Loan Amortization Calculator
Calculate your monthly loan payments, interest expenses, and view a complete monthly amortization schedule.
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$293,490 Total Cost
Cumulative Interest
60 Payments Projections
| Month # | Payment | Principal Paid | Interest Paid | Remaining Balance |
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What is a Loan Amortization Schedule?
A loan amortization schedule is a complete table detailing each periodic payment on an amortizing loan. Unlike simple interest calculations where you pay a flat rate over time, amortized loans are designed with level monthly payments. At the beginning of the schedule, the majority of your payment goes toward paying off the **accrued interest**. As the outstanding principal balance decreases, the interest portion drops, and a larger portion of your monthly payment is allocated toward the **principal balance**.
How to Calculate Amortized Loan Payments
To calculate the exact level monthly payment for an amortized loan, financial institutions use the standard amortization formula:
M = P [ r(1+r)^n ] / [ (1+r)^n – 1 ]
Where:
- M: Total Monthly Payment.
- P: Principal Loan Amount.
- r: Monthly Interest Rate (Annual APR divided by 12).
- n: Total Number of Payments (number of months).
The Difference Between Principal and Interest
Understanding these two components is critical to financial literacy:
- Principal: The original sum of money borrowed from the bank or lender. Paying down principal increases your equity in the underlying asset (such as a home or automobile).
- Interest: The fee charged by the lender for borrowing the principal. It is calculated monthly based on your remaining outstanding balance.
How to Pay Off Your Loan Faster
- Make Extra Principal Payments: Even small extra payments applied directly to the principal balance drop your interest accumulation, shaving years off your repayment schedule.
- Switch to Bi-weekly Payments: Making half-payments every two weeks results in 26 half-payments (or 13 full monthly payments) per year, cutting interest costs significantly.
- Refinance at Lower APRs: If interest rates decline or your credit score improves, refinancing to a lower APR reduces both your monthly payments and total lifetime borrowing cost.