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Loan amortization shows how loan payments are divided between principal and interest over time. Our free amortization calculator provides detailed payment breakdowns and schedules for mortgages, car loans, personal loans, and other amortizing loans. Understanding amortization helps borrowers plan payments and track equity buildup.
Enter your loan amount, interest rate, and loan term in years or months. The calculator instantly provides monthly payment amount, total interest paid, and a complete amortization schedule showing how each payment is allocated between principal and interest.
Early loan payments consist mostly of interest, with principal repayment increasing over time. As the loan balance decreases, less interest is charged each month, allowing more of the payment to go toward principal reduction. This creates a gradual buildup of equity in the asset being financed.
Most home mortgages, auto loans, and personal loans use amortization. Fixed-rate loans have consistent payments, while adjustable-rate loans may change. Understanding your amortization schedule helps with prepayment decisions and refinancing analysis.
Making extra payments reduces the principal balance faster, shortening the loan term and reducing total interest paid. Our calculator shows standard amortization, but extra payments would create a new schedule with lower balances and less interest.
The monthly payment is calculated using the standard amortization formula: P × [r(1+r)^n] / [(1+r)^n - 1], where P is principal, r is monthly interest rate, and n is number of payments.
Interest is calculated on the remaining balance. Early in the loan, the balance is high, so interest charges are higher, leaving less for principal repayment.
This calculator works for any amortizing loan with fixed payments and interest rates. It doesn't apply to credit cards or lines of credit with different payment structures.
Calculations use standard financial formulas and are accurate to within normal rounding differences. Actual lender calculations may vary slightly due to rounding methods.