Loan Amortization Calculator
Calculate your periodic payment amount and see a full principal-and-interest breakdown for any loan. Use it when comparing mortgage offers, auto loans, or any installment debt before you sign.
About this calculator
Loan amortization spreads repayment of principal and interest across equal periodic payments so the loan reaches a zero balance exactly at the end of the term. The periodic payment is calculated with the standard annuity formula: Payment = P × [r(1 + r)ⁿ] / [(1 + r)ⁿ − 1], where P is the loan principal, r is the periodic interest rate (annual rate ÷ payment frequency), and n is the total number of payments (loan term in years × payment frequency). In each period, the interest portion equals the remaining balance multiplied by r, and the remainder of the payment reduces principal. Because interest is recalculated on the declining balance each period, early payments are mostly interest while later payments are mostly principal — a pattern visible in the full amortization schedule.
How to use
Say you borrow $20,000 at 6% annual interest, repaid monthly over 3 years. The monthly rate r = 6% / 100 / 12 = 0.005, and n = 3 × 12 = 36 payments. Payment = $20,000 × [0.005 × (1.005)³⁶] / [(1.005)³⁶ − 1] = $20,000 × [0.005 × 1.19668] / [1.19668 − 1] = $20,000 × 0.005983 / 0.19668 ≈ $608.44 per month. Enter the loan amount, rate, term, and select 'Monthly' as the payment frequency. The calculator outputs the payment and a period-by-period schedule showing how each payment chips away at the balance.
Frequently asked questions
How does increasing my payment frequency reduce total interest on a loan?
When you pay more frequently — say bi-weekly instead of monthly — you make the equivalent of one extra monthly payment per year, and each payment reduces the principal balance sooner. Because interest is calculated on the outstanding balance, a lower balance at each calculation date means less interest accrues. Over a long mortgage, switching from monthly to bi-weekly payments can shave years off the term and save thousands in interest. The amortization calculator lets you compare different frequencies side-by-side to quantify the savings.
What is the difference between amortization and simple interest loan repayment?
In an amortizing loan, each fixed payment covers accrued interest first and the surplus reduces principal, so the interest portion shrinks every period as the balance falls. In a simple interest loan, interest is calculated only once on the original principal and added to the total owed upfront. Amortizing loans are standard for mortgages and auto loans; simple interest structures appear in some personal and short-term loans. For the same principal and rate, an amortizing loan typically results in lower total interest paid over time because the balance declines continuously.
Why do early loan payments consist mostly of interest rather than principal?
In the amortization formula, the interest portion of each payment equals the current outstanding balance multiplied by the periodic rate. At the beginning of the loan, the balance is at its highest, so interest consumes the largest share of each payment. As payments reduce the balance month by month, the interest component shrinks and more of each fixed payment attacks the principal. This is why making extra principal payments early in a loan's life has an outsized effect on reducing total interest paid and shortening the loan term.