Amortization Calculator
Calculate loan amortization schedule
About this Tool
The amortization calculator generates a detailed payment schedule for a loan, showing precisely how each payment is allocated between principal and interest over the loan's entire term. Amortization is the financial process of paying off a debt over time through regular, equal payments. A key characteristic of amortizing loans, like mortgages and auto loans, is that the proportion of interest to principal changes with each payment. In the early stages of a loan, a larger portion of the payment goes toward interest. As the loan matures and the principal balance decreases, this ratio shifts, with more of each payment going toward paying down the principal. This calculator provides a transparent, month-by-month breakdown, empowering borrowers to understand the true cost of their loan, visualize their equity growth, and strategically plan for early repayment to save on interest costs.
Common Use Cases
Mortgage Planning
View your complete mortgage payment schedule to understand how much equity you build over time and plan prepayment strategies to save on interest.
Auto Loan Analysis
Analyze car loan payments to see how much of your payment goes to interest versus the car's actual value, especially in the early years.
Personal Loan Transparency
Get a clear picture of how a personal loan is paid down over its term, helping you compare different loan offers effectively.
Financial Education
A powerful tool for learning about how loans work, the impact of interest rates, and the long-term process of debt repayment.
Pro Tips
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The Power of Extra Payments
Making even one extra principal payment per year can shave years off a 30-year mortgage and save you tens of thousands in interest. Use the schedule to see how your balance would decrease faster.
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Bi-Weekly Payment Strategy
Consider making half-payments every two weeks instead of full payments monthly. This results in 26 half-payments, equivalent to 13 full monthly payments per year, which naturally accelerates your loan payoff.
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Understand Your Equity
The 'Principal' column in the schedule shows how much equity you are building in your home with each payment. This is a key component of your net worth.
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Tax Deduction Insights
The 'Interest' column shows the amount of interest you pay each month. For mortgages, this interest is often tax-deductible. You can sum up the interest for a year to estimate your potential deduction.
Examples
Example: 30-Year Mortgage
Analyze a typical $300,000, 30-year mortgage with a 6% interest rate.
- Enter Loan Amount: 300000
- Enter Interest Rate: 6
- Enter Loan Term: 30
- Generate the schedule and observe how in the first year, a significant majority of your payments go towards interest. Scroll down to the final years to see how this ratio flips, with most of the payment going towards principal.
Example: 15-Year vs. 30-Year Mortgage Comparison
Compare the total interest paid on a $250,000 loan at 5.5% over 30 years versus 15 years.
- First, calculate the schedule for a 30-year term. Note the total interest paid.
- Then, change the term to 15 years and recalculate. Note the new, higher monthly payment but significantly lower total interest.
- This demonstrates the trade-off between monthly affordability and long-term interest savings.