What is an amortization calculator?
An amortization calculator shows how a loan is paid off over time, breaking down each payment into principal (the amount borrowed) and interest (the cost of borrowing). It generates an amortization schedule—a table showing payment-by-payment how the loan balance decreases and how much goes to principal vs interest. This helps borrowers understand their loan structure, see how much interest they'll pay total, and plan for early payoff.
Drag the sliders or type values in the input fields for loan amount, annual interest rate, and loan term. The calculator automatically computes monthly payment, total interest, total paid, and generates an amortization schedule showing the first 12 months. Results update instantly as you change values, and a visual pie chart shows the breakdown of principal versus interest in your total payments. The pie chart displays immediately with default values, helping you understand loan structure before making changes.
How to use this amortization calculator
Start by dragging the loan amount slider or entering the principal amount. This is the total amount you're borrowing. Next, set the annual interest rate by dragging the slider or entering a percentage value. Common mortgage rates range from 3% to 7%, car loans from 4% to 10%, and personal loans from 6% to 15%. Finally, set the loan term in years by dragging the slider or entering a value. Common terms are 15 or 30 years for mortgages, 3-7 years for car loans, and 1-5 years for personal loans.
The calculator instantly shows your monthly payment, total interest over the life of the loan, and total amount paid. The pie chart on the right visualizes the breakdown of principal versus interest in your total payments. Click "Get result" to see the detailed payment schedule showing the first 12 months with breakdown of principal and interest for each payment. Early payments go mostly to interest; later payments go mostly to principal.
Understanding amortization schedules
In an amortizing loan, each payment is the same amount, but the split between principal and interest changes over time. Early in the loan, when the balance is high, most of the payment goes to interest. As the balance decreases, more of each payment goes to principal. For example, on a 200,000 mortgage at 6% for 30 years, the first payment might be 1,199.10 with 1,000 going to interest and 199.10 to principal. By the last payment, almost all goes to principal. The schedule shows this progression clearly.
The pie chart helps visualize this breakdown, showing how much of your total payments go to principal versus interest. Over longer loan terms, interest becomes a larger portion of total payments, demonstrating the true cost of borrowing. The calculator helps you see how loan amount, interest rate, and term affect your payments and total interest cost.
Loan amortization formula
The amortization calculation uses the standard loan payment formula: Monthly Payment = P × [r(1 + r)^n] / [(1 + r)^n - 1], where P is principal, r is monthly interest rate (annual rate / 12), and n is total number of payments (years × 12). For each payment, Interest Payment = Remaining Balance × Monthly Rate, Principal Payment = Monthly Payment - Interest Payment, and New Balance = Previous Balance - Principal Payment.
The formula demonstrates that loan payments depend on three factors: principal (amount borrowed), interest rate (cost of borrowing), and term (repayment period). The calculator uses these formulas to provide accurate amortization schedules for any combination of these factors. The pie chart visualizes how principal and interest contribute to total payments, helping you understand loan structure.
When to use an amortization calculator
Use this calculator when taking out a loan (mortgage, car loan, personal loan) to understand payment structure, compare loan options, see total interest cost, plan for early payoff, or understand how extra payments affect the loan. It's especially useful for mortgages where interest can total hundreds of thousands of dollars over 30 years. Seeing the schedule helps borrowers make informed decisions about loan terms, down payments, and whether to make extra payments.
The calculator helps you compare different loan scenarios. By adjusting the loan amount, interest rate, or term sliders, you can see how changes affect monthly payments and total interest. The pie chart helps visualize the true cost of borrowing, showing how much of your payments go to interest versus principal. Use this information to make informed decisions about loan terms and repayment strategies.
Loan amortization examples
Example 1: 300,000 mortgage at 6% for 30 years. Monthly payment = 1,798.65, Total interest = 347,514.57, Total paid = 647,514.57. The pie chart shows that 46.3% goes to principal and 53.7% goes to interest. Example 2: 25,000 car loan at 5% for 5 years. Monthly payment = 471.78, Total interest = 3,306.80, Total paid = 28,306.80. Example 3: 10,000 personal loan at 8% for 3 years. Monthly payment = 313.36, Total interest = 1,280.96, Total paid = 11,280.96. Enter these values to see how loan amount, rate, and term affect payments and total interest.
The calculator helps you understand how different loan scenarios affect your payments and total interest. By comparing examples, you can see how loan amount, interest rate, and term impact the true cost of borrowing. The pie chart visualizes this breakdown, making it easy to compare different loan options and understand the long-term cost of borrowing.
Interest rate and amortization
Interest rate significantly affects amortization. Higher rates mean more of each payment goes to interest, less to principal. Lower rates mean more goes to principal, less to interest. For example, a 200,000 mortgage at 4% vs 6% over 30 years: at 4%, total interest is 143,739; at 6%, total interest is 231,676—a difference of 87,937. The calculator helps you see how interest rates affect your payments and total interest cost.
The pie chart helps visualize how interest rates affect loan structure. Higher rates result in a larger interest portion in the pie chart, while lower rates result in a larger principal portion. By adjusting the interest rate slider, you can see how rate changes affect your payments and total interest. This helps you understand the importance of securing a good interest rate and how refinancing can save money.
Loan term and amortization
Loan term significantly affects amortization. Longer terms mean lower monthly payments but more total interest. Shorter terms mean higher monthly payments but less total interest. For example, a 200,000 mortgage at 6%: 30-year term has monthly payment of 1,199.10 and total interest of 231,676; 15-year term has monthly payment of 1,687.71 and total interest of 103,788—saving 127,888 in interest. The calculator helps you see how loan term affects your payments and total interest.
The pie chart helps visualize how loan term affects loan structure. Longer terms result in a larger interest portion in the pie chart, while shorter terms result in a larger principal portion. By adjusting the loan term slider, you can see how term changes affect your payments and total interest. This helps you decide whether a shorter term is worth the higher monthly payment.
Tips for loan management
Make extra payments toward principal to pay off loans faster and save interest. Even small extra payments early in the loan save significant interest. Consider shorter loan terms if you can afford higher payments—15-year mortgages have much lower total interest than 30-year. Refinance if rates drop significantly. The calculator shows total interest, which helps you see the true cost of borrowing. Use the schedule to understand when you'll have significant equity or when extra payments have the most impact.
The pie chart helps you visualize the true cost of borrowing, showing how much of your payments go to interest. Use this information to motivate extra payments and understand how they reduce interest costs. The calculator helps you see how extra payments affect your loan balance and total interest, enabling informed decisions about loan management strategies.
Limitations and considerations
This calculator assumes fixed-rate loans with fixed monthly payments. It doesn't account for adjustable-rate mortgages (ARMs), interest-only periods, balloon payments, fees, or escrow (property taxes and insurance). For ARMs or complex loan structures, use specialized calculators. The schedule shows the first 12 months; for the full schedule, use advanced tools. Actual payments may include additional fees or escrow amounts not shown here. Consult your lender for exact payment amounts and terms.
The pie chart shows principal versus interest breakdown but doesn't account for fees, escrow, or other costs. Use this calculator as a starting point and consult a financial advisor or lender for comprehensive loan planning. The calculator helps you understand loan structure but cannot account for all variables. Consider these factors separately when planning your loan strategy.
Summary
This amortization calculator shows how loans are paid off over time, with payment-by-payment breakdowns of principal and interest. Drag sliders or enter values for loan amount, interest rate, and term. The calculator automatically computes monthly payment, total interest, total paid, and generates an amortization schedule. It's free, works in your browser, and requires no account. Use it to understand loan structure, compare options, or plan for early payoff.
The calculator uses standard amortization formulas to provide accurate payment schedules. Drag sliders or type values to compare different loan scenarios. See how loan amount, interest rate, and term affect monthly payments and total interest. The pie chart visualizes the breakdown of principal versus interest in your total payments, helping you understand the true cost of borrowing. Use this tool to plan loans, compare options, and make informed decisions about loan terms and repayment strategies. Remember that the schedule assumes fixed payments; actual loans may have different terms or fees.