Loan Amortization Calculator

Loan Amortization Calculator – How It Works

An amortization calculator helps you understand the full cost of any loan by breaking each payment into its principal and interest components. Whether you're evaluating a mortgage, auto loan, or personal loan, this tool gives you a clear picture of what you'll actually pay over the life of the loan.

What Is Loan Amortization?

Amortization is the process of spreading loan repayments over time through regular, equal payments. Each payment is applied to both interest and principal, with the interest portion decreasing and the principal portion increasing as your balance drops.

Monthly Payment Formula

M = P × r(1+r)^n / ((1+r)^n − 1)

• M – Monthly payment
• P – Principal loan amount
• r – Monthly interest rate (annual rate ÷ 12)
• n – Total number of monthly payments

Impact of Extra Payments

Making extra payments reduces your balance faster, cutting the total interest you pay and shortening the loan term. Even $50–$100 extra per month can save thousands over a long-term loan.

Reading Your Amortization Schedule

The schedule shows each payment number, how much goes to principal vs. interest, and your remaining balance. Early on, most of your payment goes to interest. By the final payments, nearly all of it reduces principal.