Amortization Calculator

Calculate Your Amortization Schedule

Welcome to the Amortization Calculator! This tool helps you calculate your loan payments and provides a breakdown of how much of each payment goes toward interest and principal over time. An amortization schedule is a great way to visualize your loan's repayment process.

Input Loan Details

Enter the total amount you want to borrow (e.g., $10,000).
Enter the annual interest rate as a percentage (e.g., 5.5%).
Enter the loan duration in years (e.g., 15).

Understanding Amortization

An amortization schedule provides a breakdown of each monthly payment over the life of a loan, showing how much goes toward the principal (the amount borrowed) and how much is allocated to interest. Over time, as the loan is paid down, the amount going toward interest decreases, while the portion applied to the principal increases.

The formula used to calculate the monthly loan payment is:

M = P[r(1 + r)^n] / [(1 + r)^n – 1]

Where:

  • M: Total monthly payment
  • P: Principal loan amount
  • r: Monthly interest rate (annual rate divided by 12 months)
  • n: Number of payments (loan duration in months)

Benefits of Using an Amortization Calculator

Using an amortization calculator helps you:

  • Plan Your Budget: Know how much your monthly payment will be, so you can budget accordingly.
  • Visualize Your Loan: See how your loan balance decreases over time, and how much you’re paying in interest versus principal.
  • Compare Loan Options: Evaluate different loan terms, interest rates, and amounts to find the best option for you.
  • Understand Total Interest Paid: By reviewing the amortization schedule, you can see the total interest you’ll pay over the life of the loan.

Example of an Amortization Schedule

Here’s a simple example of an amortization schedule for a $100,000 loan at a 5% interest rate over 15 years:

Loan Amount: $100,000
Annual Interest Rate: 5%
Loan Duration: 15 years

Monthly Payment = $790.79

Amortization Schedule (First 3 Months):
Month 1: Payment = $790.79 | Principal = $374.13 | Interest = $416.67 | Remaining Balance = $99,625.87
Month 2: Payment = $790.79 | Principal = $375.66 | Interest = $415.13 | Remaining Balance = $99,250.21
Month 3: Payment = $790.79 | Principal = $377.21 | Interest = $413.58 | Remaining Balance = $98,873.00

Over time, the portion of the payment going toward the principal increases, while the amount going toward interest decreases.

Conclusion

Our Amortization Calculator provides you with a detailed breakdown of your loan payments, helping you understand how your loan will be repaid over time. By using this tool, you can make informed decisions about your loan, plan for the future, and even compare different loan options.

Try our Amortization Calculator today and take control of your financial planning!