Paying a loan off is something that needs dedication and diligence. By making timely payments you can ensure that you pay the loan off in time and that you save more.

How an amortisation table works:

Amortisation occurs when you pay a debt off over time with regular, equal payments. Each payment goes towards paying off the interest portion (what your lender gets paid for the loan) and also reducing your loan (paying the balance off).

In the beginning, your payments go towards paying off interest. Gradually you start paying the principal portion off.

Amortised loans are designed so that after a certain amount of time, your last loan payment will completely pay the loan balance off.

One of the easiest ways to make sense of amortisation is by using an amortisation table.

What are the benefits of using an Amortisation Table in South Africa?

Using an amortisation table helps you understand how each payment affects the loan, how much you pay in interest and how much you owe on the loan at any given time.

Keep in mind that by stretching out your loan repayment period you get lower payments. But you’ll end up paying more in interest over the life of the loan. By using an amortisation table, you can clearly see how much you really pay in interest, instead of focusing on a monthly payment. You can see how fast you’ll lower the amount that you owe by making larger repayments every month.

You can calculate how much you’d save by paying debt off early.

If you’re unsure of how to make calculations, you can use an online calculator to do the work or use spreadsheets. The payment is based on the amount of the loan, the interest rate and how many years the loan lasts.