Complete Loan Amortization Calculator
Our free loan amortization calculator provides a detailed payment schedule for any type of loan. Whether it's a personal loan, auto loan, student loan, or business loan, see exactly how each payment breaks down between principal and interest, and how your balance decreases over time.
What is Loan Amortization?
Loan amortization is the process of paying off a debt over time through regular payments. Each payment covers both the interest charges and reduces the principal balance. With amortizing loans, the proportion of each payment that goes toward principal increases over time, while the interest portion decreases.
Understanding Your Amortization Schedule
An amortization schedule is a complete table showing every payment over the life of your loan. For each payment, you'll see:
- Payment Number: Sequential number of the payment
- Payment Amount: Total monthly payment (usually stays the same)
- Principal: Amount that reduces your loan balance
- Interest: Cost of borrowing the remaining balance
- Remaining Balance: Outstanding loan amount after the payment
How Loan Payments Work
Early in your loan term, most of each payment goes toward interest because the outstanding balance is highest. As you continue making payments, the balance decreases, so less interest accrues each month. This means more of your payment goes toward principal, accelerating your debt payoff.
Benefits of Extra Payments
Making additional principal payments can significantly reduce the total interest you pay and shorten your loan term. Even small extra payments early in the loan can save thousands in interest. Our calculator allows you to see the impact of extra payments on your loan.
Types of Loans That Amortize
- Mortgages: Home loans typically amortize over 15 or 30 years
- Auto Loans: Car loans usually amortize over 3-7 years
- Personal Loans: Unsecured loans often amortize over 2-5 years
- Student Loans: Education loans may amortize over 10-25 years
- Business Loans: Commercial loans vary widely in term length
Amortization vs. Interest-Only Loans
Unlike amortizing loans, interest-only loans require you to pay only the interest each month, with the full principal due at the end. While interest-only loans have lower monthly payments initially, they don't build equity and can be riskier. Amortizing loans guarantee you'll own the asset free and clear by the end of the term.
Tips for Managing Your Loan
- Review your amortization schedule to understand where your money goes
- Make bi-weekly payments instead of monthly to reduce interest
- Round up your payments to pay extra principal each month
- Consider refinancing if interest rates drop significantly
- Avoid loans with prepayment penalties if you plan to pay early
- Use windfalls (bonuses, tax refunds) to make lump-sum principal payments
How to Read Your Amortization Table
When you generate your amortization schedule, pay attention to these key insights:
- Total interest paid over the life of the loan
- How quickly your balance decreases in the first few years
- The "tipping point" where principal exceeds interest in each payment
- Total amount paid (principal + interest)
- Impact of your interest rate on total cost
Common Loan Terms
Principal: The original loan amount borrowed
Interest Rate: Annual percentage rate (APR) charged by the lender
Term: Length of time to repay the loan (e.g., 60 months, 15 years)
Monthly Payment: Fixed amount due each month (P&I - principal and interest)
Total Interest: Sum of all interest payments over the loan term