Amortization Calculator — Free Loan Payment Schedule

How to Use the Amortization Calculator

This general-purpose amortization calculator works for any fixed-rate installment loan, including personal loans, auto loans, student loans, equipment financing, and more. It generates a complete payment schedule showing exactly how each payment is split between principal and interest throughout the entire loan term.

1. Enter the loan amount. Input the total principal amount you are borrowing or the remaining balance on an existing loan. This is the amount before any interest is applied. For existing loans, check your most recent statement for the current balance.
2. Set the annual interest rate. Enter the annual percentage rate (APR) on your loan. This is the rate your lender charges per year, which the calculator converts to a monthly rate for the schedule. Rates vary widely by loan type: personal loans range from 6-36%, auto loans 3-12%, and student loans 4-8%.
3. Enter the loan term in months. Input the total number of monthly payments. The calculator shows the equivalent in years and months for reference. Common terms: 36 months (3 years) for personal loans, 60 months (5 years) for auto loans, and 120+ months (10+ years) for student loans.
4. Review the summary panel. The results show your fixed monthly payment, total interest over the life of the loan, total cost (principal plus interest), and a visual breakdown bar showing the proportion of your total cost that goes to principal versus interest.
5. Examine the charts and table. The cumulative chart shows how principal and interest payments accumulate over time. The amortization table provides the month-by-month detail. Use the "Show All" button to expand the full schedule, or review the first 12 months to understand the initial payment allocation.

The calculator updates instantly as you change any input, making it easy to compare scenarios. Try adjusting the term length to see how it affects your monthly payment and total interest cost.

The Amortization Formula

Every amortized loan follows the same fundamental formula, regardless of whether it is a $5,000 personal loan or a $500,000 mortgage. Understanding this formula helps you verify lender calculations and make informed borrowing decisions.

Where:

• M = Fixed monthly payment
• P = Loan principal (amount borrowed)
• r = Monthly interest rate (annual rate ÷ 12 ÷ 100)
• n = Total number of monthly payments

For each payment in the schedule:

• Interest portion = Remaining balance × monthly rate
• Principal portion = Monthly payment − interest portion
• New balance = Previous balance − principal portion

Step-by-Step Calculation Example

Calculate the amortization for a $25,000 personal loan at 7.5% APR for 60 months:

1. Monthly rate: r = 7.5% ÷ 12 ÷ 100 = 0.00625
2. Total payments: n = 60
3. Growth factor: (1.00625)⁶⁰ = 1.4533
4. Monthly payment: $25,000 × [0.00625 × 1.4533] / [1.4533 − 1] = $25,000 × 0.009087 / 0.4533 = $501
5. Month 1: Interest = $25,000 × 0.00625 = $156. Principal = $501 − $156 = $345. Balance = $24,655
6. Month 2: Interest = $24,655 × 0.00625 = $154. Principal = $501 − $154 = $347. Balance = $24,308
7. Total interest over 60 months: ($501 × 60) − $25,000 = $5,029

Notice how even from month 1 to month 2, the principal portion increases from $345 to $347 while the interest decreases from $156 to $154. This gradual shift continues through all 60 payments until the final payment is almost entirely principal.

Practical Amortization Examples

These real-world scenarios demonstrate how amortization works across different loan types, amounts, and terms to help you understand your own loan better.

Personal Loan for Home Renovation

Amanda takes a $20,000 personal loan at 8.9% APR for 48 months to renovate her kitchen. Her monthly payment is $496. In the first month, $148 goes to interest and $348 to principal. By month 24 (halfway), the split shifts to $79 interest and $417 principal. Over the full 48 months, she pays $3,808 in total interest, bringing her total cost to $23,808. If she chose a 36-month term instead, her payment would be $635 per month but she would save $1,058 in total interest ($2,750 instead of $3,808).

Auto Loan: 48 vs 72 Month Comparison

Chris finances a $30,000 car at 5.9% APR. With a 48-month term, his payment is $704 and total interest is $3,774. With a 72-month term, his payment drops to $497 but total interest jumps to $5,779, an increase of $2,005 (53% more interest). The 72-month loan also means Chris owes more than the car is worth for a longer period (underwater), which is risky if the car is totaled or he needs to sell it. The 48-month term costs $207 more per month but saves significant interest and builds equity in the vehicle faster.

Student Loan Repayment Analysis

Jennifer graduates with $45,000 in student loans at 5.5% APR. The standard 10-year (120-month) repayment plan gives her a monthly payment of $488. In her first year, approximately $2,380 of her $5,856 annual payments go to interest (41%). By year 5, only $1,465 of her annual payments go to interest (25%). Over 10 years, she pays $13,567 in total interest. If she can afford to pay $100 extra per month ($588 total), she finishes in 90 months (7.5 years) and saves $2,989 in interest.

Small Business Equipment Financing

A bakery owner, Roberto, finances $40,000 in commercial kitchen equipment at 9.5% APR for 60 months. His monthly payment is $838. Total interest over the loan is $10,292, making the total cost $50,292. He checks the amortization schedule and notices that after 24 months, his remaining balance is $27,156. If business is good, he considers using a $27,156 payment to pay off the loan two years early, saving approximately $4,600 in remaining interest.

Amortization Tips and Complete Guide

Understanding amortization helps you make smarter borrowing decisions and optimize your repayment strategy for any type of loan.

Choose the Shortest Affordable Term

The loan term is the single biggest factor in total interest cost. A shorter term with a higher monthly payment always costs less in total interest than a longer term with a lower payment. Before committing to a loan, run the numbers for multiple term lengths. Find the shortest term where the payment fits comfortably in your budget without sacrificing essential savings (emergency fund, retirement) or forcing you to live paycheck to paycheck. The ideal payment should feel sustainable, not stressful.

Use the Schedule for Financial Planning

Your amortization schedule is a roadmap for your debt payoff journey. Use it to set milestone goals (celebrate when your principal exceeds 50% of each payment), plan the timing of extra payments for maximum impact (earlier is better), calculate the remaining balance at any point if you want to pay off the loan early, and verify that your lender is correctly applying your payments. Many people print their schedule and mark off each payment, which provides motivation and a sense of progress.

Compare Loans Beyond the Monthly Payment

When shopping for loans, most people focus on the monthly payment. But two loans with the same monthly payment can have very different total costs. Always compare: total interest paid over the full term, the APR (which includes fees), whether there are prepayment penalties, origination fees, and any balloon payments due at the end. The amortization schedule reveals the full picture that a monthly payment alone cannot show.

Understand Your Break-Even Point

The break-even point is when you have paid more in principal than in interest during the life of the loan. For shorter-term loans (36 months), this happens relatively early. For longer-term loans at higher rates, it happens later. Knowing your break-even point helps you understand when you have turned the corner on your loan, when more than half of each payment is going to reducing your balance rather than paying interest.

Common Mistakes to Avoid

• Extending terms to lower monthly payments. While a longer term reduces your payment, it dramatically increases total interest. A $25,000 loan at 7.5% costs $2,963 interest over 36 months but $5,029 over 60 months, a 70% increase. Only extend terms when the lower payment is genuinely necessary for your cash flow.
• Ignoring the APR in favor of the interest rate. The APR includes origination fees and other costs, making it a more accurate measure of the true borrowing cost. Two loans might quote the same interest rate but have different APRs due to fees. Always compare APRs when shopping for loans.
• Refinancing too frequently. Each refinance restarts the amortization clock, meaning you go back to paying mostly interest. If you refinance multiple times, you can end up paying years of mostly-interest payments without making significant progress on principal reduction. Only refinance when the savings clearly justify the reset.
• Not accounting for origination fees in total cost. Some lenders charge 1-8% origination fees deducted from your loan proceeds. On a $25,000 loan with a 3% fee, you receive $24,250 but repay $25,000 plus interest. Factor these fees into your total cost comparison.
• Focusing only on the first payment. Many borrowers look at month 1 of the amortization and feel discouraged by the high interest portion. Remember that this improves significantly over time and that every payment brings you closer to payoff. The compound effect of steady payments is powerful.