Loan Amortization Calculator
Amortization is the process of paying off a loan with equal payments over time. Each payment covers the interest that has built up and sends the rest toward the balance.
The page starts with a $180,000 loan at 5.9 percent over 20 years. Open the year-by-year table to see the split.
How the schedule is built
Every payment on a fixed loan is the same size. To find it, multiply $180,000 by the monthly rate of 0.4917 percent. Then divide by one minus the reciprocal of one plus that rate raised to the power of 240. That power is the number of monthly payments in 20 years.
Worked example
On $180,000 at 5.9 percent over 20 years the payment is $1,279.21. In year one $4,861 goes to principal and $10,490 goes to interest.
By year ten the split has shifted to $8,255 of principal and $7,095 of interest. In the final year it is $14,871 of principal and $480 of interest.
Questions about this calculator
What is an amortization schedule?
It is a table that lists each payment on a loan and shows how much of it pays interest and how much reduces the balance. This calculator shows the figures by year.
Why does interest fall from $10,490 to $480 over the loan?
Interest is charged on the balance. As the balance shrinks the interest charge shrinks too. The payment stays the same so the principal share grows.
Do all loans use this method?
Most fixed payment loans do, such as mortgages and car loans. Credit cards and interest-only loans work differently.
How do extra payments change the schedule?
They reduce the balance sooner so less interest builds up. The loan ends earlier. The mortgage calculators on this site have an extra payment box to show the effect.
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This page is for education only and is not financial or tax advice.