Amortization Calculator
Monthly Payment
$1,013.37
Total Interest
$164,814.32
Total Payment
$364,814.32
Payoff Date
Jun 2055
Payment Breakdown
Amortization Schedule
| Payment | Date | Payment | Principal | Interest | Extra | Balance |
|---|
Understanding Amortization
What is Amortization?
Amortization refers to the process of paying off debt over time through regular payments. Each payment consists of both principal and interest, with the proportion changing over the life of the loan.
Early in the loan term, a larger portion of the payment goes toward interest. As the loan matures, more of each payment is applied to the principal balance.
How Does it Work?
Amortized loans use a fixed payment schedule that ensures the loan is paid off in full by the end of the term. The calculation balances the interest due with the gradual reduction of the principal.
Making extra payments can significantly reduce the total interest paid and shorten the loan term. Our calculator allows you to factor in additional payments to see these benefits.
Why is it Important?
Understanding amortization helps borrowers make informed financial decisions. By visualizing how payments are allocated, you can see the impact of extra payments and plan for debt repayment effectively.
Whether you're considering a mortgage, auto loan, or personal loan, amortization schedules provide clarity on the true cost of borrowing.
Key Terms Explained
Principal
The original amount of money borrowed, excluding interest.
Interest
The cost of borrowing money, calculated as a percentage of the principal.
Term
The length of time over which the loan is scheduled to be repaid.
Extra Payment
Additional funds paid toward the principal to reduce the loan term and total interest.