How to Use This Calculator
- Enter loan principal: Specify the total amount financed.
- Input interest rate and term: Define annual percentage rate (APR) and repayment years.
- Analyze the schedule: Review how each payment allocates between interest charges and principal equity.
Formula and Calculation Steps
Monthly Payment (M) = P × [ r(1 + r)^n ] ÷ [ (1 + r)^n − 1 ]
Interest Portion = Remaining Balance × r
Principal Portion = M − Interest Portion
New Balance = Prior Balance − Principal PortionWorked Examples and Reference Table
| Loan Amount | Rate | Term | Monthly Payment | Total Interest |
|---|---|---|---|---|
| $100,000 | 6.0% | 15 Years | $843.86 | $51,894.27 |
| $200,000 | 6.5% | 15 Years | $1,742.22 | $113,600.08 |
| $300,000 | 6.5% | 30 Years | $1,896.20 | $382,633.47 |
| $500,000 | 7.0% | 30 Years | $3,326.51 | $697,544.40 |
Frequently Asked Questions
What is loan amortization?
Amortization is the process of spreading out a loan into a series of equal periodic payments. Over time, a larger portion of each payment goes toward the principal balance and less toward interest.
Why does early interest dominate loan payments?
Because interest is calculated on the remaining unpaid principal balance. In the initial years, the principal is highest, so the interest charge is largest.
How do extra payments impact an amortization schedule?
Making additional payments directly to the principal reduces the remaining balance immediately. This shortens the loan term and saves substantial interest over the life of the loan.
What is the difference between an amortization schedule and a loan statement?
An amortization schedule projects all future payments assuming steady interest and timely payments. A loan statement shows actual historical transactions and current balance.
Can I amortize both fixed and variable loans?
A fixed-rate amortization schedule is fully predictable. Variable-rate loans recalculate their schedule whenever the benchmark interest rate changes.