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Amortization Calculator

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Loan term
years months
Monthly Pay: $1,687.71
Principal: $200,000 (65.8%)
Interest: $103,788 (34.2%)
Total of 180 monthly payments $303,788.46
Total interest $103,788.46
Payoff date Oct. 2041

Amortization schedule

Year-by-year principal, interest & balances

Year Date Interest Principal Ending Balance
1 10/26-9/27 $11,769.23 $8,483.33 $191,516.67
2 10/27-9/28 $11,246.00 $9,006.57 $182,510.10
3 10/28-9/29 $10,690.49 $9,562.07 $172,948.02
4 10/29-9/30 $10,100.72 $10,151.84 $162,796.18
5 10/30-9/31 $9,474.58 $10,777.98 $152,018.20
6 10/31-9/32 $8,809.82 $11,442.75 $140,575.45
7 10/32-9/33 $8,104.05 $12,148.51 $128,426.94
8 10/33-9/34 $7,354.76 $12,897.80 $115,529.13
9 10/34-9/35 $6,559.25 $13,693.31 $101,835.82
10 10/35-9/36 $5,714.68 $14,537.89 $87,297.94
11 10/36-9/37 $4,818.01 $15,434.55 $71,863.38
12 10/37-9/38 $3,866.04 $16,386.52 $55,476.86
13 10/38-9/39 $2,855.36 $17,397.21 $38,079.66
14 10/39-9/40 $1,782.34 $18,470.23 $19,609.43
15 10/40-9/41 $643.13 $19,609.43 $0.00
Loan Balance & Payments Over Time
Balance Interest Principal
$0 $75,947 $151,894 $227,841 $303,788 Yr 0 Yr 8 Yr 15

This Amortization Calculator returns your monthly payment amount as well as an annual and monthly schedule, balance curve chart, and pie chart breakdown of your amortized loan. You can also model extra payments (monthly, yearly, or one-time) to see how much interest and time you can save.

What is Amortization?

There are two general definitions of amortization. The first is the systematic repayment of a loan over time through equal, periodic installments. The second is used in the context of business accounting and is the act of spreading the capitalized cost of an expensive, long-lived intangible asset over multiple financial periods.

When a borrower takes out a mortgage, car loan, student loan, or personal loan, they usually make monthly payments to the lender. These are the most common everyday applications of loan amortization. Each payment is divided into two parts: one part covers the interest accrued on the outstanding balance, and the remaining portion goes toward paying down the principal balance. Because interest is always calculated on the current unpaid balance, the interest portion gradually decreases with each payment, while the principal portion progressively increases.

How Does an Amortization Schedule Work?

An amortization schedule (also called an amortization table) is a comprehensive table detailing each periodic installment on an amortized loan. For each payment period, the table specifies the exact payment amount, the split between principal and interest, any extra prepayments made, and the remaining loan balance.

Unlike revolving debt (such as credit cards where the balance can fluctuate and monthly minimums vary), amortizing loans have a defined repayment horizon and a scheduled end date. Loans that are generally NOT amortized include interest-only loans (where the principal remains unchanged until maturity) and balloon loans (where a large lump-sum principal payment is due at the end of the term).

Amortization Formula

The standard formula for calculating the fixed monthly payment (A) on an amortized loan is:

A = P × [ r(1 + r)^n ] / [ (1 + r)^n - 1 ]

Where P is the initial principal loan balance, r is the periodic interest rate (annual interest rate divided by 12 and converted to a decimal), and n is the total number of payments (loan term in years multiplied by 12).

For each month m, the interest payment is calculated as: Interest(m) = Balance(m - 1) × r. The principal portion is then: Principal(m) = A - Interest(m). The new balance becomes: Balance(m) = Balance(m - 1) - Principal(m).

The Power of Extra Payments

Making extra payments directly against the principal balance provides two massive financial benefits: it accelerates your payoff date (shortening your total loan term) and reduces the total interest paid over the life of the loan.

Because interest compounds on the remaining balance each month, even modest extra payments—such as an additional $50 or $100 per month, an annual tax refund bonus, or an occasional lump sum—can save thousands of dollars and eliminate years of debt.

Amortization in Business Accounting

In corporate accounting, amortization is analogous to depreciation. While depreciation refers to spreading the cost of tangible physical assets (like machinery, factories, and vehicles) over their useful lives, amortization is used specifically for intangible assets.

Under IRS Section 197 and international accounting standards (GAAP/IFRS), businesses can deduct the acquisition cost of intangible assets over statutory recovery periods (often 15 years in the United States). Intangible assets commonly amortized include patents, registered trademarks, copyrights, customer lists, software licenses, franchises, and covenants not to compete.

Business startup costs (including market research, site evaluations, legal entity creation, and initial advertising prior to launching operations) are also amortized over a 180-month period under IRS regulations.

Understanding your calculation

Method, example and limitations

How the calculation works

An amortization schedule splits each payment into interest on the outstanding balance and principal reduction, repeating until the loan is repaid.

Example to check

A zero-interest loan of 12,000 repaid over 12 equal monthly payments requires 1,000 per month, entirely principal.

Before using the result

Payment timing, compounding, fees and lender rounding can differ. A schedule assumes the entered rate and payments remain applicable.

Calculation methodology · Report a result that needs review