Amortization Calculator

This amortization calculator builds a full payment schedule for a fixed-rate loan. Enter the loan amount, term, and interest rate to see the monthly payment, the split between principal and interest for every period, the running balance, and the payoff date. Add optional extra payments to see how much interest and time they save. It works for mortgages, auto loans, personal loans, and any loan repaid in equal installments.

What amortization means

Amortization has two common meanings. The first is paying off a loan in equal installments over a set period, where each payment covers interest plus part of the principal. The second comes from business accounting: spreading the cost of a large, long-lived purchase across the years it is used, instead of recording it all at once. Both ideas share the same core. A lump sum is broken into a schedule of smaller amounts over time.

Paying off a loan over time

When you take out a mortgage, car loan, or personal loan, you usually repay it with fixed monthly payments. Part of each payment covers the interest owed for that month, and the rest reduces the principal, the amount you still owe. Interest is charged on the current balance, so as the principal falls, the interest portion of each payment shrinks and the principal portion grows. Early payments are mostly interest; later payments are mostly principal. Because interest is front-loaded this way, paying a little extra early goes almost entirely to principal and removes the future interest that balance would have earned, which can shorten the loan by months or years. The amortization table on this page shows that shift period by period.

What an amortization schedule shows

An amortization schedule, sometimes called an amortization table, lists every payment on the loan. For each period it shows the payment amount, how much goes to interest, how much goes to principal, the interest and principal paid so far, and the balance left afterward. This calculator produces both an annual summary and a full monthly schedule. A basic schedule assumes a fixed rate and does not include fees, and standard schedules do not apply to adjustable-rate mortgages, variable-rate loans, or lines of credit. You can still add extra payments here to test their effect, even though a plain schedule leaves them out.

Reading the schedule on this page

The annual view groups the loan into years so you can scan the big picture: how much interest you pay each year and how fast the balance drops. The monthly view lists every single payment for a closer look, which helps when you want to check a specific date or time an extra payment. Watch for the point where the principal portion of a payment overtakes the interest portion, since that is when the loan starts building equity quickly. If you turn on extra payments, the schedule recalculates and the payoff date moves earlier, so you can compare two plans side by side before committing to one.

Loans that are not amortized

Not every debt amortizes. Credit cards are revolving debt: the balance carries from month to month and the amount you repay can change each time, so there is no fixed payoff schedule. To plan credit card payments, use our Credit Card Payoff Calculator. Two other examples are interest-only loans, which have a stretch where you pay only interest, and balloon loans, which end with one large principal payment at maturity.

Amortization in business accounting

Businesses also amortize costs. When a company buys something expensive that lasts for years, recording the whole cost in one quarter would distort its financial statements, so the cost is spread across the item's useful life. For physical items like machinery, buildings, and equipment, this spreading is called depreciation; our Depreciation Calculator handles that case. For intangible items, it is called amortization. Under Section 197 of U.S. tax law, the value of many intangible assets can be deducted in equal amounts over time, and those deductions can be forecast with a schedule the same way a loan is. Common amortizable intangibles include:

• Goodwill, the value of a business's reputation as a measurable asset
• Going-concern value, the worth of a business as an operating whole
• A trained workforce already in place, including its experience and skills
• Business records, operating systems, and customer or supplier information
• Patents, copyrights, formulas, processes, designs, trademarks, and trade names
• Customer and supplier relationships that drive future business
• Licenses and permits granted by government agencies
• Non-compete agreements tied to buying a trade or business

Some intangibles cannot be amortized for tax purposes, most often self-created goodwill or assets with no fixed useful life. The IRS also leaves certain items out of Section 197, such as land, most off-the-shelf software, and interests in an existing lease or debt.

Amortizing startup costs

Startup costs get their own treatment. In the U.S., the money spent investigating and setting up a new business, such as consulting fees, market research, advertising before opening, and wages paid before the doors open, must be amortized under IRS rules rather than deducted all at once. These have to be the kind of expenses a running business could deduct, and they have to occur before the business becomes active.

Why the early years move so slowly

Interest is charged on the balance you still owe, so the first payment on a large loan is mostly interest and the last is almost entirely principal. Take $300,000 over 30 years at 6.5%, where the payment is $1,896.20. The first twelve months send $19,401 to interest. The final twelve send $781. Total interest over the full term is $382,633, more than the amount borrowed.

Two crossover points are worth knowing on that loan. The month where the principal share first exceeds the interest share falls in year 20. Half the original balance is not repaid until year 21. Both arrive far later than most borrowers assume, and both come earlier as the rate falls, since a lower rate leaves more of each payment for principal from the start.

What an extra payment does

Because every dollar of extra payment goes straight against principal, it cancels all the future interest that dollar would have carried. On the same loan, adding $200 a month ends it after 23 years instead of 30 and cuts total interest from $382,633 to $279,185, a saving of $103,449 for $200 a month.

Biweekly plans work by the same mechanism. Paying half the monthly amount every two weeks produces 26 half payments a year, which is 13 monthly payments rather than 12. On this loan that retires it in about 24 years and saves roughly $88,000. There is nothing magical in the schedule, and setting up one extra payment a year by hand does the same thing without the fee some servicers charge to administer it.

What the schedule leaves out

An amortization schedule covers principal and interest only. Property tax, homeowners insurance, mortgage insurance and any association fee are collected alongside it but are not part of the loan, so the total leaving your account is larger than the schedule shows. Escrow amounts also change each year as tax bills and premiums are reassessed, while the principal and interest payment on a fixed-rate loan never moves.

One small detail explains a mismatch people notice at the end. Payments are rounded to the cent, and the rounding does not divide evenly across the term, so the final payment is usually a few dollars different from the rest. Servicers adjust that last payment rather than change the schedule, which is why a payoff quote rarely matches a hand-built table to the penny.