# A simple amortization function

August 29, 2013
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(This article was first published on Houses of Stones » R, and kindly contributed to R-bloggers)

I was working on a project yesterday where I needed to amortize out a bunch of loans to calculate the total interest a borrower would pay if he or she paid the minimum monthly payment for the full term of the loan. I couldn’t find any package in R that already contained the necessary math, so I looked around and found this post as well as this one. They both presented the R code to do the basic math involved in amortization, but each function was built to handle only one loan at a time. I had well over 100,000 loans I needed to go through, and loops aren’t all that efficiently implemented in R.

So I revised the code to perform that math on all of the loans at once by organizing everything into matrices that could then be added, subtracted, etc. It only took a little over three seconds to amortize 110,335 loans. I don’t know how long it would have taken to amortize each loan individually – I killed the process after I got tired of waiting for it to finish.

The function takes the following parameters:

• p_input: the initial principal owed on the loan
• i_input: the interest rate
• n_months: the length of the loan term, in months
• output: format of the output; “list” returns a list of full amortization tables (balance, payment, principal, interest, and installment for each month); “table” combines all the individual tables into one and differentiates loans by a separate index column; “balance”, “payment” “principal”, and “interest” return only those columns
• index: an id number or other unique identifier for each loan; if not supplied, the loans are just numbered

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