Loan Amortization Calculator
See exactly how each monthly payment splits between principal and interest. Generate a full amortization schedule for any loan — mortgage, auto, personal, or student.
How Loan Amortization Works
Loan amortization is the process of spreading a loan into a series of fixed payments over time. Each payment includes two components: principal (which reduces the loan balance) and interest (the cost of borrowing). In early payments, most of your money goes toward interest. As the balance decreases, a larger portion goes to principal. This shift is why the amortization schedule is so valuable — it shows you exactly where every dollar goes each month. Understanding this breakdown helps you make informed decisions about extra payments, refinancing, and loan comparisons.
Amortization for Different Loan Types
Mortgages are the most common amortized loans, typically spanning 15 or 30 years. Auto loans usually run 3 to 7 years with higher rates. Personal loans range from 1 to 7 years. Student loans can stretch to 10, 20, or even 25 years under income-driven repayment plans. The amortization formula is identical for all: M = P[r(1+r)^n]/[(1+r)^n-1], where M is the monthly payment, P is the principal, r is the monthly interest rate, and n is the total number of payments. The key difference is the rate and term, which dramatically affect total interest paid.
How Extra Payments Save You Money
Making extra payments directly reduces your principal balance, which means less interest accrues in future months. On a $250,000 mortgage at 6.5% over 30 years, adding just $200 per month in extra payments saves over $100,000 in total interest and pays off the loan nearly 9 years early. Even a single extra payment per year makes a significant difference. The earlier you start making extra payments, the greater the impact because you reduce the principal that compounds interest over decades. Use this calculator to see the exact savings from any extra payment amount.
Tips for Faster Loan Payoff
Round up your payments to the nearest hundred — the small extra goes entirely to principal. Make bi-weekly payments instead of monthly, which results in one extra full payment per year. Apply bonuses, tax refunds, and windfalls to principal. When refinancing to a lower rate, keep making the same payment amount and apply the savings to principal. Compare the avalanche method (highest rate first) vs snowball method (smallest balance first) if you have multiple loans. Always confirm with your lender that extra payments are applied to principal, not future payments.