What does a loan amortization schedule show?

• A. A calendar of loan approvals.
• B. A table showing each payment’s principal and interest portions and the remaining balance over time.
• C. A summary of loan interest rates.
• D. A record of late payment penalties.

Answer: (B)

A loan amortization schedule is a detailed repayment plan that shows how each payment affects the loan over time. It lists every payment, breaking it down into the portion that goes to interest and the portion that reduces the principal, plus the remaining loan balance after each payment. This view helps you see how your debt declines and how much of your total interest you’ll pay over the life of the loan, which can inform decisions about prepayments or refinancing. It’s not a calendar of loan approvals, nor a general summary of interest rates, and it doesn’t focus on penalties—those are separate concepts from the repayment mechanics described in the schedule.