Amortization Calculator
Loan Details
Extra Payments
Amortization Results
Total payments
$444,260.63
Total interest
$144,260.63
Loan payoff date
Jun. 2037
Interest savings
$0.00
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Export Results
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Amortization Calculator: Your Complete Guide to Loan Payments
Understand how your loan payments work, save money, and make informed financial decisions
When you take out a loan—whether it's for a home, car, or personal expense—understanding how your payments work is crucial. An amortization calculator helps you see exactly how each payment is split between interest and principal, how long it will take to pay off your loan, and how much interest you'll pay over time.
In this comprehensive guide, we'll explain everything you need to know about amortization and how to use our calculator to make smarter financial decisions.
What Is Loan Amortization?
Definition
Amortization is the process of paying off a debt over time through regular payments. Each payment covers both interest charges and a portion of the principal balance. In the early years of a loan, most of your payment goes toward interest. As the loan matures, more of each payment goes toward reducing the principal.
Think of amortization like this:
- Principal: The original amount you borrowed
- Interest: The cost of borrowing money
- Amortization Schedule: A table showing how each payment is split between principal and interest over the life of the loan
Try Our Amortization Calculator
See exactly how your loan payments work with our easy-to-use calculator. Input your loan details to get a complete payment schedule.
Key Features of Our Amortization Calculator
Visual Payment Breakdown
See exactly how much of each payment goes toward principal vs. interest with clear charts and graphs.
Complete Payment Schedule
View your entire payment schedule month-by-month or year-by-year to understand how your loan balance decreases over time.
Extra Payment Analysis
See how making extra payments can reduce your total interest and shorten your loan term.
Multi-Currency Support
Calculate loans in over 50 different currencies for accurate financial planning.
How to Use the Amortization Calculator
Step 1: Enter Your Loan Details
Start with the basic information about your loan:
Example: $300,000 Mortgage
Loan Amount: $300,000
Loan Term: 30 years (360 months)
Interest Rate: 4.5%
Start Date: June 2023
- Loan Amount: The total amount you're borrowing
- Loan Term: How long you have to repay the loan (in years and months)
- Interest Rate: The annual percentage rate (APR) charged by the lender
- Start Date: When your loan payments begin
Step 2: Add Extra Payments (Optional)
Our calculator allows you to see how extra payments can save you money:
- Extra Monthly Payment: Additional amount paid each month
- Extra Yearly Payment: Additional lump sum paid once per year
- One-Time Payment: A single extra payment at a specific time
Pro Tip: The Power of Extra Payments
Even small extra payments can significantly reduce your total interest and loan term. For example, adding just $100 to your monthly mortgage payment on a $300,000 loan at 4.5% could save you over $30,000 in interest and pay off your loan 4 years early!
Step 3: Review Your Results
After clicking "Calculate," you'll see several key results:
- Monthly Payment: Your fixed monthly payment amount
- Total Payments: The sum of all payments over the loan term
- Total Interest: The total interest you'll pay over the life of the loan
- Payoff Date: When your loan will be completely paid off
- Payment Breakdown: A visual chart showing principal vs. interest
- Amortization Schedule: A detailed table of every payment
Understanding the Amortization Formula
The calculator uses a standard formula to determine your monthly payment:
Monthly Payment Formula
M = P [ i(1 + i)^n ] / [ (1 + i)^n - 1 ]
Where:
- M = Monthly payment
- P = Principal loan amount
- i = Monthly interest rate (annual rate ÷ 12)
- n = Total number of payments (loan term in months)
Calculation Example
For a $300,000 loan at 4.5% interest for 30 years:
- P = $300,000
- i = 4.5% ÷ 12 = 0.375% (0.00375 as a decimal)
- n = 30 years × 12 months = 360 payments
- M = $300,000 [ 0.00375(1 + 0.00375)^360 ] / [ (1 + 0.00375)^360 - 1 ] = $1,520.06
So your monthly payment would be $1,520.06.
How Amortization Works Over Time
In the early years of your loan, most of your payment goes toward interest rather than principal. This is because the interest is calculated on the remaining balance, which is highest at the beginning of the loan.
Payment Breakdown Example
For a $300,000 loan at 4.5% for 30 years:
- First Payment: $1,125.00 interest + $395.06 principal = $1,520.06 total
- Payment #121 (Year 10): $904.69 interest + $615.37 principal = $1,520.06 total
- Final Payment: $5.69 interest + $1,514.37 principal = $1,520.06 total
Why This Matters
Understanding how amortization works can help you make smarter financial decisions. If you plan to sell your home in a few years, you'll know how much equity you've built. If you're considering refinancing, you'll understand how much principal you've paid down.
Advanced Features
Currency Support
Our calculator supports over 50 currencies, making it useful no matter where you live. The exchange rates are updated regularly to ensure accurate calculations.
Calculation History
Save your calculations to compare different loan scenarios or revisit them later. This is especially helpful when shopping for loans or considering refinancing options.
Export Options
Export your results in multiple formats:
- PDF: For printing or sharing with others
- HTML: For viewing in a web browser
- TXT: For simple text-based records
Frequently Asked Questions
Principal is the original amount you borrowed. Interest is the cost of borrowing that money, calculated as a percentage of the remaining principal.
In the early years of a loan, your balance is highest, so the interest calculation (which is based on the current balance) results in a larger interest portion. As you pay down the principal, the interest portion decreases.
Making extra payments directly toward principal can significantly reduce your loan term and total interest. Even small additional payments can make a big difference over time.
A 15-year mortgage has higher monthly payments but much less total interest paid over the life of the loan. A 30-year mortgage has lower monthly payments but significantly more total interest.
A lower interest rate reduces both your monthly payment and the total interest paid over the life of the loan. Even a small rate decrease can save you thousands of dollars.
An amortization schedule is a table that shows each payment's breakdown between principal and interest, along with the remaining balance after each payment.
Yes! This calculator works for mortgages, auto loans, personal loans, student loans, and any other installment loan with a fixed interest rate and term.
Our calculator uses standard financial formulas and is highly accurate for fixed-rate loans. However, actual loan terms may include additional fees or slightly different calculations.
This calculator is designed for fixed-rate loans. For adjustable-rate loans, the calculations would change when the interest rate adjusts.
Extra payments reduce your principal balance faster, which means less interest accrues over time. This can significantly shorten your loan term and reduce total interest paid.
Consistent extra payments (even small ones) have the biggest impact. Specify that extra payments should be applied to principal, not future payments.
Yes! The amortization schedule shows your remaining balance after each payment, which helps you track how your equity increases over time.
Missing payments can result in late fees and may extend your loan term. It also means you're paying more in interest over the life of the loan.
Recalculate whenever your financial situation changes, when considering refinancing, or when making significant extra payments.
Yes! Use the "Save to History" feature to store your calculations and compare different scenarios over time.