the remaining original balance considering the lump sum end payment using the following steps:

âť¶ First, select the cell **F10**.

âť· Then insert the following formula:

`=F9-E10-H10`

Here,

**F9**refers to the previous value of remains balance to pay back.**E10**is the principal paid back amount.**H10**is the lump sum end payment amount.

âť¸ After that hit the **ENTER **button.

## Things to Remember

- To make a loan amortization schedule just change the values such as the
**Original Balance, Number of Years, Annual Interest Rate (AIR),**and**Lump Sum.** - Adjust the
**Period**according to the**Number of Years.**

## Conclusion

To sum up, we have discussed the procedure to prepare a loan amortization schedule with a variable interest rate in Excel. You are recommended to download the practice workbook attached along with this article and practice all the methods with that. And donâ€™t hesitate to ask any questions in the comment section below. We will try to respond to all the relevant queries asap. And please visit our website **Exceldemy** to explore more.

## Further Readings

**Interest Only Mortgage Calculator with Excel Formula (A Detailed Analysis)****Excel Interest Only Amortization Schedule with Balloon Payment Calculator****How to Use Formula for Car Loan Amortization in Excel (with Quick Steps)****Mortgage Repayment Calculator with Offset Account and Extra Payments in Excel****How to Use Formula for 30 Year Fixed Mortgage in Excel (3 Methods)****Creation of a Mortgage Calculator with Taxes and Insurance in Excel****Mortgage Calculations with Excel Formula (5 Examples)**

May I have this template

https://www.exceldemy.com/loan-amortization-schedule-excel-with-variable-interest-rate/

Hello Mr. Fazal,

You can download the attached Excel file and use that as a template.

All you need to do is input the number of years, periods per year, and balance. All the columns have their corresponding formula applied. As you provide the required information, Excel will automatically calculate the Loan Amortization Schedule for you.

Last but not the least, you have to update the variable annual interest rate (AIR) manually. If you have any lump sum amount in your consideration don’t forget to update that too!

Regards!