Loan Amortization Calculator
Compute your fixed monthly loan payment and generate a full amortization schedule showing how each payment splits between principal and interest over the life of the loan.
About this calculator
Loan amortization spreads equal payments over a fixed term so the loan balance reaches exactly zero at the end. The standard monthly payment formula is: M = P × r / (1 − (1 + r)^(−n)), where P is the loan amount, r = annualRate / 100 / 12 is the monthly interest rate, and n = loanTermYears × 12 is the total number of payments. An extra principal payment is added on top: total payment = M + extraPrincipal. Each month, interest due = remaining balance × r; the rest of the payment reduces the principal. Early in the loan, most of the payment covers interest; gradually, as the principal falls, the interest portion shrinks and the principal portion grows. Making extra principal payments shortens the loan term and reduces total interest paid.
How to use
Suppose you borrow $200,000 at 6.5% annual interest for 30 years with no extra payments. r = 6.5/100/12 ≈ 0.005417; n = 360. M = 200,000 × 0.005417 / (1 − (1.005417)^(−360)) = 1,083.33 / (1 − 0.1505) = 1,083.33 / 0.8495 ≈ $1,264.14/month. Month 1: interest = 200,000 × 0.005417 = $1,083.33; principal = 1,264.14 − 1,083.33 = $180.81; new balance = $199,819.19. Over 360 months, total interest paid ≈ $255,089 — more than the original loan.
Frequently asked questions
What is an amortization schedule and why is it useful?
An amortization schedule is a complete table of every loan payment, broken down into the interest and principal portions, along with the remaining balance after each payment. It is useful because it makes visible how slowly the principal falls in the early years of a long-term loan — for instance, on a 30-year mortgage, you may still owe 90% of the original amount after five years of payments. Seeing this breakdown motivates borrowers to make extra principal payments early, when the interest savings are greatest. Lenders are required to provide amortization schedules for many loan types.
How does making extra principal payments reduce the total interest on a loan?
Every extra dollar applied to principal immediately reduces the balance on which future interest is calculated. Because interest compounds monthly, eliminating $1,000 of principal today saves you that $1,000 times the monthly rate times every remaining month — the savings compound forward. For example, on a $200,000 mortgage at 6.5% for 30 years, paying an extra $200/month from day one saves approximately $73,000 in interest and cuts the loan term by about 6 years. The earlier in the loan term you make extra payments, the larger the impact.
What is the difference between a fixed-rate and variable-rate loan amortization?
A fixed-rate loan has the same interest rate and payment amount for every period, so the amortization schedule can be calculated precisely in advance using the standard formula. A variable-rate (ARM) loan has an interest rate that resets periodically based on a market index, meaning the monthly payment — and therefore the entire remaining schedule — must be recalculated at each reset date. This calculator uses the fixed-rate formula, giving you a definitive schedule. If you have a variable-rate loan, run the calculator again each time your rate adjusts to see your updated payoff trajectory.