Amortization schedule
The formula
How it works
An amortization schedule shows how each payment on a loan is split between interest and principal, and how the balance falls over time. Early on most of your payment is interest; later, most goes to the principal.
FAQ
Why is early payment mostly interest?
Interest is charged on the balance you still owe, which is highest at the start. As you pay the balance down, the interest portion of each payment shrinks and the principal portion grows, even though the total payment stays the same.
What does “amortized” mean?
An amortized loan is repaid in equal instalments that gradually clear both the interest and the principal, so the balance reaches exactly zero with the final payment. Mortgages and most car and personal loans work this way.
How do extra payments affect the schedule?
Any amount paid above the required payment goes straight to principal, which shrinks the balance faster and reduces every future interest charge. This calculator shows the standard schedule; even small regular overpayments can shorten a 30-year loan by several years.
Does the schedule change if I have a variable interest rate?
This calculator assumes a fixed rate for the life of the loan, so the payment never changes. With a variable-rate loan, the rate — and often the payment — is recalculated periodically, so the actual schedule will drift from a fixed projection over time.
Why does the balance not reach zero exactly some years?
Rounding within each monthly calculation can leave the final year’s numbers slightly off a clean zero, which the schedule corrects by floor-capping the balance at zero once the loan is paid off.
How does a shorter loan term change the total interest paid?
A shorter term raises the monthly payment but sharply cuts total interest, because the balance is paid down faster and has less time to accrue interest. Comparing a 15-year and 30-year schedule at the same rate shows the difference clearly.
What is negative amortization?
It happens when a payment is smaller than the interest due, so unpaid interest is added to the balance instead of reducing it — the opposite of what this calculator assumes. It’s a feature of some non-standard loans and is worth watching for since the debt grows instead of shrinking.
About the amortization calculator
This calculator builds an amortization schedule for a loan — a year-by-year breakdown of how each payment is divided between interest and principal, and how the balance shrinks over time. Understanding this split matters because the same monthly payment does very different work at the start of a loan than at the end. The schedule reveals exactly how much interest you pay and how slowly the balance falls in the early years.
How to use it
Enter the loan amount, the interest rate, and the term in years. The calculator shows the monthly payment and a year-by-year table of the interest and principal paid and the remaining balance. For example, a $200,000 loan at 6% over 30 years has a payment of about $1,199, and in the first year the vast majority of your payments go to interest rather than reducing the balance.
The formula
The payment comes from the amortization formula, , where is the loan amount, is the monthly rate and is the number of payments. Each month, the interest portion is the balance times , and whatever is left of the payment reduces the principal. As the balance falls, less interest accrues, so more of each fixed payment goes to the principal.
Where it is used
Amortization schedules are used for mortgages, car loans, student loans and business finance — anywhere a debt is repaid in equal instalments. Borrowers use them to see how much interest they will pay and how equity builds, and to judge the impact of overpaying. Lenders and accountants use them for statements and tax purposes, since the interest portion is often what is deductible.