Loan amortization & payoff calculator
Amortization is how a fixed loan payment splits between interest and principal over time — heavy on interest early, heavy on principal late. Enter your loan amount, rate, and term to see the monthly payment, total interest, and payoff date, then add an optional extra payment to watch the interest and years melt away. Everything runs in your browser — nothing is uploaded.
How the schedule is built
- The monthly payment is the standard amortizing formula: payment = P × i ÷ (1 − (1 + i)−n), where i is the monthly rate (APR ÷ 12) and n is the number of months.
- Each month, interest is charged on the remaining balance and the rest of the payment reduces principal. Any extra payment goes entirely to principal, shrinking future interest.
- The schedule below is a yearly rollup — interest and principal paid each year plus the ending balance — with the extra payment applied.
- Interest and time saved compare the same loan with and without the extra payment.
An estimate for planning, not a loan offer. It assumes a fixed rate and on-time payments, and it ignores property taxes, insurance, PMI, escrow, and any fees or prepayment penalties. Confirm the exact terms with your lender.
What is loan amortization?
Amortization is the process of paying off a loan with equal periodic payments. Although each payment is the same size, the split between interest and principal shifts over the life of the loan. Early on, most of the payment covers interest on a large balance; as the balance falls, more of each payment attacks the principal. That's why the first years of a mortgage barely dent the balance — and why extra principal payments early are so powerful.
Why extra payments save so much
An extra payment goes straight to principal, so it permanently removes the future interest that balance would have generated. Because interest compounds over the remaining term, even a modest extra amount each month can cut years off the loan and save a large chunk of total interest. The calculator above shows exactly how much — try nudging the extra-payment field and watch the payoff date move.
How the payment is calculated
A fully amortizing payment solves for the fixed amount that pays the loan to zero over the term. The formula is payment = P × i ÷ (1 − (1 + i)−n), where P is the loan amount, i is the monthly interest rate (APR divided by 12), and n is the total number of monthly payments. Total interest is simply the sum of every payment minus the amount you borrowed.
Reading an amortization schedule
- Interest paid — the portion of your payments that went to the lender as the cost of borrowing.
- Principal paid — the portion that actually reduced what you owe.
- Ending balance — what's left after that year's payments; watch it fall faster once you add extra principal.
Frequently asked questions
How is a monthly loan payment calculated?
A fully amortizing payment uses the formula payment = P × i ÷ (1 − (1 + i) to the power of −n), where P is the loan amount, i is the monthly interest rate (the APR divided by 12), and n is the number of monthly payments. It's the fixed amount that pays the balance down to zero over the term.
How much does an extra monthly payment save?
More than most people expect. Because every extra dollar goes to principal and eliminates the future interest on it, a modest extra payment can shorten the loan by years and save tens of thousands in interest. Enter an amount in the extra-payment field above to see the exact interest and time saved for your loan.
Why is so much of my early payment interest?
Interest is charged on the outstanding balance, which is largest at the start. So early payments are mostly interest and only a little principal. As the balance shrinks, the interest portion falls and the principal portion grows, which is why the balance drops slowly at first and then accelerates.
Does paying extra reduce my required monthly payment?
No. Extra principal payments shorten the loan and cut total interest, but your required monthly payment stays the same unless you formally recast or refinance the loan. You simply reach a zero balance sooner. Confirm your lender applies extra amounts to principal, not to future payments.
What's the difference between APR and interest rate here?
This calculator treats the rate you enter as the loan's periodic interest rate applied monthly. A lender's APR can also fold in certain fees, so a real-world APR may run slightly above the note rate. For amortization math, enter the note rate used to compute your payment.
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