Loans amortization
In the loans amortization the quota is the quantity to pay in the agreed regularity. According to what we have matched, it can be monthly, quarterly, half-yearly, etc. What we pay is going to depend on the amount of the loan, the interest rate and the term on that we have agreed.
The quota includes the part of the given money that returns or amortizes, more the corresponding interests. This way, there differ 3 types of amortization of loans:
Amortization Loans: Constant quota or French method
Also called ‘French method’. It is the most frequent form of amortization of loans, and it consists of the fact that we are always going to pay the same quota, what it changes there are the interests and the amortized capital. The interests that recover in the quotas are calculated on the hanging amount to amortize, that is to say, what we pay of interests is going to be coming down in a proportional quantity to the amortization of the capital, since the capital dependent on amortization will be minor. In the first phase, therefore, interests are paid principally. But as quotas are paid, the part of the same ones that corresponds to amortized capital increases, diminishing this way the interests.
Amortization Loans: Increasing quota
The quota is increasing in the course of time. It has the advantage of which it is paid less at first but, logically, the load increases in the future.
Amortization Loans: Decreasing quota
In this type of amortization of loans the opposite happens. The same capital quantity is always amortized so that the interests are diminishing progressively and the whole, to paying, is descending. Namely the amount of the quotas descends in the course of time.