Amortization Calculator
Calculate your loan payments and see a full amortization schedule. Understand how much of each payment goes toward principal vs. interest, and track your remaining balance over time.
What Is Amortization?
Amortization is the process of paying off a debt over time through regular, fixed payments. Each payment covers both the interest accrued on the outstanding balance and a portion of the principal (the original loan amount). Over the life of the loan, the interest portion gradually decreases while the principal portion increases.
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.
How Does the Amortization Calculator Work?
The calculator uses the standard loan amortization formula:
Payment = P × [r(1+r)n] / [(1+r)n − 1]
Where:
P = Loan amount (principal)
r = Periodic interest rate (annual rate ÷ payments per year)
n = Total number of payments (term in years × payments per year)
For each payment period, the calculator determines:
- Interest Portion = Outstanding Balance × Periodic Interest Rate
- Principal Portion = Fixed Payment − Interest Portion
- New Balance = Outstanding Balance − Principal Portion
You can also add extra payments to see how they reduce your total interest and shorten your loan term.
Why Use This Amortization Calculator?
- Full Schedule: See every payment from start to finish.
- Visual Breakdown: Understand how much goes to principal vs. interest.
- Extra Payments: See the impact of paying extra each month.
- Flexible Terms: Choose monthly, bi-weekly, or weekly payments.
- Free & Private: No registration, no data storage.
Real-World Applications of Amortization
- Mortgages: The most common use — understanding your home loan payments.
- Auto Loans: See how much interest you'll pay on your car loan.
- Student Loans: Plan your repayment strategy.
- Business Loans: Track debt repayment for financial planning.
- Personal Loans: Understand the true cost of borrowing.
❓ Amortization FAQ
What is an amortization schedule?
An amortization schedule is a table that shows each periodic payment on a loan over time. It breaks down how much of each payment goes toward interest and how much goes toward reducing the principal balance.
How is the monthly payment calculated for an amortized loan?
The monthly payment is calculated using the formula: P = L × [r(1+r)n] / [(1+r)n − 1], where L is the loan amount, r is the monthly interest rate, and n is the total number of payments.
What is the difference between amortization and depreciation?
Amortization refers to paying off a debt over time, while depreciation refers to the reduction in value of a tangible asset over time. Both involve spreading costs over a period, but they apply to different things (liabilities vs. assets).
How does making extra payments affect my loan?
Making extra payments reduces your principal balance faster, which means you pay less interest over the life of the loan. It can also shorten the total term of your loan significantly.
What is the difference between simple interest and amortized interest?
Simple interest is calculated only on the original principal amount. Amortized interest is calculated on the outstanding balance, which decreases over time as you make payments.
Can I change my payment frequency?
Yes. Many loans allow you to choose between monthly, bi-weekly, or weekly payments. More frequent payments can reduce the total interest paid because interest accrues on a smaller balance more often.
What is a negative amortization loan?
A negative amortization loan is one where the payment is less than the interest accrued, causing the principal balance to increase over time. These loans are risky and generally not recommended.
How do I read an amortization schedule?
An amortization schedule typically shows: the payment number, payment amount, principal portion, interest portion, and the remaining balance. Early payments are mostly interest; later payments are mostly principal.
What is the total interest paid on a loan?
The total interest paid is the sum of all interest portions from every payment over the life of the loan. Our calculator shows this total in the results summary.
How does the loan term affect my payments?
A longer loan term means lower monthly payments but more total interest paid. A shorter term means higher monthly payments but less total interest. This calculator lets you compare different terms.
What is the difference between APR and interest rate?
The interest rate is the cost of borrowing the principal loan amount. The APR (Annual Percentage Rate) includes the interest rate plus other fees and costs associated with the loan, giving a more complete picture of the loan's total cost.
Can I use this calculator for a mortgage?
Yes. This calculator works for any fixed-rate loan with regular payments, including mortgages, auto loans, student loans, and personal loans.
What is an amortization table?
An amortization table is another name for an amortization schedule. It's a detailed table showing each payment's breakdown of principal and interest over the life of a loan.
How do I calculate the remaining balance on a loan?
You can calculate the remaining balance by using the formula: B = P × [(1+r)n − (1+r)p] / [(1+r)n − 1], where P is the original loan amount, r is the periodic rate, n is the total number of payments, and p is the number of payments already made.
What is a balloon payment?
A balloon payment is a large, lump-sum payment due at the end of a loan term. Some loans have lower monthly payments but require a balloon payment to pay off the remaining balance.
How does refinancing affect amortization?
Refinancing replaces your existing loan with a new one, typically with a different interest rate or term. This resets the amortization schedule, potentially lowering your monthly payment or reducing total interest.
What is the difference between a fixed-rate and an adjustable-rate amortized loan?
A fixed-rate loan has the same interest rate for the entire term, so the payment amount stays constant. An adjustable-rate loan has a rate that can change periodically, which means the payment amount can change over time.
How do I calculate the total cost of a loan?
The total cost of a loan is the sum of all payments you make over the life of the loan. This includes the principal amount borrowed plus all interest paid. Our calculator shows this total in the results.