Loan Amortization Calculator
Generate detailed amortization schedules showing the breakdown of principal and interest for each payment. See how extra payments can save you thousands in interest.
Loan Details
Loan Summary
Enter your loan details to generate a complete amortization schedule.
How to Use the Loan Amortization Calculator
- Enter Loan Amount: Input the principal amount you're borrowing
- Set Interest Rate: Enter the annual interest rate as a percentage
- Choose Loan Term: Select the loan duration in years
- Set Start Date: Choose when your first payment will be due
- Payment Frequency: Select monthly or bi-weekly payments
- Extra Payments: Add any additional principal payments to see savings
- Review Schedule: Examine the detailed payment breakdown and timeline
Understanding Loan Amortization
What is Amortization?
Amortization is the process of paying off debt through regular payments over time. Each payment includes both principal and interest, with the proportion changing over the loan term.
Key Benefits
Payment Frequency Impact
Monthly vs. Bi-weekly Payments
Making bi-weekly payments instead of monthly can significantly reduce your loan term and interest paid.
Monthly Payments
Bi-weekly Payments
Example Savings
On a $300,000 mortgage at 6.5% for 30 years, bi-weekly payments can save over $100,000 in interest and reduce the loan term by about 6 years.
Extra Payment Strategies
Popular Strategies
Fixed Extra Amount
Add a fixed amount to each payment (e.g., $100/month)
Round-up Payments
Round your payment to the nearest $50 or $100
Annual Lump Sum
Use tax refunds, bonuses, or windfalls as extra payments
Bi-weekly Schedule
Pay half your monthly payment every two weeks
When to Consider Extra Payments
Consider Alternatives First
Reading Your Amortization Schedule
| Column | Description |
|---|---|
| Payment # | Sequential number of each payment |
| Date | Due date for each payment |
| Beginning Balance | Loan balance before the payment is made |
| Payment | Total amount paid (principal + interest + extra payment) |
| Principal | Amount that reduces the loan balance |
| Interest | Interest charged on the remaining balance |
| Ending Balance | Remaining loan balance after the payment |
Early in the Loan
Later in the Loan
Frequently Asked Questions
Why does most of my early payment go to interest?
Interest is calculated on the outstanding balance. Early in the loan, your balance is highest, so interest charges are highest. As you pay down principal, interest charges decrease and more of your payment goes toward principal.
Should I make extra payments or invest the money instead?
This depends on your loan's interest rate and potential investment returns. If your loan rate is higher than expected investment returns (risk-adjusted), prioritize extra payments. Consider your risk tolerance, emergency fund, and other high-interest debt.
Can I change my payment schedule after the loan starts?
Most lenders allow you to make extra principal payments anytime without penalty. Some may offer to switch you to bi-weekly payments. Always confirm there are no prepayment penalties before making extra payments.
What's the difference between principal and interest payments?
Principal payments reduce your loan balance and build equity. Interest payments are the cost of borrowing money and don't reduce your balance. Over time, the principal portion increases while the interest portion decreases.
How do I ensure extra payments go toward principal?
When making extra payments, specify that the additional amount should be applied to principal only. Contact your lender to understand their procedures for principal-only payments to ensure they're applied correctly.