Amortization Schedule Calculator

How to use the amortization schedule calculator

Enter the amount borrowed, the annual rate and the term in years. The tool solves for the level monthly payment that retires the loan exactly at the end of the term, then walks the balance down one payment at a time, splitting each payment into interest first and principal second.

The table underneath lists every payment of the first year in full, and then one summary row per year after that. A 30 year loan is 360 payments, and printing all of them would bury the one thing worth seeing: how little of an early payment reaches the principal.

The split is the whole story. In month one, $1,250.00 of the payment is interest and only $248.88 touches the balance. Interest is charged on what is still owed, so as the balance falls the interest share falls with it and the principal share grows to fill the gap.

Now set the extra monthly amount. Every dollar of it goes straight to principal, which means it never pays interest again for the remaining life of the loan. That is why a small extra removes a large number of months: it is removing the most expensive payments, the ones at the far end.

On the default loan, $200.00 a month cuts the term from 360 payments to 267 and the interest from $289,595.47 to $203,362.51. Raising the extra to $500.00 saves $146,128.41, which is well short of two and a half times as much, because the later dollars remove months that were already cheap.

What an extra payment actually removes

An extra payment does not shorten the loan evenly from both ends. It deletes payments from the end of the schedule, and those are the payments that would otherwise have been sitting on the balance for decades collecting interest. That is why the saving is so much larger than the money put in.

A common variation is one extra payment a year rather than a monthly top up. Spread across twelve months that is $124.91 on this loan, and it finishes the term 65 months early while removing $61,387.80 of interest. The mechanism is identical; only the size of the extra changes.

Where the interest sits inside a long term

Interest is front loaded, not because anything is stacked against the borrower, but because interest is charged on the balance and early on the balance is nearly the whole loan. The consequence is worth seeing in numbers: the first year of this loan pays $14,916.49 of interest and retires $3,070.03 of principal.

The crossover, the first payment where principal beats interest, lands at month 223 of 360. At that point $745.78 of the payment is interest and $753.09 is principal, and the balance still stands at $148,403.34. Shorter terms move that crossover forward sharply, which the reference table below shows.

The formula, worked line by line

Amortization solves one problem: find the level payment that clears a balance in exactly n months at a fixed rate. Every payment is the same size, but the split inside it moves, because interest is always charged on whatever is still owed and the rest of the payment reduces that balance.

Once the payment is known the schedule is a loop. Take the interest for the month, subtract it from the payment, apply the remainder to the balance, and repeat. An extra amount simply makes the payment larger while the contract payment stays where it was, so the whole surplus lands on principal.

i = APR ÷ 12 ÷ 100                     (the monthly periodic rate)
n = years × 12                         (the number of payments)
payment = P × i × (1 + i)^n ÷ ((1 + i)^n − 1)
interest[m] = balance[m − 1] × i
principal[m] = payment + extra − interest[m]
balance[m] = balance[m − 1] − principal[m]

What a zero rate does to the formula

At a rate of zero the formula above divides by zero, so the engine falls back to the plain case: the payment is the principal divided by the number of months, and every dollar of it is principal. A twelve month interest free loan of $12,000.00 is twelve payments of $1,000.00, and the interest column stays empty.

The last payment is the one place the schedule visibly deviates from a flat payment. Rounding through the term leaves a small remainder, so the final payment is trimmed to whatever actually clears the balance. Here it is $1,498.88 against a balance that lands exactly on zero.

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