Amortization Calculator
See how a loan amortizes: the monthly payment, total interest, and a year-by-year schedule of how each payment splits between interest and principal.
Cómo usar esta calculadora
- 1Enter the loan amount, interest rate, and term in years.
- 2Read the monthly payment and the total interest over the life of the loan.
- 3See how the very first payment splits between interest and principal.
- 4Use the yearly schedule to watch the balance fall and the split shift over time.
Cómo funciona
Loan amortization
payment = P·i ÷ (1 − (1 + i)⁻ⁿ) each month: interest = balance × i principal part = payment − interest i = annual rate ÷ 12, n = years × 12
Amortization is the process of paying off a loan with a series of equal payments, each of which covers the interest due that period plus a portion of the principal. The payment amount is fixed for the life of the loan, but its composition shifts over time. Early on, the outstanding balance is large, so most of each payment goes to interest and only a little reduces the principal. As the balance falls, the interest portion shrinks and the principal portion grows, so the loan pays down faster and faster toward the end. The equal-payment formula is engineered to make the balance reach exactly zero on the final payment. Laying this out month by month produces the amortization schedule, which reveals both the total interest cost and the surprisingly slow early progress that catches many borrowers off guard.
Ejemplo resuelto
A $200,000 loan at 6% over 30 years has a monthly payment of about $1,199. The very first payment is $1,000 interest and only $199 principal. Over the full term the borrower pays roughly $232,000 in interest — more than the amount borrowed — because interest accrues on the slowly-shrinking balance for decades.
Amortization Calculator: la guía completa
Why early payments barely dent the balance
The most eye-opening feature of an amortization schedule is how little of the balance the early payments repay. On a typical 30-year mortgage, the first payment might be 80% or more interest, with only a small slice reducing what you owe. This is not a trick; it is simple arithmetic. Interest is charged on the outstanding balance, and at the start that balance is at its largest, so the interest due is high. Whatever is left of the fixed payment after covering that interest is all that goes toward principal.
As the balance slowly declines, the monthly interest charge declines with it, freeing up more of each fixed payment to attack the principal. The effect compounds: the more principal you pay, the less interest accrues, the more principal the next payment can cover. This is why a loan seems to crawl for years and then pay down rapidly near the end. Understanding this front-loading is the key to understanding why the total interest on a long loan can rival or exceed the amount borrowed.
The power of extra principal payments
The front-loaded structure of amortization is exactly what makes extra principal payments so powerful, especially early in the loan. When you pay an additional amount directly toward principal, you permanently remove that sum from the balance — and with it, all the future interest that sum would have accrued over the remaining years. A single extra payment in year one of a 30-year loan can save several times its own value in interest and shave months off the term.
This is the logic behind strategies like biweekly payments, where you pay half the monthly amount every two weeks. Because there are 52 weeks in a year, this results in 26 half-payments, or 13 full payments instead of 12 — one extra payment a year, applied to principal, quietly cutting years off a mortgage. Rounding payments up, or applying windfalls to principal, works the same way. The schedule shows precisely where you are on the curve, and the earlier you add principal, the more interest you skip.
Reading a schedule before you sign
An amortization schedule is one of the most useful documents to study before committing to any loan, because it makes the true cost visible in a way the monthly payment alone does not. The headline payment tells you what fits your budget; the schedule tells you what the loan actually costs. Seeing that a $200,000 loan will cost $232,000 in interest over 30 years reframes the decision, and comparing schedules for different terms shows the trade-off between a lower payment and a much larger interest bill.
The schedule also clarifies choices that are otherwise abstract. It shows how much sooner a 15-year term pays off and how much interest that saves versus a 30-year term, at the cost of a higher payment. It reveals how a lower interest rate changes not just the payment but the balance trajectory. And it makes the consequences of refinancing concrete, showing whether resetting the clock erases the principal progress already made. For any significant loan, running the numbers through an amortization view turns a leap of faith into an informed decision.
Preguntas frecuentes
What is loan amortization?
Amortization is paying off a loan with equal periodic payments, each covering the interest due plus some principal. The payment stays fixed, but early on it's mostly interest and later mostly principal, engineered so the balance hits zero on the final payment.
Why is my first payment mostly interest?
Because interest is charged on the outstanding balance, which is largest at the start. Whatever remains of the fixed payment after covering that interest goes to principal — a small amount early on. As the balance falls, the interest portion shrinks and principal grows.
How do extra payments save money?
An extra payment applied to principal removes that sum from the balance permanently, along with all the future interest it would have accrued. Because interest is front-loaded, early extra payments save the most — a reason biweekly payments, which add one extra payment a year, cut years off a loan.
How much total interest will I pay?
It's the sum of all payments minus the amount borrowed. On a $200,000 loan at 6% over 30 years, total interest is about $232,000 — more than the loan itself, because interest accrues on the slowly-declining balance for decades. A shorter term or lower rate reduces it sharply.