Amortization Calculator

    Generate a detailed loan amortization schedule showing payment breakdown for each period.

    Calculate Amortization Schedule

    About Amortization

    Loan amortization is the process of paying off a debt over time through regular payments. Each payment covers both principal and interest, with the proportion shifting over the loan's lifetime.

    How Amortization Works

    • Early Payments: Higher proportion goes to interest
    • Later Payments: Higher proportion goes to principal
    • Equal Payments: Monthly payment amount stays the same
    • Declining Balance: Interest calculated on remaining balance

    Amortization Formula

    Monthly Payment = P × [r(1+r)^n] / [(1+r)^n - 1]
    Interest Payment = Balance × Monthly Rate
    Principal Payment = Monthly Payment - Interest Payment
    New Balance = Old Balance - Principal Payment

    Benefits of Amortization Schedules

    • Understand how much interest you'll pay over time
    • See how extra payments can reduce total interest
    • Plan for future financial obligations
    • Compare different loan options effectively
    • Track equity building in assets like homes

    Example Breakdown

    • $200,000 loan at 4% for 30 years:
    • Monthly Payment: ~$955
    • First Month: $288 principal, $667 interest
    • Total Interest: ~$143,739

    Tips to Save on Interest

    • Make extra principal payments when possible
    • Consider bi-weekly payments instead of monthly
    • Refinance if rates drop significantly
    • Round up payments to accelerate payoff
    • Make one extra payment per year

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