Amortization Table Adjustment for Missed Loan Payments: A Guide

An amortization table is a loan repayment schedule. The table shows when payments are to be made, how much each payment goes toward paying the principal, how much goes toward paying the interest and how much each payment reduces the amount owed. When a loan payment is missed, the loan amortization must be adjusted to account for the missed payment and any changes to the interest rate or payment terms triggered by a skipped payment. Although amortization tables can be computed longhand, most are created using a financial spreadsheet software program; adjustments can be made with a few clicks.

Step 1

Check the loan agreement for the implications of a missed payment. Not only does a missed payment lengthen the total amount of time required to pay back a loan, it may also trigger fees and interest rate increases. Confirm these repercussions with your lender.

Step 2

Add the amount of the missed payment, plus any fees, to the outstanding principal amount from the previous payment period. This is new outstanding principal, less any increased interest. If the software you use for your amortization schedule does all of the calculations for you, you may skip this step.

Step 3

Make the adjustments on your amortization table. You will need to update the principal, if your software does not make this computation for you. If it does, you can simply plug in "0" for the missed payment, and allow the software to update the principal accordingly. You should also update the interest rate if it increased after the missed payment. Software program setups vary, but you should change this information in the part of the spreadsheet that allows you to enter the basic terms of your loan. Use your spreadsheet's "calculate" function to generate a new amortization table that accounts for the missed payment.

Tip

A missed payment may either lengthen the repayment period for your loan or increase your usual payment. If the repayment period is extended, update your spreadsheet to reflect the new payment term. If the repayment term remains the same, when you press "calculate," the payments will be adjusted so you can pay off the new principal in the same amount of time.