Calculate your monthly loan payment and view a complete amortization schedule with a clear breakdown of interest and principal for every payment. Supports extra monthly, yearly, and one-time payments.
An amortization calculator is a tool that calculates the periodic payment required to fully repay a loan over a fixed term and produces a detailed schedule showing how each payment is split between interest and principal. The word "amortize" comes from the Latin ad (to) and mors (death), reflecting the idea of "killing off" the debt gradually through scheduled payments.
This calculator works for any fixed-rate, fully amortizing loan, including:
The monthly payment on a fixed-rate amortizing loan is calculated with the standard annuity formula:
M = P × [ r(1+r)n ] / [ (1+r)n − 1 ]
Where:
For example, a $200,000 loan at 6% APR over 15 years produces a monthly payment of approximately $1,687.71, and you will pay about $103,788 in interest over the life of the loan.
An amortization schedule is a table showing every payment over the life of the loan with four columns:
In the early years of a loan, most of each payment goes toward interest because the balance is highest. As the balance drops, the interest portion shrinks and the principal portion grows. This is why the loan is paid off slowly at first and accelerates toward the end — a phenomenon sometimes called the "amortization curve."
Because interest is calculated on the outstanding balance, any extra payment made to principal immediately reduces the amount on which future interest is charged. This creates a compounding benefit that can save thousands of dollars:
Use the optional inputs above to see how much interest and time you can save. Always confirm with your lender that extra payments are applied directly to principal and that there is no prepayment penalty.
In accounting, amortization refers to spreading the cost of an intangible asset over its useful life — similar to how depreciation spreads the cost of a physical asset. Intangible assets that are commonly amortized include patents, copyrights, trademarks, franchises, goodwill, and customer lists. Under Section 197 of the U.S. Internal Revenue Code, qualifying intangible assets can be amortized over a 15-year period for tax purposes.
Business startup costs, such as consulting fees, market analysis, and pre-launch advertising, must generally be amortized rather than deducted immediately. The specific rules depend on whether the business has begun active operations and the total amount of startup costs incurred.
Amortization typically applies to intangible assets (patents, goodwill, trademarks), while depreciation applies to tangible assets (machinery, vehicles, buildings). Both spread the cost of an asset over its useful life. For loans, amortization refers to the gradual repayment of principal through scheduled payments.
This calculator is designed for fixed-rate, fully amortizing loans. For an ARM, the interest rate changes over time, so the amortization schedule can only be accurately computed for the fixed-rate period. Use a dedicated ARM calculator for variable-rate loans.
No. This is a pure principal-and-interest amortization calculator. Property taxes, homeowners insurance, PMI, HOA fees, and closing costs are not included. For a full monthly housing payment estimate, use a mortgage calculator that includes escrow.
Prepayment penalties vary by lender and loan type. Many modern mortgages and auto loans have no prepayment penalty, but some do. Always check your loan agreement before making large extra payments.
Interest is calculated as a percentage of the outstanding balance, so when the balance is highest at the beginning of the loan, the interest portion is largest. As the balance decreases, the interest portion shrinks and more of each payment goes toward principal.
Disclaimer: This amortization calculator is provided for educational and informational purposes only. Results are estimates based on the inputs you provide and may not reflect the exact terms of your loan. Lenders may charge additional fees, closing costs, insurance, or taxes not included in this calculation. Always confirm figures with your lender or a qualified financial advisor before making financial decisions. ToolShed is not responsible for any decisions made based on these calculations.