An amortizing loan is repaid with equal payments that cover the interest due and part of the principal. Early payments are mostly interest; the principal share grows each period.
How to use the Amortization Calculator
- Loan amount
- Loan term
- Interest rate
- Compounding frequency
- Payment frequency
- Extra payment per period
Results update as you type, and every field accepts the units shown in its menu.
How it works
Enter the loan amount, term, interest rate, compounding, payment frequency and any extra payment per period.
Tips
- Compare loans by APR and total cost, not just the monthly payment.
- Extra payments go straight to principal and can save a lot of interest.
- Pay off the highest-rate debt first if you want to save the most money.
- Check for prepayment penalties before paying a loan off early.
Common mistakes to avoid
- Stretching a loan term to lower the payment without seeing the extra interest.
- Paying only the minimum on credit cards.
- Forgetting fees that are rolled into the loan.
Inputs explained
| Field | What to enter |
|---|---|
| Loan amount | Amount in your currency |
| Loan term | Units: years, months |
| Interest rate | In % |
| Compounding frequency | Choose one: Yearly, Semi-annually, Quarterly, Monthly … |
| Payment frequency | Choose one: Monthly, Semi-monthly, Bi-weekly, Weekly … |
| Extra payment per period | Amount in your currency |
What each result means
- Number of payments = round([Loan term]×[Payment frequency])
- Payment per period = pmt([Rate per payment], [Number of payments], [Loan amount])
- Total interest = ([Payment per period] + [Extra payment per period])×[Payments needed (with extra payment)] – [Loan amount]
- Total of payments = ([Payment per period] + [Extra payment per period])×[Payments needed (with extra payment)]
- Interest in the first payment = [Loan amount]×[Rate per payment]
- Principal in the first payment = [Payment per period] + [Extra payment per period] – [Loan amount]×[Rate per payment]
- Interest saved by the extra payment = ([Payment per period]×[Number of payments] – [Loan amount]) – [Total interest]
Example values
How the main result changes when Loan amount changes and everything else stays at the example values above:
| Loan amount | Payment per period |
|---|---|
| 125,000 | 790.09 |
| 187,500 | 1,185.13 |
| 250,000 | 1,580.17 |
| 312,500 | 1,975.21 |
| 375,000 | 2,370.26 |
| 500,000 | 3,160.34 |
Formula
Rate per payment i = (1 + r ÷ m)^(m ÷ p) − 1 (continuous: e^(r/p) − 1)Payment = L × i ÷ (1 − (1 + i)^−n)With extra payment E: number of payments = nper(i, payment + E, L)Worked example
Inputs — Loan amount: $250,000; Loan term: 30 years; Interest rate: 6.5 %; Compounding frequency: Monthly; Payment frequency: Monthly; Extra payment per period: $0.
Results — Number of payments = 360; Payment per period = $1,580.17; Payments needed (with extra payment) = 360; Total interest = $318,861.22; Total of payments = $568,861.22; Interest in the first payment = $1,354.17; Principal in the first payment = $226.00; Interest saved by the extra payment = $0.00.
Frequently asked questions
What is loan amortization?
Repaying a loan in equal instalments that cover interest and principal.
How does compounding affect the payment?
More frequent compounding slightly raises the effective rate.
Do extra payments reduce interest?
Yes – they go straight to principal, so less interest accrues.
What formula does the Amortization Calculator use?
Rate per payment i = (1 + r ÷ m)^(m ÷ p) − 1 (continuous: e^(r/p) − 1).