Amortization Calculator

Want to see exactly where every dollar of your loan payment goes? An amortization schedule breaks down each payment into principal and interest — month by month, from day one to the final payment.

What Is Loan Amortization?

Amortization is the process of paying off a loan through regular scheduled payments. With each payment you make, a portion reduces your loan balance (principal) and the rest covers the cost of borrowing (interest). Early payments are mostly interest; later payments are mostly principal.

How to Use This Calculator

1. Enter the loan amount (total borrowed).
2. Enter the annual interest rate.
3. Enter the loan term in years or months.
4. Click Calculate to generate the full amortization table.

Amortization Formula

Each monthly payment is calculated as:

Payment = P × [r(1+r)ⁿ] / [(1+r)ⁿ – 1]

For each period, interest = Remaining Balance × Monthly Rate. Principal = Payment − Interest.

Example Calculation

Loan: $200,000 at 7% annual interest for 30 years.

• Monthly payment ≈ $1,331
• Month 1: $1,167 interest / $164 principal
• Month 180 (year 15): $752 interest / $579 principal
• Month 360 (final): $8 interest / $1,323 principal
• Total interest paid ≈ $279,160

Why Use This Calculator?

Seeing the full schedule is eye-opening. Most borrowers don't realize how little of their early payments reduce the actual loan balance. Knowing this motivates many people to make extra principal payments and save thousands in interest.

Common Mistakes to Avoid

• Assuming equal principal reduction each month — it grows gradually as your balance drops.
• Ignoring extra payment impact — even $100 extra per month can cut years off your loan.
• Not accounting for escrow — your actual payment may be higher due to taxes and insurance.
• Mixing up APR and interest rate — the amortization formula uses the base interest rate, not APR.

Frequently Asked Questions

What is a negative amortization loan?

If your payment doesn't cover the monthly interest, the unpaid interest gets added to your balance — causing it to grow instead of shrink. This is called negative amortization and should be avoided.

How do extra payments affect amortization?

Extra principal payments directly reduce your balance, which cuts interest on future payments and shortens your loan term. Use our Mortgage Payoff Calculator to model this.

Is amortization the same for all loans?

No. Adjustable-rate mortgages (ARMs) recalculate periodically when the rate changes. The amortization formula stays the same but the payment amount updates with each adjustment.

What's the difference between amortization and depreciation?

Amortization applies to loan repayment (spreading payments over time). Depreciation applies to the declining value of a physical asset over time. See our Depreciation Calculator for that.

Can I use this for a car loan?

Absolutely. The amortization formula works the same for any fixed-rate installment loan — mortgage, car loan, personal loan, or student loan.

How do I read an amortization table?

Each row shows one payment period: the payment number, payment amount, interest portion, principal portion, and remaining balance. The balance column should reach $0 on the final row.

Conclusion

An amortization schedule turns your loan from a mystery into a clear map. Once you see the numbers, you can make smarter decisions about extra payments, refinancing, or choosing a shorter term.

Related tools: Mortgage Calculator | Loan Calculator | Mortgage Payoff Calculator | Simple Interest Calculator