Loan Amortization Calculator
One Payment Number, Two Very Different Uses of It
Every fixed-rate installment loan — a mortgage, an auto loan, a personal loan — charges interest on whatever balance remains, then applies the rest of the payment to principal. Because the balance shrinks every month, the interest charge shrinks too, and the amount going to principal grows to fill the gap, even though the total payment never changes. This calculator runs that month-by-month simulation for you and rolls it up into a year-by-year view of exactly where each payment goes.
The Formula
Each month: Interest Payment = Balance × r
Principal Payment = M − Interest Payment
M is the fixed monthly payment, solved once from the principal P, monthly interest rate r, and total number of monthly payments n. The calculator then walks the loan forward one month at a time, recalculating the interest charge against whatever balance is left before applying the remainder of the payment to principal.
Why the Breakdown Matters, Not Just the Payment
- Judging early-payoff value — in the first years of a long loan, most of each payment is interest; knowing exactly how much shows why extra principal payments made early save far more than the same extra payment made later.
- Comparing loan terms — a 15-year loan and a 30-year loan at the same rate can have wildly different total interest costs, which only shows up when you look past the monthly payment figure.
- Refinance break-even analysis — knowing how much principal you've actually built (versus interest already sunk) is essential before deciding whether restarting the clock on a new loan makes financial sense.
- Tax and budgeting planning — mortgage interest deductions and year-over-year cash flow planning both depend on knowing the interest/principal split for a specific year, not just the loan's lifetime totals.
A $30,000 Auto Loan at 7%, 5-Year Term
| Year | Principal Paid | Interest Paid | Remaining Balance |
|---|---|---|---|
| 1 | $5,192.94 | $1,935.49 | $24,807.06 |
| 2 | $5,568.34 | $1,560.09 | $19,238.72 |
| 3 | $5,970.87 | $1,157.56 | $13,267.85 |
| 4 | $6,402.51 | $725.92 | $6,865.34 |
| 5 | $6,865.34 | $263.09 | $0.00 |
Even on a comparatively short 5-year loan, the interest paid in year 1 is more than 7 times the interest paid in year 5, purely because the balance it's charged against keeps shrinking.
How to Use This Calculator
- Enter the Loan Amount.
- Enter the Annual Interest Rate as a percentage.
- Enter the Loan Term (years).
- Select Calculate for the fixed monthly payment, total interest over the life of the loan, and a full year-by-year principal/interest/balance breakdown.
Related Calculations
Need just the monthly payment figure without the full schedule? Use the Loan Calculator, or model a mortgage specifically, including taxes and insurance, with the Mortgage Calculator.