Amortization Calculator
Generate a complete loan amortization schedule and see how extra payments save interest.
How this is calculated
Standard amortization formula with optional extra principal payment reducing balance each period.
Frequently Asked Questions About Amortization Calculator
An amortization calculator creates a detailed payment schedule showing how each payment splits between principal and interest over the life of a loan. It also shows how extra payments accelerate payoff and save interest.
What does amortization mean?
Amortization is the process of paying off a loan through regular payments over time. An amortization schedule breaks down each payment showing how much goes to principal (reducing the loan balance) versus interest (the cost of borrowing).
Why do early payments go mostly to interest?
Interest is calculated on the outstanding loan balance. Early in the loan, the balance is highest, so the interest portion of each payment is largest. As you pay down the principal, the interest portion decreases and more of each payment goes toward reducing the balance.
How much can extra monthly payments save me?
Extra monthly payments significantly reduce total interest and shorten the loan term. For example, an extra $200/month on a $250,000 mortgage can save tens of thousands of dollars in interest and shorten the term by several years, though the exact amount depends on your loan details.
Should I make extra payments if I have other debts?
It depends on your interest rates. If your loan rate is lower than other debts, pay minimums on the mortgage and focus on higher-interest debt first. If mortgage rates are high relative to other debts, extra payments here might not be the best use of funds.
Can I pay off my loan early without penalties?
Most modern loans allow early payoff without prepayment penalties. However, some loans—particularly older mortgages or certain auto loans—may charge penalties. Check your loan agreement before making large extra payments.
What is the difference between principal and interest?
Principal is the original amount you borrowed and the remaining balance you owe. Interest is the cost the lender charges for letting you borrow money. Each payment covers both: the interest portion goes to the lender, while the principal portion reduces what you owe.