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Amortization Calculator

Calculate loan amortization schedules with optional extra payments. See monthly payment, total interest, principal vs interest breakdown, and full annual or monthly schedules.

Loan Worksheet
$
yrs mo
%
Monthly payment $1,687.71
Principal 65.84% Interest 34.16%
Total of 180 payments$303,788.46
Total interest$103,788.46

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How Amortization Works

An amortized loan has fixed periodic payments that cover both principal and interest. In the early months, most of each payment goes toward interest. Over time, the interest portion decreases and more goes toward paying down the principal.

Formula: M = P × [r(1+r)n] / [(1+r)n − 1]

  • M = monthly payment
  • P = principal (loan amount)
  • r = monthly interest rate (annual rate / 12)
  • n = total number of payments

Effect of Extra Payments

Making extra payments reduces the outstanding principal faster, which means less interest accrues each month. Even small extra payments can significantly shorten a loan term. For example, adding $100/month to a $200,000 mortgage at 6% over 30 years saves over $50,000 in interest and pays off the loan 5+ years early.

Amortization Schedule

The schedule breaks down every payment into principal and interest components. Two views are available:

  • Annual schedule: Shows yearly totals for interest paid, principal paid, and ending balance — matches the format used by banks and financial advisors.
  • Monthly schedule: Shows each individual payment with its exact principal, interest, and remaining balance.

Common Amortized Loans

  • Mortgages: Typically 15 or 30 years at fixed rates
  • Auto loans: Usually 3–7 years
  • Personal loans: 1–7 years
  • Student loans: 10–25 years for federal loans

Non-amortized loans like credit cards and interest-only mortgages work differently — the balance doesn't automatically decrease with each payment.

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Frequently Asked Questions

How is a monthly loan payment calculated?

The payment is M = P x r(1+r)^n / ((1+r)^n - 1), where P is the principal, r is the monthly interest rate (annual rate divided by 12) and n is the number of monthly payments. The result is a fixed payment that covers that month of interest plus a slice of principal, so the loan reaches zero on the final payment.

Why does most of an early mortgage payment go to interest?

Interest is charged on the remaining balance, and the balance is highest at the start. On a fixed payment, early months are mostly interest with little principal. As the balance falls, the interest share shrinks and more of each identical payment goes to principal, which is why paydown accelerates in the final third of the term.

When is half of a 30-year mortgage paid off?

At typical 6 to 7 percent rates, half the principal is repaid around year 21 to 22 of a 30-year loan, not at year 15. Front-loaded interest keeps principal paydown slow in the early years. At lower rates the halfway point arrives a little sooner, around year 19 at 4 percent.

Do extra payments shorten an amortized loan?

Yes. Extra payments go straight to principal, so the balance falls faster and every later payment carries less interest. On a fixed-rate loan this shortens the term rather than lowering the monthly payment, and over the life of a mortgage it often saves thousands of dollars in total interest.