Loan Amortization Calculator with Schedule
This loan amortization calculator finds your fixed monthly payment and builds a month-by-month schedule of principal, interest and balance. Works for auto, personal, student and other installment loans, with optional extra payments.
Loan amortization is the repayment of a loan through equal, scheduled payments that each cover that month's interest plus part of the principal. Because interest is charged on the remaining balance, early payments are mostly interest and later payments are mostly principal, until the final payment brings the balance to exactly zero.
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 $200 per month in extra payments saves about $97,600 in total interest and pays off the loan 95 months (almost 8 years) early. On a smaller $20,000 loan at 7% for 60 months, an extra $100 a month saves $893.74 in interest and finishes in 47 payments instead of 60. 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 amortization calculator with extra payments to see the exact interest saved and months saved for any amount: enter it in the Extra Monthly Payment box and the results show both figures next to the schedule.
Loan Amortization Formula with a Worked Example
The fixed monthly payment comes from the standard amortization formula:
M = P × r(1 + r)n / ((1 + r)n − 1)
Here P is the amount borrowed, r is the annual rate divided by 12 (as a decimal) and n is the number of monthly payments. If the rate is 0%, the formula reduces to M = P / n. Each month, interest = balance × r, principal = M − interest, and the new balance = old balance − principal. Example: $20,000 at 7% for 60 months gives r = 0.07 / 12 = 0.0058333 and M = $396.02.
| Month | Payment | Interest | Principal | Balance |
|---|---|---|---|---|
| 1 | $396.02 | $116.67 | $279.35 | $19,720.65 |
| 2 | $396.02 | $115.04 | $280.98 | $19,439.67 |
| 3 | $396.02 | $113.40 | $282.62 | $19,157.05 |
| 60 (final) | $396.30 | $2.30 | $394.00 | $0.00 |
| Total | $23,761.48 | $3,761.48 | $20,000.00 | — |
Lenders round the payment to the cent, so the last payment is usually a few cents different (here $396.30) to clear the balance exactly. This calculator does the same.
Amortizing vs Interest-Only vs Simple Interest Loans
An amortization schedule is the chart showing how much of each payment goes to principal and how much to interest, as the CFPB explains. Not every loan follows a fixed schedule:
| Amortizing loan | Interest-only loan | Simple interest loan | |
|---|---|---|---|
| Payment | Fixed; covers interest and principal | Covers interest only during the interest-only period, then rises | Usually fixed; interest accrues daily on the current principal |
| Balance | Falls every month to $0 | Does not fall during the interest-only period | Falls; the split depends on when each payment arrives |
| $20,000 at 7% | $396.02/mo for 60 months | $116.67/mo, balance stays $20,000 | About $396/mo if every payment is on time |
| Paying early | Extra principal shortens the term | Only principal paid reduces later payments | Early or extra payments cut interest; late payments add interest |
Your loan agreement and Truth in Lending disclosure state which method your lender uses. If it says interest-only, use this calculator only for the period after principal payments begin.
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.
Last updated: October 2026
Frequently Asked Questions
What is loan amortization?
Amortization is the process of paying off a loan through regular installments. Each payment covers interest plus a portion of the principal, gradually reducing the balance to zero.
Why do I pay more interest at the beginning?
Interest is calculated on the remaining balance. When the balance is highest (at the start), the interest portion of each payment is largest. As the balance decreases, more of each payment goes to principal.
How do extra payments affect my loan?
Extra payments go directly to reducing principal, which means less interest accrues in future months. This shortens the loan term and reduces total interest paid significantly.
What is the amortization formula?
The monthly payment formula is M = 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 monthly payments.
Should I make extra payments or invest?
If your loan interest rate is higher than expected investment returns, pay off the loan. If your rate is low (under 4-5%), investing may yield better returns. Consider your risk tolerance and tax situation.
What is the difference between amortization and simple interest?
An amortized loan follows a fixed schedule in which each payment covers the interest for that month plus some principal. A simple interest loan also usually has a fixed payment, but interest accrues daily on the current principal, so paying early lowers the interest portion and paying late raises it.
How do you calculate loan amortization?
Find the monthly rate r (annual rate / 12) and the number of payments n, then compute the payment M = P x r(1+r)^n / ((1+r)^n - 1). Each month, interest is the balance times r, principal is M minus that interest, and the balance falls by the principal. For $20,000 at 7% over 60 months, M is $396.02 and month 1 is $116.67 interest and $279.35 principal.
How much interest do extra payments save on a loan?
It depends on the rate, the balance and how early you start. On a $20,000 loan at 7% for 60 months, paying $100 extra each month saves $893.74 in interest and ends the loan 13 months early (47 payments instead of 60). Enter any extra amount above to see your own interest and months saved.