Amortization Calculator
Enter the loan amount, annual interest rate and term to see a full amortization schedule. The calculator separates each monthly payment into principal and interest, tracks the remaining balance, and shows how extra principal or a shorter term can reduce the total cost of borrowing.
How to read an amortization schedule
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1
Enter the principal
Use the amount actually borrowed, such as $300,000 for a mortgage or $25,000 for an auto loan, not the purchase price before down payment.
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2
Add the annual rate
Use the stated annual interest rate for a fixed-rate loan. The calculator converts it to a monthly rate internally.
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3
Choose the term
Common terms are 30 or 15 years for mortgages, 3 to 7 years for auto loans, and shorter terms for personal loans.
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4
Review each payment
The schedule shows payment number, principal, interest, remaining balance and cumulative interest so you can compare scenarios clearly.
The amortization formula
For a fixed-rate installment loan, the monthly payment is:
M = P × (r(1+r)^n) / ((1+r)^n - 1)
Where:
- M = monthly payment
- P = principal, or the amount borrowed
- r = monthly interest rate, annual rate divided by 12
- n = total number of monthly payments, years × 12
What each schedule column means
| Column | How to use it |
|---|---|
| Payment | The month number in the repayment plan. |
| Principal | The part of the payment that reduces the loan balance. |
| Interest | The cost charged for that month, based on the remaining balance. |
| Balance | The amount still owed after the payment is applied. |
Why early payments are mostly interest
The payment stays fixed, but interest is recalculated every month as current_balance × r. In the first months the balance is still close to the original principal, so the interest portion is high and the principal portion is small. As the balance falls, more of the same payment goes toward principal. That is why a 30-year mortgage can feel slow at first and only reaches the halfway point well after year 15.
Example: 30-year vs. 15-year loan
A $300,000 fixed-rate loan at 6.5% for 30 years:
- Monthly principal and interest: $1,896.20
- Total paid: $682,633
- Total interest: $382,633
The same loan paid over 15 years:
- Monthly principal and interest: $2,613.32
- Total paid: $470,398
- Total interest: $170,398
The shorter term raises the monthly payment by about 38%, but it saves more than $200,000 in interest in this example.
Extra payment impact
Extra principal lowers the balance immediately, so the next month’s interest is calculated on a smaller amount. Even a modest extra payment can shorten a long loan, but the benefit depends on how long you keep the loan. If you expect to refinance, sell the home, or trade the car soon, compare the interest saved with what you could do with the same cash elsewhere.
Frequently Asked Questions
Lenders may include escrow, property tax, insurance, mortgage insurance, fees or a different day-count method. This calculator focuses on principal and interest for a standard fixed-rate loan, so the payment breakdown should be close, but the full statement total can differ.
Yes. Use it for fixed-rate installment loans with regular monthly payments. It is not meant for variable-rate loans, credit cards or interest-only loans where the payment can change.
Extra principal reduces the balance before future interest is calculated. That usually shortens the payoff date and lowers total interest, especially when paid early in the loan term.
No. The schedule shows principal and interest only. For a mortgage budget, add property tax, homeowners insurance, HOA dues and any mortgage insurance separately.
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