Amortization Calculator

What is an Amortization Calculator?

An amortization calculator helps you understand exactly how each loan payment is divided between principal and interest over the life of your loan. It generates a complete amortization schedule showing you the breakdown of every single payment.

How Loan Amortization Works

When you take out a loan, your monthly payment stays the same throughout the loan term (for fixed-rate loans). However, the portion going to interest versus principal changes over time:

• Early payments: Most of your payment goes toward interest
• Later payments: More goes toward reducing your principal balance

The Amortization Formula

Monthly Payment: M = P × [r(1+r)^n] / [(1+r)^n – 1]

Where:

• M = Monthly payment
• P = Principal (loan amount)
• r = Monthly interest rate (annual rate ÷ 12)
• n = Total number of payments (years × 12)

Interest for each payment: Interest = Remaining Balance × Monthly Rate

Principal for each payment: Principal = Monthly Payment - Interest

How to Use This Calculator

1. Enter Loan Amount: The total amount you're borrowing
2. Set Interest Rate: Annual interest rate (APR)
3. Choose Loan Term: Length of the loan in years
4. Optional Start Date: When payments begin
5. View Schedule: See the complete breakdown of every payment

Understanding Your Amortization Schedule

Payment Number

Sequential number for each payment (1 through total payments).

Payment Date

When each payment is due based on your start date.

Payment Amount

Your fixed monthly payment amount.

Principal

The portion of this payment reducing your loan balance.

Interest

The cost of borrowing for this period.

Remaining Balance

How much you still owe after this payment.

Benefits of Understanding Amortization

Plan Extra Payments

See how extra payments impact your loan payoff date and total interest paid.

Compare Loan Terms

• 15-year vs 30-year mortgages
• Different interest rates
• Various loan amounts

Tax Planning

Mortgage interest may be tax-deductible. Your amortization schedule shows exactly how much interest you pay each year.

Build Home Equity

Track how quickly you're building equity as your principal balance decreases.

Types of Loans This Calculator Works For

• Mortgages: Home loans of any term
• Auto Loans: Car and vehicle financing
• Personal Loans: Unsecured installment loans
• Student Loans: Education financing
• Business Loans: Commercial lending

Frequently Asked Questions

Why is most of my early payment interest?

Lenders calculate interest on the remaining balance. Since your balance is highest at the start, interest charges are also highest. As you pay down the balance, less goes to interest and more to principal.

How can I pay off my loan faster?

• Make extra principal payments
• Round up your monthly payment
• Make bi-weekly payments (26 half-payments = 13 full payments per year)
• Apply windfalls (bonuses, tax refunds) to principal

What's the difference between APR and interest rate?

• Interest Rate: The base rate charged on your loan
• APR: Includes interest plus other costs (fees, points) spread over the loan term

Are all loans amortized?

No. Some loans have:

• Interest-only periods: Pay only interest for a set time
• Balloon payments: Large lump sum due at the end
• Variable rates: Payment amounts can change

This calculator assumes a standard fixed-rate amortizing loan.

Disclaimer: This calculator provides estimates for educational purposes. Actual loan terms, rates, and payments may vary. Consult with a financial professional for specific advice.