What amortization means
To amortize a loan is to pay it off in equal installments over a set term. Each installment has two parts: interest on the money you still owe, and a slice of principal that shrinks the debt. The payment stays the same every month, but the split changes. At the start, the balance is large, so most of the payment is interest. Near the end, the balance is small, so almost all of it is principal.
An amortization schedule lists every payment with that split and the balance left afterwards. Mortgages, car loans, personal loans, student loans and most business term loans all work this way. The calculator above builds the full schedule, groups it by year, and lets you switch to a row for every month.
The amortization formula
First, the level payment that clears the loan in exactly n payments:
P = amount borrowed · r = yearly rate ÷ 12 · n = number of monthly payments
Then, one row at a time:
Principal this month = M − interest
New balance = balance − principal − any extra payment
Repeat until the balance reaches zero. The last payment absorbs any rounding, which is why it can differ by a few cents from the others.
Worked example 1: a $200,000 home loan
You borrow $200,000 at 6.5% for 30 years.
- r = 0.065 ÷ 12 = 0.0054167 and n = 360
- M = 200,000 × 0.0054167 ÷ (1 − 1.0054167^−360) = $1,264.14 a month
- Month 1 interest = 200,000 × 0.0054167 = $1,083.33, so only $180.80 repays principal
- Total paid over 30 years: $455,088.98, of which $255,088.98 is interest
Here is how the split shifts over the life of the loan:
| Payment | Interest | Principal | Balance after |
|---|---|---|---|
| 1 | $1,083.33 | $180.80 | $199,819.20 |
| 12 | $1,072.26 | $191.87 | $197,764.55 |
| 60 (year 5) | $1,015.47 | $248.67 | $187,221.95 |
| 120 (year 10) | $920.27 | $343.87 | $169,552.25 |
| 180 (year 15) | $788.63 | $475.50 | $145,118.28 |
| 240 (year 20) | $606.60 | $657.53 | $111,330.57 |
| 300 (year 25) | $354.89 | $909.25 | $64,608.32 |
| 360 | $6.81 | $1,257.33 | $0.00 |
Two things stand out. In the whole first year you repay only $2,235.45 of principal while paying $12,934.18 of interest. And principal does not overtake interest until payment 233, more than 19 years in. Half the loan is not repaid until payment 257. That slow start is why selling or refinancing in the first few years leaves most of the debt still owed.
Worked example 2: a $25,000 car loan
A $25,000 auto loan at 7% for 5 years (60 payments):
- r = 0.07 ÷ 12 = 0.0058333
- M = 25,000 × 0.0058333 ÷ (1 − 1.0058333^−60) = $495.03
- Month 1: $145.83 interest and $349.20 principal
- Total interest: $4,701.80
Short loans amortize much faster. Even in the first month, principal is more than twice the interest. That is one reason a shorter term costs so much less overall, even at the same rate. The auto loan calculator adds sales tax, trade-in and dealer fees on top of this.
Worked example 3: what extra payments do
Back to the $200,000 loan. Any extra money you send goes straight to principal, so it also removes all the future interest that principal would have charged.
| Extra payment | Paid off after | Interest saved |
|---|---|---|
| None | 360 payments (30 years) | — |
| $100 every month | 293 payments (24 years 5 months) | $55,945.77 |
| $2,000 once a year | 264 payments (22 years) | $77,367.31 |
| $10,000 once, at month 12 | 315 payments (26 years 3 months) | $47,910.82 |
A one-time payment early in the loan saves far more than the same payment late in the loan, because it has more months to stop interest. Use More options above to try your own mix. The dashed line on the balance chart shows the loan without extra payments, so you can see the gap open up.
Payment and total interest per $100,000
This reference table shows the monthly payment and total interest on every $100,000 borrowed. Multiply by your loan size to estimate quickly; for example, $300,000 at 7% over 30 years is about 3 × $665.30 = $1,995.90 a month.
| Rate | 15 years | 20 years | 30 years |
|---|---|---|---|
| 5% | $790.79 · $42,342.85 interest | $659.96 · $58,389.38 | $536.82 · $93,255.78 |
| 6% | $843.86 · $51,894.23 | $716.43 · $71,943.45 | $599.55 · $115,838.19 |
| 7% | $898.83 · $61,789.09 | $775.30 · $86,071.74 | $665.30 · $139,508.90 |
| 8% | $955.65 · $72,017.38 | $836.44 · $100,745.62 | $733.76 · $164,155.25 |
Going from 30 years to 15 years at 6% raises the payment by about 41% but cuts total interest by more than half.
How to read the schedule above
- Yearly view adds up each loan year. Tap a year to see its 12 months.
- Monthly view lists every payment on its own row, like a lender’s statement.
- Balance is what you would still owe after that payment, which is roughly your payoff amount on that date (lenders add interest accrued since the last payment).
- Download CSV opens in Excel, Google Sheets or Numbers so you can add your own columns.
- The chart has two views: yearly principal and interest bars, and the falling balance with running totals.
Tips
- Check for a prepayment penalty first. The CFPB notes that some loans charge a fee for paying early. Most US mortgages made since 2014 cannot charge one after the first three years, and many car and personal loans have none, but read your contract.
- Tell the lender where extra money goes. Ask for it to be applied to principal, not held as an advance on next month’s payment. Otherwise it may not cut interest at all.
- Compare with the APR, not just the rate. The payment depends on the interest rate, but fees change the true cost. The APR calculator turns fees into a single comparable rate.
- Early years matter most. Because interest is front-loaded, extra payments and refinancing decisions in the first third of a loan have the largest effect.
- For a home, add the rest of the bill. Property tax, insurance, PMI and HOA fees are not part of amortization. The mortgage calculator adds them to the monthly payment.
Common mistakes
- Dividing the yearly rate wrongly. A 6.5% loan charges 6.5 ÷ 12 = 0.5417% a month, not 6.5%. Entering a monthly rate in a yearly field makes the payment look enormous.
- Mixing up term and remaining term. If you are 7 years into a 30-year loan, the schedule from today runs 23 years on your current balance. The mortgage payoff calculator starts from where you are now.
- Assuming equal principal each month. Only the total payment is level. The principal share grows every month, which is why balances fall slowly at first.
- Expecting interest-only or variable loans to match. Interest-only periods, adjustable rates and HELOC draw periods do not follow this table. Use a calculator built for them, such as the HELOC calculator.
Where the numbers come from
The formula is the standard present-value-of-an-annuity equation used by US lenders and taught in every finance course. Results are calculated in your browser with full precision and only rounded for display. Lenders round each payment to the cent and some charge interest by the exact number of days, so a real statement can differ by a few cents a month. For legal terms, rely on your Loan Estimate or loan agreement.