Amortization Calculator
Loan Amortization Calculator
Enter loan details to generate your payment schedule
Amortization Results
Your payment breakdown and schedule
Payment Breakdown Over Time
Amortization Schedule
How It Works
Enter your loan details to generate a complete payment schedule showing interest vs. principal breakdown for every payment. See how extra payments reduce total interest.
Common Uses
Plan mortgage payments, compare auto loan options, evaluate student loan repayment strategies, and understand personal loan costs with detailed amortization schedules.
Always Accessible
All calculations happen in your browser - no data sent to servers. Use it anytime, anywhere with full privacy protection for your financial information.
How the Amortization Calculator Works
- Calculate the fixed monthly payment using the standard loan formula based on your principal, interest rate, and term.
- Determine the interest portion of each payment by multiplying the current remaining balance by the monthly interest rate.
- Calculate the principal portion by subtracting the interest from the total payment amount for that period.
- Update the remaining balance by subtracting the principal paid from the previous balance.
- Repeat for each payment period until the balance reaches zero. Each month, the interest portion decreases while the principal portion increases.
- Apply extra payments directly to principal, which reduces the remaining balance faster and decreases future interest calculations.
- Recalculate the schedule with the new balance, potentially shortening the loan term and reducing total interest paid.
The schedule clearly shows this shift—early payments are mostly interest, while later payments apply more to principal. This is why extra payments early in the loan term have the greatest impact on reducing total interest costs.
Amortization Calculation Formulas
Standard Monthly Payment
- P = Principal loan amount
- i = Periodic interest rate (annual rate ÷ 12 ÷ 100)
- n = Total number of payments (term in years × 12)
- M = Fixed monthly payment amount
Interest Portion of Payment (Period t)
- RemainingBalance_(t-1) = Loan balance before payment t
- i = Monthly interest rate
- t = Current payment number
Principal Portion & Remaining Balance
- Principal portion increases over time
- Interest portion decreases over time
- Remaining balance decreases to zero
Step-by-Step Example: 30-Year Mortgage
Input Parameters
Monthly Payment Calculation
M = $250,000 × [0.00375(1.00375)^360] ÷ [(1.00375)^360 - 1]
First Payment Breakdown
Principal = $1,266.71 - $937.50 = $329.21
With Extra $100 Payment
New payoff: 24 years 4 months
Understanding and Utilizing the Amortization Calculator
Amortization is the process of spreading out a loan into fixed payments over time, where each payment covers both interest and principal. An amortization calculator transforms this complex financial concept into an understandable visual schedule, showing exactly how your payments reduce your debt over the life of the loan.
What is an Amortization Schedule?
An amortization schedule is a complete table of periodic loan payments showing the amount of principal and interest that comprise each payment until the loan is paid off at the end of its term. While early payments consist mostly of interest payments, later payments consist mostly of principal. The schedule clearly illustrates this transition.
Core Functions of the Amortization Calculator
- Payment Breakdown: Shows exactly how much of each payment goes toward interest vs. principal
- Cumulative Tracking: Tracks total interest paid and remaining balance after each payment
- Extra Payment Analysis: Calculates how additional payments reduce total interest and shorten loan term
- Visual Representation: Charts show the changing proportion of interest vs. principal over time
Practical Example: 30-Year Mortgage Analysis
Consider a $250,000 mortgage at 4.5% interest for 30 years. Without the amortization schedule, you might only know your monthly payment is $1,266.71. With the schedule, you can see crucial details that affect your financial planning:
- In the first 5 years, you'll pay $55,085 in interest but only reduce principal by $20,916
- It takes 21 years and 4 months to reach the point where more payment goes to principal than interest
- The total interest paid over 30 years is $206,016 - almost as much as the original loan
- Adding just $100 extra monthly reduces the term by 5 years 8 months and saves $41,203 in interest
How to Read Your Amortization Schedule
The amortization schedule gives you three essential insights for better loan planning:
1. Payment Composition Analysis
Each payment shows how much goes toward interest versus principal. Early payments are interest-heavy, but as the balance drops, more of each payment starts reducing the principal.
2. Progress Over Time Visualization
The "Remaining Balance" column steadily declines, and the decrease speeds up as principal repayment grows. The chart illustrates this shift clearly—from interest-focused early on to principal-focused later.
3. Extra Payment Impact Assessment
Extra payments lower the balance faster and reduce future interest. Even small early extra payments can shorten your loan term and cut total interest significantly.
Decision-Making Insight: Use the summary to compare loan scenarios—lower total interest or an earlier payoff might justify a slightly higher monthly payment.