💰 Financial
Amortization Calculator
Generate a complete amortization schedule for your loan. See exactly how much of each payment goes toward principal versus interest over the life of the loan.
⏳
Formula
Interest = P_remaining × r
Principal = M - InterestInterest- Interest portion of the current payment
Principal- Principal portion of the current payment
P_remaining- Remaining loan balance before the payment
r- Monthly interest rate
M- Total monthly payment amount
Example
First Month of a Loan
Understanding the first payment on a $100,000 loan at 6% for 30 years (Monthly payment: $599.55).
- Calculate month 1 interest: $100,000 × (0.06 / 12) = $500.00.
- Calculate month 1 principal: $599.55 payment - $500.00 interest = $99.55.
- Calculate new balance: $100,000 - $99.55 = $99,900.45.
- In month 2, the interest will be slightly lower because the balance is lower.
Frequently Asked Questions
Amortization is the process of spreading out a loan into a series of fixed payments. While the payment amount remains the same, the breakdown of principal and interest changes over time.
Because interest is calculated on the remaining balance. In the early years, the balance is at its highest, so the interest portion of the payment is also at its highest.
Extra principal payments immediately lower your remaining balance. This reduces the amount of interest charged in all future months and shortens the overall schedule.