Repayment of Installment Loans (SAP Library

Repayment of Installment Loans

The repayment amount that reduces the balance of the loan in each loan period remains constant. Interest accrues as an additional charge against the employee.

The expected term of the loan can be determined for this loan type.

Prerequisites

Loan amount paid out	30,000 euro
Interest rate	5 % p.a.
Repayment installment	250 euro
Interest calculation frequency	Monthly
Repayment frequency	Monthly
Repayment start date	One year after loan was paid out

Loan Calculation

In the first twelve months, interest of 125 euro accrues monthly. As the loan balance of 30,000 euro remains unchanged in this period, the interest amount remains constant.

Repayment, which starts after 12 months, is calculated in the following way:

30,000 euro / 250 euro = 120 months

The total term of the installment loan is eleven years.
In the first month after repayment begins, deductions taken from the employee's remuneration are 375 euro = 250 euro repayment + 125 euro interest).
The remaining debt after the first repayment is 29,750 euro.
With each repayment, the amount of interest is reduced, and subsequently the amount paid by the employee is also reduced.