Amortization Calculator
View your full loan repayment schedule.
Understanding Amortization Calculator
An amortization schedule shows how a loan is gradually repaid through a series of scheduled payments. Each payment is divided into two main parts: interest charged for the period and principal that reduces the outstanding balance. With a fixed-rate fully amortizing loan, the scheduled payment generally remains the same throughout the repayment term, but the portion applied to interest and principal changes over time.
At the beginning of a loan, the outstanding balance is at its highest, so more of each payment goes toward interest. As the principal balance decreases, the amount of interest charged each month also decreases. Consequently, a larger portion of later payments is applied toward principal. By the end of the scheduled term, the remaining balance is reduced to zero.
Using this calculator with your own numbers
To use Amortization Calculator effectively, enter the values requested by the calculator and keep their units and meaning consistent. The main information requested on this page includes Loan Amount ($), Interest Rate (%), Loan Term (years). If the calculator offers selectable methods or options, choose the one that matches the question you are trying to answer.
Reading the number correctly
The result is calculated from the inputs shown on this page, so it is most useful when you understand what each input represents. Before relying on the number, check the units, the scale of the result, and any assumptions described above the calculator.
About Amortization Calculator
An amortization schedule shows how a loan is gradually repaid through a series of scheduled payments. Each payment is divided into two main parts: interest charged for the period and principal that reduces the outstanding balance. With a fixed-rate fully amortizing loan, the scheduled payment generally remains the same throughout the repayment term, but the portion applied to interest and principal changes over time.
At the beginning of a loan, the outstanding balance is at its highest, so more of each payment goes toward interest. As the principal balance decreases, the amount of interest charged each month also decreases. Consequently, a larger portion of later payments is applied toward principal. By the end of the scheduled term, the remaining balance is reduced to zero.
How Amortization Works
The calculator determines the monthly payment using the loan amount, annual interest rate, and repayment term. For each payment period, the monthly interest is calculated from the current outstanding balance. The interest is then subtracted from the scheduled payment, and the remaining amount is applied to the principal.
After each payment, the remaining principal becomes the starting balance for the next month. This process continues until the entire loan has been repaid. The resulting schedule provides a month-by-month view of the payment, principal, interest, and remaining balance.
Monthly Payment Formula
For a fixed-rate amortizing loan, the monthly payment can be estimated using:
M = P × [r(1 + r)n] ÷ [(1 + r)n − 1]
Where M is the monthly payment, P is the original loan amount, r is the monthly interest rate, and n is the total number of monthly payments. The annual interest rate is divided by 12 to obtain the monthly rate.
Principal and Interest
The principal is the original amount borrowed that remains unpaid. Interest is the cost charged for borrowing the money. At the start of an amortizing loan, the interest portion of a payment is usually larger because it is calculated from a larger outstanding balance.
As principal is repaid, the balance becomes smaller and less interest accumulates during each subsequent period. If the monthly payment stays fixed, this causes the principal portion of the payment to increase over time. This changing relationship between principal and interest is one of the main features of an amortization schedule.
Understanding Your Results
Monthly Payment is the scheduled amount required each month to repay the loan over the selected term at the entered interest rate. Total Principal represents the amount of the original loan that is repaid, while Total Interest represents the interest accumulated over the repayment period.
Total Payments combines principal and interest over the full loan term. The amortization schedule provides additional detail by showing the amount of each payment applied to principal and interest and the balance remaining after every payment.
Why Amortization Schedules Are Useful
An amortization schedule can help borrowers understand the long-term cost of a loan instead of looking only at the monthly payment. Two loans with similar monthly payments can have very different total interest costs if their interest rates or repayment terms differ.
The schedule can also help show how quickly the principal balance is declining. This is particularly useful for long-term loans, where a significant amount of interest may be paid during the early years of repayment.
Effect of Loan Term
A longer repayment term generally produces a lower required monthly payment, but it can also result in more total interest because the balance remains outstanding for a longer period. A shorter term usually requires higher monthly payments but can reduce the total amount of interest paid.
The best repayment term depends on the borrower's circumstances, including the desired monthly payment and the overall cost of borrowing. Comparing different terms with the calculator can help illustrate the trade-off between monthly affordability and total interest.
Example
Consider a $200,000 fixed-rate loan with a 5% annual interest rate and a 30-year repayment term. The calculator determines the required monthly payment and then creates a complete amortization schedule showing how the balance changes over all 360 monthly payments.
Early payments contain a larger interest component because the original balance is still high. As the loan progresses, more of each payment is applied to principal and the outstanding balance gradually approaches zero.
Factors That Can Change an Amortization Schedule
The amortization schedule depends primarily on the original loan amount, interest rate, repayment term, and payment structure. Additional principal payments can reduce the balance faster and may lower the amount of interest paid over the life of the loan.
Actual loan schedules can differ when a loan has a variable interest rate, irregular payments, fees added to the balance, payment holidays, refinancing, or other lender-specific terms. The calculator is designed for a standard fixed-rate amortizing loan with regular monthly payments.
How to Use the Amortization Calculator
Enter the loan amount, annual interest rate, and repayment term, then select Calculate. The calculator will show the estimated monthly payment, total principal, total interest, total payments, and a detailed monthly amortization schedule. You can change the inputs to compare how different loan amounts, rates, and terms affect the repayment schedule.
Financial Disclaimer
Results are estimates only and should not be considered financial, investment, tax, or legal advice. Please consult a qualified professional before making financial decisions.