Amortization Calculator
Calculate loan payment schedule and see how principal and interest change over time.
Loan Details
Payment Summary
About This Calculator
The Amortization Calculator helps you understand how your loan payments are structured over time. It shows you how each payment is split between principal and interest, and how your loan balance decreases over the loan term.
This calculator is essential for understanding the true cost of borrowing and planning your financial future. Use it to compare different loan options and see how extra payments can save you money on interest.
Formula & Calculation Method
Amortization Formula:
Monthly Payment = [P × r × (1 + r)^n] / [(1 + r)^n - 1]
Where:
P = Principal (loan amount)
r = Monthly interest rate (annual rate ÷ 12 ÷ 100)
n = Total number of payments (years × 12)
Example: For a $500,000 loan at 6.5% for 30 years:
r = 6.5% / 12 / 100 = 0.005417
n = 30 × 12 = 360
Monthly Payment = $500,000 × 0.005417 × (1.005417)^360 / [(1.005417)^360 - 1] ≈ $3,160
How to Use This Calculator
- Enter Loan Amount: Input the total amount you're borrowing.
- Enter Interest Rate: Input the annual interest rate as a percentage.
- Enter Loan Term: Input the number of years for the loan.
- View Results: See monthly payment, total interest, and amortization schedule.
- Review Schedule: See how principal and interest change over time.
Frequently Asked Questions
What is loan amortization?
Loan amortization is the process of paying off a loan over time through regular payments. Each payment includes both principal (the original loan amount) and interest (the cost of borrowing).
How does extra payment affect amortization?
Making extra payments reduces your principal balance faster, which reduces the total interest you pay over the life of the loan. This can significantly shorten your loan term.
What is the difference between principal and interest?
Principal is the original loan amount you borrowed. Interest is the fee charged for borrowing money. Early in the loan, most of your payment goes to interest. Later, more goes to principal.
Can I use this for any type of loan?
Yes, this calculator works for any fixed-rate loan including mortgages, auto loans, personal loans, and student loans. It assumes a fixed interest rate and regular monthly payments.
Expert Reviewed
This calculator was reviewed by NumCalculators Editorial Team, Multi-disciplinary Expert Team