Võlakava

Võlakava, or debt service schedule, is a plan that lays out all payments required to service a loan over time. It shows each payment period, the amount of interest and principal in every payment, and the remaining balance after each payment. A võlakava can cover a single loan or a portfolio of debts and is commonly used in public finance, corporate treasury, and household budgeting.

Purpose of a võlakava is to facilitate budgeting, liquidity planning, debt management, and risk assessment. By forecasting future cash outflows, institutions can ensure funds are available and evaluate debt sustainability under different scenarios, such as interest rate changes or refinancing.

Key components typically include the initial principal, the interest rate, payment frequency, maturity date, periodic payment amount, and a breakdown of each payment into interest and principal. The schedule also records the outstanding balance after each payment and, in some cases, the cumulative interest or total cost of the debt.

Types of schedules vary. Fixed-rate amortizing schedules have constant payments that gradually reduce the principal. Declining balance schedules keep a fixed principal repayment with decreasing interest over time. Bullet or interest-only schedules repay the principal at the end, while variable-rate schedules adjust payments with rate changes. Multibond or multi-currency debt can require more complex modeling.

Calculation generally follows: each period, interest equals the outstanding balance times the rate; principal repayment equals the total payment minus interest; new balance equals the previous balance minus principal repayment.

Võlakava is used by governments to monitor debt service costs, by companies for cash flow forecasting, and by households for loan planning.