Amortization Calculator
Generate a complete loan amortization schedule with monthly and yearly breakdowns.
Loan Summary
| Month | Payment | Principal | Interest | Balance |
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What is an Amortization Calculator?
An amortization calculator is a financial tool that shows exactly how a loan is paid off over time. Rather than giving you a single monthly payment figure, it generates a complete amortization schedule — a row-by-row breakdown of every payment from the first month to the last, split into the portion that covers interest and the portion that reduces your principal balance.
This visibility matters because the split changes constantly: early payments are mostly interest, while later payments are mostly principal. Use the free amortization calculator above to see your monthly payment, payoff date, total interest cost, and where every dollar goes — whether you are financing a home, a car, or any other fixed-rate installment loan.
How to Use
- Enter the total loan amount you plan to borrow.
- Input the annual interest rate as a percentage.
- Specify the loan term in full years.
- Optionally set a start date to see your payoff date.
- Click Calculate to view your monthly payment and full schedule.
The results card summarizes your monthly payment, total interest, total amount paid, and payoff date, followed by the month-by-month schedule, which you can print or save for reference.
The Amortization Formula
Every fixed-rate amortized loan uses the same payment formula, which spreads repayment into equal monthly installments so the balance reaches exactly zero after the final payment:
M = P × r(1 + r)ⁿ ÷ ((1 + r)ⁿ − 1)
- M — the fixed monthly payment
- P — the principal, or amount you borrow
- r — the monthly interest rate (annual rate ÷ 12 ÷ 100)
- n — the total number of payments (years × 12)
Each month, the interest charge is simply the current balance multiplied by r. Whatever remains of the payment after covering that interest goes to principal, shrinking the balance — and next month's interest charge — a little further.
Worked Example: $300,000 at 6% for 30 Years
Suppose you borrow $300,000 at a 6% annual rate on a 30-year term. Plugging the numbers into the formula:
- P = 300,000
- r = 6 ÷ 12 ÷ 100 = 0.005 per month
- n = 30 × 12 = 360 payments
The result is a monthly payment of $1,798.65. Over all 360 payments you will pay $647,514.57 in total, which means $347,514.57 goes to interest — more than the original loan amount.
Your first payment splits into $1,500.00 of interest ($300,000 × 0.005) and just $298.65 of principal. In other words, about 83% of that first payment is pure interest.
Sample Amortization Schedule
The table below shows the first six payments of the example loan. Notice how the interest portion falls slightly each month while the principal portion grows by the same amount:
| Payment # | Payment | Principal | Interest | Remaining Balance |
|---|---|---|---|---|
| 1 | $1,798.65 | $298.65 | $1,500.00 | $299,701.35 |
| 2 | $1,798.65 | $300.14 | $1,498.51 | $299,401.21 |
| 3 | $1,798.65 | $301.64 | $1,497.01 | $299,099.57 |
| 4 | $1,798.65 | $303.15 | $1,495.50 | $298,796.42 |
| 5 | $1,798.65 | $304.67 | $1,493.98 | $298,491.75 |
| 6 | $1,798.65 | $306.19 | $1,492.46 | $298,185.56 |
How the Interest/Principal Mix Shifts Over Time
Because interest is charged on the outstanding balance, the composition of each payment tilts slowly toward principal. In year 1 of the example loan, $17,899.78 of your money goes to interest and only $3,684.04 reduces the debt, which ends the year at $296,315.96. By the final year the roles reverse completely: $20,898.41 goes to principal and only $685.41 to interest.
The crossover point — the first payment in which principal exceeds interest — arrives at payment #223, more than 18 years into the 30-year term. And halfway through the schedule, after 15 years of on-time payments, you still owe $213,146.53: less than 29% of the original balance has been repaid. This front-loaded interest is why it pays to understand amortization before signing a long-term loan.
The Power of One Extra Payment Per Year
Amortization works against you early on, but you can turn it to your advantage with extra principal payments. Making just one extra monthly payment of $1,798.65 per year on the example loan — applied directly to principal — pays the loan off in about 24 years and 9 months instead of 30, and cuts total interest to roughly $276,591. That is a saving of about $70,923 and more than five years of payments erased.
Even modest recurring extras compound dramatically, because every dollar of extra principal permanently removes that dollar from the balance on which future interest is calculated. Before doing this, confirm with your lender that extra payments are applied to principal and that no prepayment penalty applies.
Frequently Asked Questions
What is an amortization schedule?
An amortization schedule is a table listing every payment over the life of a loan. Each row shows how much of the payment goes toward interest, how much reduces the principal, and the remaining balance after the payment is made.
How is the monthly payment on an amortized loan calculated?
Lenders use the amortization formula M = P × r(1 + r)ⁿ ÷ ((1 + r)ⁿ − 1), where P is the loan amount, r is the monthly interest rate, and n is the number of monthly payments. The result is a fixed payment that exactly repays the loan by the end of the term.
Why does most of my early payment go to interest?
Interest is calculated on the remaining balance. Early in the loan, the balance is highest, so a larger share of each payment covers interest. Over time, more of each payment goes toward principal.
Can I use this calculator for a mortgage or car loan?
Yes. The math is identical for any fixed-rate, fully amortizing loan — mortgages, auto loans, personal loans, and student loans. Just enter the amount borrowed, the annual interest rate, and the term in years.
How much can one extra payment per year save?
On a $300,000 loan at 6% for 30 years, one extra monthly payment per year saves roughly $70,923 in interest and pays the loan off about 5 years and 3 months early. Even smaller recurring extra amounts produce meaningful savings.
What is the difference between an amortized loan and an interest-only loan?
With an amortized loan, every payment covers interest plus some principal, so the balance falls to zero by the end of the term. With an interest-only loan, payments cover just the interest for an initial period and the balance does not shrink until principal payments begin.
Does this calculator include taxes or insurance?
No. This calculator shows principal and interest only. Property taxes, homeowners insurance, and mortgage insurance are separate costs that lenders often collect through an escrow account on top of the payment shown here.