What is an amortization schedule?

An amortization schedule is a table that shows the periodic payment amount, interest and principal portions of each payment, and the remaining balance after each payment throughout the life of a loan.

How can extra payments affect my loan amortization?

Making extra payments reduces the principal balance, which means less interest accrues over time. This can significantly shorten the loan term and reduce the total interest paid over the life of the loan.

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Amortization Calculator

Calculate your loan amortization schedule, track monthly payments, and see how extra payments affect your loan.

Loan Amount *

Annual Interest Rate *

Loan Term Years *

years

Extra Months

months

Start Date (Month/Year)

Payment Frequency

Extra Payment (per period)

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Calculation Results

Amortization calculation is complete. Your results are shown below.

Payment Amount $0.00

Total Cost $0.00

Total Interest $0.00

Payment Breakdown

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Amortization Schedule

View your complete payment schedule

Payment No	Date	Principal	Interest	Total Payment	Balance

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How Amortization Works

Understanding loan amortization and how payments are applied

Understanding how loan amortization works is essential for making informed financial decisions:

Equal Periodic Payments: Amortized loans are structured so you make equal payments throughout the loan term, but the proportion of interest and principal changes over time.
Early Interest: In the beginning, a larger portion of each payment goes toward interest, with less going to the principal balance.
Decreasing Interest: As you pay down the principal, the interest portion decreases, and more of each payment goes toward the principal.
Extra Payments: Making extra payments reduces the principal balance faster, reducing the total interest paid and shortening the loan term.

Our calculator helps you understand the complete amortization schedule of your loan, allowing you to see how each payment affects your balance over time.

By understanding how your loan amortizes, you can make better decisions about extra payments, refinancing, or comparing different loan offers.

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Frequently Asked Questions

Common questions about loan amortization and payments

What is loan amortization?

Loan amortization is the process of gradually paying off a debt through regular payments over time. An amortized loan has scheduled, periodic payments that are applied to both principal and interest. As the loan matures, more of each payment goes toward the principal and less toward interest.

How can I pay off my loan faster?

You can pay off your loan faster by making extra payments toward the principal. Even small additional amounts can significantly reduce the loan term and total interest paid. You can use our calculator to see the impact of extra payments on your amortization schedule.

Why does most of my payment go to interest at the beginning?

At the beginning of an amortized loan, more of each payment goes toward interest because the interest is calculated based on the outstanding principal balance, which is at its highest. As you make payments and reduce the principal, the interest portion decreases and more goes toward the principal.

How is my monthly payment calculated?

Your payment is calculated using the formula: Payment = Principal × (Rate × (1 + Rate)^Term) ÷ ((1 + Rate)^Term - 1), where Rate is the periodic interest rate (annual rate divided by payment periods per year) and Term is the total number of payments (years × payment periods per year).

What's the difference between principal and interest?

Principal is the original loan amount or the remaining balance that you still owe. Interest is the cost of borrowing that money, typically calculated as a percentage of the outstanding principal. Each payment you make is divided between principal repayment and interest charges.

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