Amortization Calculator Information
Overview
Amortization Calculator helps you visualize your loan repayment schedule, monthly payments, and total interest. Enter your loan details to see a detailed amortization table. This tool is ideal for mortgages, auto loans, and any installment loan.
What is Amortization?
Amortization is the process of paying off a loan in equal installments over time. Each payment covers interest and reduces the principal. Early payments are mostly interest; later payments are mostly principal.
How Amortization is Calculated
The standard formula for a fixed-rate loan is:
- P = monthly payment
- L = loan amount (principal)
- r = monthly interest rate (annual rate / 12 / 100)
- n = number of monthly payments (term)
Example: $10,000 loan, 6% interest, 5 years
Why Amortization Matters
- Understand how much interest you pay over the life of a loan.
- See how extra payments reduce interest and shorten the term.
- Compare different loan options and terms.
Tips for Managing Loans
- Make extra payments to save on interest.
- Refinance if you can get a lower rate.
- Understand your amortization schedule before borrowing.
Frequently Asked Questions (FAQ)
A: Mortgages, auto loans, personal loans, and most installment loans use amortization.
A: Yes, but check for prepayment penalties. Early payoff saves on interest.
A: Because interest is calculated on the remaining principal, which is highest at the start.
A: Extra payments reduce principal faster, saving interest and shortening the loan term.