How to use the amortization calculator
It works for any fixed-rate loan with monthly payments: a mortgage, car loan, personal loan or student loan. Enter the amount you're actually borrowing, without escrow or costs you pay up front. Use the interest rate on your note, not the APR, because APR can include fees.
If your term isn't a round number of years, add the extra months. Extra payments are optional. Leave them at zero to see the standard schedule.
- Enter the loan amount, annual interest rate and term in years (plus any extra months).
- Add an extra principal amount for every month if you plan to pay more.
- Add a yearly extra, applied with payments 12, 24, 36 and so on, or a one-time extra on a payment number you choose.
- Set a target payoff time to see the monthly extra you'd need to hit it.
- Press Calculate, then check the payment, total interest, milestones and the full schedule.
Example: $250,000 at 6.5% for 30 years
A $250,000 fixed-rate loan at 6.5% over 360 payments has a principal and interest payment of $1,580.17. Over 30 years you pay $318,861.22 in interest, so the loan costs $568,861.22 in total.
The first year shows how slowly a long loan starts. Of the $18,962 you pay in the first 12 payments, only $2,794.31 goes to principal and $16,167.73 goes to interest. The principal part of the payment doesn't catch up with the interest part until payment 233, and the balance doesn't fall to half until payment 257.
| Payment | Principal | Interest | Balance after |
|---|---|---|---|
| 1 | $226.00 | $1,354.17 | $249,774.00 |
| 2 | $227.23 | $1,352.94 | $249,546.77 |
| 12 | $239.84 | $1,340.33 | $247,205.69 |
| 60 | $310.84 | $1,269.33 | $234,027.44 |
| 120 | $429.83 | $1,150.34 | $211,940.32 |
| 233 | $791.42 | $788.75 | $144,824.47 |
| 360 | $1,571.66 | $8.51 | $0.00 |
Loan amortization formula
The payment formula uses the loan amount P, the monthly rate r and the number of payments n. It finds the one fixed payment that brings the balance to exactly zero after n months. If the rate is 0%, the payment is just P divided by n.
Each row of the schedule then follows the same three steps. Work out interest on the opening balance, subtract it from the payment to get principal, and subtract principal from the balance. Extra payments go straight to principal after the regular split.
Monthly payment = P x r / (1 - (1 + r)^(-n))r = annual interest rate / 100 / 12Interest this month = opening balance x rPrincipal this month = payment - interest + any extra principalNew balance = opening balance - principal this month
Why early payments are mostly interest
Interest is always charged on what you still owe. At the start, you owe nearly the whole loan, so interest takes the biggest share of a fixed payment. Each month the balance drops a little, interest drops a little, and a bit more of the same payment goes to principal.
There's no hidden fee loaded into the early years. It's simply the rate applied to a large balance. On a short loan the effect is mild. On a 30-year mortgage at 6.5% it lasts nearly 20 years.
Amortization schedule with extra payments
Every extra dollar of principal lowers the balance that next month's interest is charged on. On the $250,000 example, adding $200 a month pays the loan off in 265 payments instead of 360 and cuts interest by $97,618.12. Your required payment stays $1,580.17. The extra is voluntary.
Yearly and one-time extras help too. Paying $1,000 with every 12th payment saves $48,832.80. A single $5,000 with payment 12 saves $26,134.96. Combine $200 a month with both of those and the loan is paid off in 232 payments.
| Extra principal | Payments to payoff | Total interest | Interest saved |
|---|---|---|---|
| None | 360 | $318,861.22 | $0 |
| $100 a month | 304 | $260,001.34 | $58,859.89 |
| $200 a month | 265 | $221,243.10 | $97,618.12 |
| $300 a month | 236 | $193,347.21 | $125,514.01 |
| $1,000 every 12th payment | 313 | $270,028.42 | $48,832.80 |
| $5,000 once, with payment 12 | 341 | $292,726.26 | $26,134.96 |
How the loan term changes your payment and interest
A shorter term means a bigger payment but far less interest, because the money is borrowed for less time. Same $250,000, same 6.5% rate: going from 30 years to 15 raises the payment by about $598 a month and cuts total interest by about $176,863.
Real lenders often price shorter terms at lower rates, so compare actual offers with their own disclosures. The table holds the rate fixed to show the effect of term alone. To pay off a 30-year loan in 20 years, the target solver says you'd need about $283.76 extra a month, which matches the 20-year payment of $1,863.93.
| Term | Monthly payment | Total interest | Total paid |
|---|---|---|---|
| 10 years | $2,838.70 | $90,643.93 | $340,643.93 |
| 15 years | $2,177.77 | $141,998.31 | $391,998.31 |
| 20 years | $1,863.93 | $197,343.88 | $447,343.88 |
| 30 years | $1,580.17 | $318,861.22 | $568,861.22 |
Limits and when to double-check
The calculator assumes a fixed rate, monthly payments and interest charged on the opening balance each month. It won't match loans with adjustable rates, interest-only periods, balloon payments, daily simple interest or precomputed interest. Payments sent early or late, fees and rounding can also move a real balance.
For a mortgage, the payment here is principal and interest only. Your bill may also include property taxes, homeowners insurance and mortgage insurance through escrow.
- Use the note rate, not the APR, for the schedule.
- Ask your lender or servicer how extra payments are applied and whether there's a prepayment penalty.
- Request a dated payoff quote before you pay a loan off. It can include interest up to the payoff date and fees, so it may differ from the schedule balance.
- Compare the first modeled row with your next statement.
Sources
These official resources explain amortization, principal and interest, payoff amounts and loan terms.