Amortization Calculator
Generate a complete amortization schedule showing principal and interest breakdown for each payment.
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How to Use This Calculator
- Enter the total loan amount you're borrowing
- Input the annual interest rate as a percentage
- Specify the loan term in years (e.g., 15, 30)
- Click 'Calculate' to see your monthly payment
- Review the total payment amount and total interest
- Compare different scenarios by adjusting the inputs
Formula
M = P[r(1+r)^n]/[(1+r)^n-1], where M = monthly payment, P = principal loan amount, r = monthly interest rate, n = number of monthly payments
Frequently Asked Questions
What is loan amortization?▼
Loan amortization is the process of paying off a debt over time through regular payments. Each payment covers both principal and interest, with the proportion changing over time. Early payments are mostly interest, while later payments are mostly principal.
How is the monthly payment calculated?▼
The monthly payment is calculated using the formula M = P[r(1+r)^n]/[(1+r)^n-1], where M is the monthly payment, P is the principal, r is the monthly interest rate, and n is the number of payments.
What's the difference between fixed and variable rate mortgages?▼
Fixed-rate mortgages have the same interest rate throughout the loan term, resulting in consistent monthly payments. Variable-rate mortgages have interest rates that can change periodically, causing monthly payments to fluctuate.
Should I make extra principal payments?▼
Extra principal payments can significantly reduce the total interest paid and shorten your loan term. Even small additional payments early in the loan can save thousands of dollars in interest over time.