Amortization Calculator: Monthly Payment and Loan Schedule

An amortized loan is repaid in equal monthly payments sized so the balance hits exactly zero on the last payment. Each payment first covers that month's interest, and whatever remains reduces the principal — which is why the interest/principal split changes every month even though the payment never does.

The monthly payment comes from the standard loan amortization formula:

M = P × r(1 + r)ⁿ ÷ ((1 + r)ⁿ − 1)

Total interest is simply (M × n) − P: everything you pay minus what you borrowed. The calculator builds the schedule by simulating every payment — interest = balance × r, principal = M − interest — so the yearly table below the results always ties back to the totals.

Borrow $250,000 at 6.5% APR for 30 years:

r = 6.5 ÷ 12 ÷ 100 = 0.0054167, n = 360 → M = $1,580.17/month. Over 360 payments you pay $568,861.22 total, so the interest is $318,861.22 — more than the loan itself. In year 1, $16,167.73 of your payments goes to interest and only $2,794.31 to principal, leaving a balance of $247,205.69. By the final year the split has flipped: nearly all of each payment attacks principal.

Three numbers are all it takes — grab them from any loan offer or statement.

Step by step

1. Enter the loan amount. The principal you borrow, before interest.
2. Enter the annual interest rate. Use the APR from the loan offer, not a monthly figure.
3. Enter the loan term in years. Common choices: 15 or 30 for mortgages, 3–7 for auto loans.
4. Press Calculate. Read your monthly payment, total interest and the year-by-year schedule.
5. Compare scenarios. Change the rate or term and re-run — a 1% rate change can move total interest by tens of thousands.

Amortization has two meanings. In lending, it is the systematic repayment of a loan through scheduled payments that cover both interest and principal. In accounting, it means spreading the cost of an intangible asset over its useful life. This calculator — and this page — is about the lending meaning.

Almost every consumer loan amortizes: mortgages, auto loans, personal loans and student loans. The payment stays fixed, but the mix inside it moves. Because interest is charged on the outstanding balance, and the balance is largest at the start, early payments are interest-heavy. As the balance shrinks, more of each payment reaches the principal — the crossover usually happens around the middle of the loan.

For a home loan that also bundles property tax, insurance and PMI into the monthly bill, use our mortgage calculator instead — it builds the escrow on top of the same amortization math.

The schedule table under the results rolls every payment into yearly rows. Each row shows:

• Payment — total paid that year (12 × monthly payment, adjusted in the final year).
• Principal — the part of the year's payments that reduced the balance.
• Interest — the part the lender kept.
• Balance — what you still owe at year end.

The most useful insight in the whole table is the interest-to-principal ratio by year. On a 30-year loan at 6.5%, roughly 85% of year-1 payments go to interest. That ratio is why refinancing early in a loan saves far more than refinancing late: there is simply more interest left to eliminate.

Any payment above the scheduled amount goes straight to principal (confirm your lender applies it that way and charges no prepayment penalty). Because interest is computed on the balance, shrinking the balance early removes future interest with it — a double win: the loan ends sooner and costs less.

• One extra payment per year (divide your monthly payment by 12 and add it monthly) cuts roughly 4–5 years off a 30-year mortgage.
• Rounding up — paying $1,600 instead of $1,580.17 — quietly shaves months off with almost no budget pain.
• Lump sums (a bonus, a tax refund) hit hardest when the balance is highest, i.e. early in the loan.

If you only need the monthly figure for a loan without the full schedule, the loan EMI calculator gives it from amount, rate and term in one step.

For background reading on payoff options, the Consumer Financial Protection Bureau's Ask CFPB library explains amortization and repayment strategies in plain language.