How to read a repayment schedule
In the early months most of the payment goes to interest, not to the debt. That is not a mistake but the nature of the calculation, and the schedule shows it plainly.
A repayment schedule is a list of monthly rows: each shows how much goes to principal, how much to interest, and what balance remains. After the contract itself, it is the most important document of the loan.
Annuity payments
The monthly payment is the same throughout. What changes is the split inside it: at first the interest share is large because it is charged on a large balance; later the interest falls and the principal share grows. That is what the bars of the chart show.
Declining-balance payments
The principal is divided into equal parts across the term, and interest is charged on the balance. The first payment is the largest, the last the smallest. All else being equal the total interest is lower than with an annuity, but the early burden is heavier. At Neo Credit this is how leasing is calculated.
What to look for
- The balance in the final row: it must be zero
- The monthly fee: is it a separate column or already inside the payment
- The total payable: compare it with the loan amount — the difference is the real cost
In the calculator the schedule can be opened month by month and downloaded as a table, to study before signing.