Understanding the ABC of Loan Calculation – Series 1

Loan decisions are often made quickly, but repaying them requires precision, planning, and a clear understanding of how interest, tenure, and payment options affect your cash flow.

In the first part of our Loan Calculation Series, hosted by Emmanuel Oyedele, AFM, we broke down loan repayment structures using a practical framework and demonstrated how to model them effectively in Excel. You can catch up with the session recording available above.

Breaking Down the ABCs of Loan Repayment
During the session, we introduced the ABC framework for understanding the most common loan repayment structures:

A – Amortization
Equal payments over time, gradually reducing the principal and interest. Suitable for individuals with steady monthly income.

B – Bullet Payment
A one-time lump sum repayment at the end of the loan term. Ideal when expecting a future inflow such as a bonus or project payment.

C – Capitalized Interest
Interest is deferred and added to the principal after a moratorium period. Best for borrowers with delayed income (e.g., new business owners).

Each option carries different implications on total repayment and cash flow. Emmanuel walked participants through how to evaluate which plan best aligns with their financial realities.

Watch the Live Excel Demo

A key highlight of the webinar was a step-by-step Excel demo, where Emmanuel built a dynamic loan calculator using built-in functions like:

PMT() for regular payment calculations

IPMT() and PPMT() for breaking down interest and principal portions

RATE(), NPER(), and FV() for broader loan planning

The calculator is fully automated; once the loan amount, interest rate, or tenure is adjusted, the repayment schedule updates instantly. This allows for clear scenario analysis when choosing between different repayment plans.

🎥 Watch the recording above to see the full demo in action.

The GROW Framework: A Guide for Better Loan Decisions

To help borrowers make smarter financial decisions, Emmanuel introduced the GROW Framework:

Gauge the cost of borrowing: Evaluate interest rates and total repayment.

Review repayment options: Compare amortization, bullet, and capitalized interest plans.

Optimize your plan: Negotiate terms, shorten tenor if possible, and avoid penalties.

Work toward timely repayment: Automate payments and prioritize in your budget.

Take Your Learning Further with the Financial Modelling Academy

The concepts shared during this session are part of a larger commitment to equipping professionals with real-world financial modeling skills.

Through our Financial Modelling Academy, developed in partnership with FMI Canada, you can:

✅ Build a strong foundation in Excel and financial modeling
✅ Prepare for the Advanced Financial Modeler (AFM) exam
✅ Access instructor support, community learning, and accountability tools
✅ Earn globally recognized certification
✅ Join at up to 95% off through our scholarship programme

Learn more at Financial Modeling Academy or register by emailing us at [email protected].