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What is loan amortization?
Loan amortization is the process of paying off a balance through scheduled payments that cover both principal and interest. An amortization calculator shows how every payment is divided, how your balance falls over time, and how much interest the loan costs from the first payment to the last.
Most mortgages, auto loans, personal loans, student loans, and fixed-rate business loans are amortized. Your required payment normally stays level, but its composition changes each month. Early in the term, interest takes a larger share because the outstanding balance is high. As the balance falls, interest shrinks and more of the same payment reduces principal.
In the payment formula, P is the original principal, r is the monthly interest rate, and n is the number of monthly payments. The calculator applies the formula to fixed-rate, fully amortizing loans. It does not model adjustable rates, interest-only periods, balloon payments, lender fees, taxes, or insurance.
What an amortization schedule tells you
A loan amortization schedule lists each payment date, the amount applied to principal, the interest charged, and the balance left after payment. The annual view makes a long loan easier to scan, while the monthly view gives you the detailed figures needed to review a lender estimate or plan your cash flow.
The schedule also reveals the principal crossover point—the first payment where more of your regular payment goes toward principal than interest. This milestone does not change your required payment, but it helps you understand how quickly you are building equity or reducing debt.
For example, a $250,000 loan at 6% for 30 years has a monthly principal-and-interest payment of about $1,498.88. With no extra payments, total interest is about $289,595. Adding $200 each month cuts the payoff period by approximately seven years and nine months and saves about $86,233 in interest. Actual lender figures can vary because of payment timing and rounding.
Compare a standard plan with faster payoff
A lower required payment can make a loan easier to manage, but it may also keep you in debt longer and increase lifetime interest. The Build a Schedule mode compares the original plan with a recurring-extra-payment plan. You can see both payoff dates and total interest amounts together instead of trying to interpret two separate tables.
If you already have a deadline, use Reach a Payoff Date. Enter the month and year when you want the balance to reach zero, and the calculator finds the monthly payment required to meet that target. The difference between that amount and your regular payment is the extra amount you would need to budget each month.
Before committing to accelerated payments, confirm that your lender applies extra money to principal and check for prepayment penalties. If you are modeling a home loan and need property taxes, homeowners insurance, HOA dues, or PMI, use the Mortgage Calculator for a broader monthly-cost estimate.
How to use this amortization calculator
Choose a calculation mode. Select Build a Schedule to review a loan and test recurring extra payments, or select Reach a Payoff Date to find the payment required for a specific deadline.
Enter the loan details. Add the current or original loan balance, annual interest rate, term, and start date. Use a fixed rate and exclude taxes, insurance, and fees.
Set your payoff strategy. Add an optional monthly extra payment in Build a Schedule mode, or choose your desired payoff month and year in Reach a Payoff Date mode.
Review and export the results. Compare payment amounts, payoff dates, interest costs, time saved, and the principal crossover point. Switch between annual and monthly schedules, then download the schedule as a CSV file if you need a spreadsheet copy.