What is an amortization schedule?

An amortization schedule is a detailed table that outlines each payment of a loan over time, specifically breaking down the portion of each payment that goes toward the principal and the portion that goes toward interest. This schedule helps borrowers understand how their payments are applied throughout the life of the loan. Initially, a larger portion of each payment will generally go toward interest, with the allocation gradually shifting toward paying off the principal as the loan progresses. This clear breakdown provides important insights into how the loan balance decreases over time and can aid in budgeting and financial planning.

The other options do not accurately describe an amortization schedule. For instance, a diagram showing income tax rates is relevant to tax planning but unrelated to loans or amortization. A record of monthly savings deposits pertains to savings accounts and does not involve loan repayment information. Lastly, a summary of investment performances focuses on tracking the success of investments rather than the breakdown of loan payments.