Amortization Calculator

How to use this calculator

1. Enter the loan amount, the loan term in years and months, and the annual interest rate.
2. Read the fixed monthly payment and the ring beneath it, which shows how the total splits between principal and interest.
3. Optionally open make extra payments to add extra principal monthly, yearly or as dated one-off amounts, and see what it saves.
4. Open the amortization schedule and toggle it between an annual summary and the full monthly breakdown.
5. Follow the interest and principal columns down the table to see where each payment goes and what you still owe.

A worked example

A $200,000 loan at 6% over 15 years costs $1,687.71 a month. Over 180 payments that is $303,788.46 — the $200,000 borrowed plus $103,788.46 of interest, so roughly a third of everything you pay is the cost of borrowing.

The first year shows why the schedule matters. Of the $20,252.56 paid, $11,769.23 is interest and only $8,483.33 reduces the balance. By year nine the split has reversed: $6,559.25 interest against $13,693.31 of principal. The payment never changes; what changes is where it goes.

What extra payments do

Extra principal does not reduce the monthly bill — it shortens the loan. Take the same $200,000 at 6% over 15 years and add $300 a month: the payment stays $1,687.71, but the loan clears in 11 years 9 months instead of 15, saving $25,072.62 in interest for $42,000 of extra principal.

Timing is most of the effect. Extra principal paid early removes interest from every remaining payment, while the same amount paid near the end removes almost none — by then the balance is small and there is little interest left to avoid. An extra payment is also applied after that month's interest has accrued, so it starts saving from the following month.

What amortization is

Amortization is paying off a debt in equal, regular instalments over a set term. Each payment is the same, but the split changes: because interest is charged on the outstanding balance, early payments are mostly interest and later payments are mostly principal, until the balance reaches zero on the final payment. It is the structure behind mortgages, car loans, personal loans and most fixed-rate debt.

The formula

The fixed payment comes from the amortization formula, then the schedule is built one month at a time:

M = P · r · (1 + r)ⁿ / ((1 + r)ⁿ − 1)

• M — the fixed monthly payment
• P — the loan amount
• r — the monthly interest rate (annual rate ÷ 12)
• n — the total number of payments (years × 12)

For each month, interest = balance × r, principal = M − interest, and the new balance = balance − principal. Repeat until the balance is zero, and you have the full schedule.

A worked example

Take a $20,000 car loan at 6% over 5 years. The fixed payment works out to about $386.66 a month. In the very first payment, interest is $20,000 × (6% ÷ 12) = $100.00 and the other $286.66 reduces the principal.

By the final payment, interest has fallen to about $1.92 and roughly $384.73 is principal — because the balance, and therefore the interest on it, has shrunk to almost nothing. Across all 60 payments you pay about $3,199 in interest on top of the $20,000 borrowed. That shift is the whole story of amortization.

Reading the schedule

Each row shows the principal paid, the interest paid and the balance left. On a long loan like a 30-year mortgage, interest dominates for years and the point where principal overtakes it — the crossover — arrives well past the calendar midpoint. On a short loan like this 5-year example, principal leads from the very first payment, because the balance is small relative to the payment. Either way, the interest column always shrinks as the balance falls.

Using it to pay off faster

The schedule reveals why extra early payments are so powerful. Any amount above the scheduled payment goes straight to principal, which lowers the interest charged on every remaining payment and pulls the payoff date forward. Because interest is front-loaded, a little extra early in the loan saves far more than the same amount added near the end.

Negative amortization

Normal amortization shrinks the balance every month. Negative amortization is the opposite: if a payment is smaller than the interest due, the unpaid interest is added to the balance and the debt grows. It can appear with some adjustable-rate or minimum-payment "option" loans and deferred plans, and it is a warning sign — this calculator models a standard fully-amortizing loan, where the balance always reaches zero.

Limitations

• It assumes a fixed rate and equal payments; adjustable-rate loans re-amortize when the rate changes.
• It does not include taxes, insurance, escrow or fees — only principal and interest.
• Extra payments are not modeled here; use the payment tools below to compare payoff scenarios.

To see totals and compare terms, use the loan calculator; for a home loan with taxes, insurance and PMI, use the mortgage calculator. This tool is for planning and education, not financial advice.