Amortization Calculator

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Monthly Schedule

Annual Schedule

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Understanding Amortization

Amortization is the process of spreading loan payments over a fixed term. Each payment covers interest first, then reduces the outstanding principal. Early payments are interest-heavy; later ones pay down more principal.

Key Concepts:

• Principal: The original loan amount (minus any down payment).
• Interest Rate (i): Annual rate converted to a monthly fraction (annual ÷ 12 ÷ 100).
• Term (n): Total number of payments (years × 12 + months).

Calculation Formula:

M = P × i × (1 + i)ⁿ / ((1 + i)ⁿ – 1) + Extra Payment

Worked Example:

You borrow $10,000 at 5% APR for 2 years. With no down payment and zero extras, you pay $438.71 monthly. Over 24 payments, total interest is $529.04, and total paid is $10,529.04.

Adding an extra $50 each month cuts ~3 months off the term and saves interest.

Disclaimer: This calculator is for educational purposes only. Results are estimates based on your inputs.